25 August 2010

The New Economy

Let's say the recovery happens, but without easy credit. Perhaps that is what is happening right now. I have noted that a return to the old economic ways is accompanied by a rise in EUR and a fall in $. Now the reason this is not happening presently now may be because the dollar had to bounce against JPY and EUR's rise was partly technical from a structural low.

It may partly be what the post yesterday was suggesting, the conduit to reflate is structurally failing. EUR/USD on 1 month fell at the bottom of Raghee Horner's 34 EMA. On the weekly it fell at the top. To me this suggest strength in that move upwards. On daily it has come back to the 55 day simple moving average. That allows either a move down or a move up.

The structure I called the conduit still exists, but it is like a magnet losing magnetism. What this may mean in the medium term is there can be no return to those old ways.

It was essentially the premise of the rescue started by the previous government that it was necessary to relfate assets deflated by the crisis and they did so, in a remarkable piece of financial engineering, directing money back into delfated assets by making a conduit to them, using a forced valuation of the dollar, by Fed Funds target rates being essentially removed from the system

I can rephrase the routes through all this this blog has delineated, in this technical way, either the present conduit must be reinforced, a new structure must be found to do this, or those setting economic policy should (or must) go with a new direction the economy is mapping for them. That is an investing economy led by the creative output of the Americans, which is already here.

It is the remarkable dichotomy of the economy right now, the strength in information engineering and the weakness elsewhere and it is such strength, it is like that dynamo this blog has delineated at the heart of the US economy, in action.

The technologies GOOG, for example, keeps on rolling out are so far ahead of anything else but more than this they fulfill needs you didn't even think you could have. It is like they are by appointment to those driving the creative economy (that is not a few, it is the many, it is stunningly democratic). In this sense, there are no problems, only opportunities.

When myspace rolls out beautiful and expressive new HCIs, which it is doing right now, it is a similar thing. They create spaces literally which get used in creative ways, which add value to the economy. It is those points of creativity, millions of them which create the new economy itself. It is that dream of the tech boom, in action. Remember in the dark economic days, great thing begin, continue and create great wealth.

© 2010 Guy Barry - All Rights Reserved.