[youtube:http://www.youtube.com/watch?v=xvz8tg4MVpA&feature=related 450 300] [youtube:http://www.youtube.com/watch?v=n8YCd9-Xtc8&feature=endscreen&NR=1 450 300]
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We talked today, so you know what I was doing this afternoon. I liked the way the miners and even the silvers hung in there today despite the savage sell-off in the morning at the POG/POS level. It convinced me to add another 10% or so to my 60% position. I added SLW, AG, and GDX (two silvers and a gold).
To some extent I’m justifying my “Hang on, Sloopy” act over the last week or so, and I have to admit I was surprised to see that sudden cut below $1600 on the POG today. However, when I noted that the $HUI was bouncing off long time support even as the price of gold (and silver, yeesh!) was still plummeting, I was pretty sure we were not far from the final washout. That’s what I’m betting on now and for the remainder of the week.
If tomorrow we see a continued bounce (off of the $500 floor) in $HUI, then I will add more to the above and perhaps go have a sandwich in a park with some homeless people for the next couple of days.
It beats Christmas shopping.
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I mentioned I was going to say a word on that execrable and stupid Henry Blodget piece from the other day, the one in his Business Insider blog extolling this new bizarre left wing theory stating that it’s not entrepreneurs after all who create jobs but the concept of “demand.”
Suffice it to say, I’m shocked that such a jejune theory could be promulgated by a guy who at one time was actually hired to analyze stocks for a major Wall Street firm (albeit a guy who has since been banned from ever working on that side of the game forever).
Saying “Demand” causes job growth is a little like saying “oxygen” causes job growth, in the sense that if there were no oxygen, we’d be too busy gasping for air to bother to create jobs.
The whole idea is intentionally denigrating in the tradition of the political Left in that it implies that there is no credit due to entrepreneurs for having an idea, risking capital, and pouring hard work into a new enterprise. Blodget’s crazy claim is that all those factors don’t matter, because — get this — if there weren’t the cash and the desire (which equal “demand” to him) to buy the product or service, their would be no revenues and therefore, no jobs.
In Blodget’s world, the chickens are slave to the egg! But is that really the case? That without a consumer “demand” present, we’d have no production economy? Well let’s go back to a hypothetical pre-history to find out:
On a primitive island, where most sustenance is derived from the indigenous banana trees, people traditionally spend most of their day searching about for banana trees which they can climb and then painstakingly harvest bananas by hand. Local smart guy Oog rigs a scaffolding platform one day out of bamboo and cane rushes and finds he can harvest four times as many bananas as the typical islander can using the old method. Oog soon finds he has a surplus of bananas, which he finds he can trade for other foods, clothing and perhaps a concubine or two.
Soon Oog realizes that he can make the scaffolding platforms for other islanders, which he does, in exchange for more trade items, and perhaps a plot of land for a new house. This distribution leads to a massive increase in productivity on the island, which leaves the other islanders with more time (ah the essential commodity!) to commit to other useful tasks, perhaps in seeking alternate foods (the local javelina look tasty, but they were hard to catch and bananas took less time to harvest).
In the meantime, Oog has hired a couple of young men to help him construct his scaffolds and to develop a sharp new projectile or two to help with the javelina hunting ideas he’s been working on. He pays them in a portion of the goods he obtains in trade for his invention. They in turn have excess goods with which to trade their fellow islanders, who now have time to continue developing this micro-economy outside the initial “firm” of Mr. Oog’s. A cycle of job creation has begun.
Now in the above case, “demand” is nothing more than common sense. Mr. Oog, through his ingenuity, has devised a time saving device for his fellow islanders, and they quite sensibly recognize the value in “purchasing” an item like that to free up their own lives for other activities. What they pay for the device is irrelevant, as Mr. Oog can take many forms of specie — from trade goods to service — in exchange for his invention, were it mutually beneficial for him to do so. Blodgett’s “demand” is a red herring.
In the same way so is his insistence that no one would buy Steve Jobs wonderful iPhone were it not for “demand” from the mindless consumer masses in the form of desire and cash. But don’t the last three years put the lie to such inanity? In some of the worst economic times in modern history, iPhones have sold faster than Carl Lewis on crank. That’s because consumers saw the value in an entrepreneur’s idea, risk and execution– not because they just happened to have a few extra hundred bucks they weren’t using.
To act like an economic system is not one of choices and decisions which lead to rewards and penalties is to perpetrate an invidious lie that would suggest we are all powerless as individuals. I can imagine only one purpose for promulgating such nonsense, and call me cynical, but it’s a dark one, ending in death and slavery for all but the very few.
Best to you all.
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