The Summer of Our Discontent

(Encouraging developments out of Tegucigulpa of all places. 1270 words)

Midsummer finds us not only struggling against the systemic torpor alluded to by the venerable Market maxim, “Sell in May and go away” but also enduring the Disconnect Phase which is a normal part of every cyclical bull market. The Initial stage, when it goes like a bottle rocket because “it ain’t the end of the world after all”; the panicky, eggy-faced short sellers discovering that its not like found money after all and the fear of being left behind becoming the only palpable fear still in the room, all that has flamed out now and slipped into the past. In this Disconnect Phase, insistence on “fundamentals” begins to assert itself, but the here & now fundamentals, and even the foreseeable future fundamentals, remain pretty darn dreadful. So the stocks that got way out ahead of themselves (i.e., about 80% of my portfolio, the remainder being the stuff that managed to sleep as if dead through all that April-May excitement) and in so getting there produced about two good years of return in ninety or so days have given some of it back. In some cases, a good bit has been given back. That the past four or so weeks have so vividly reminded us of just how discontinuous returns from equity investing are has abraded our spirits. It has also not helped that any objective assessment of the current political climate suggests that however gradual we expected the eventual economic recovery to be, its going to be even slower than we thought. It is as if anything that can be done in a non-totalitarian state to dim the animal spirits of commerce is trying to find its way into the mix. Many of us find it very difficult to follow the news and maintain any sort of bullishness. But believe it or not, the last few weeks have seen a number of seemingly unrelated events which have, for me, strengthened the only conviction necessary for long term bullishness in times like these.  All is not lost, and regression to a proximate “normal” which is conducive to material prosperity is not quite yet an unreasonable expectation. 

So what happened? It would be humorous if one were viewing it from the safe remove of, say, another solar system. While the purported “last remaining superpower”, that beacon of light which so illumined the 20th Century, finds itself lurching in the direction of failed Peoples’ Republics a la Omar Bongo, more benighted precincts have seen a sudden quickening of that spirit which says “enough already” to El Jefe and friends. The Revolution (i.e., the thugs in charge for the past thirty years) in Iran has managed to apply a hefty dose of fertilizer to the long languishing seeds of discontent. That genie is out of the bottle now. It might lay low for a time, but change is coming to Greater Persia. China, which is said to have violent demonstrations on a more or less daily basis, saw a spate of riots that were too big to keep out of the news. The left leaning coalitions which administer that comatose realm we call Europe seem to be losing ground to political entities of a more “mad as Hell and not going to take it anymore” variety. It was a couple of political backwaters right here in our own hemisphere, though, that did the most to raise my shopworn spirits. The power couple that seemed only a year ago to be well on their way to feting Argentina with Evita: The Sequel   has been sent packing, and Honduras is providing a splendidly theatric illustration that people can and will rise up and just say No when the dead head of statism becomes unbearable. We have been reminded that the march to 21st Century Socialism, an implacable enemy not only of ownership but of rule of law, is not inexorable after all.

Who would have thought that scruffy little Honduras could provide such an illustration of the curious state the world finds itself in? I don’t pretend to know much about its institutions or the key players (does anyone, really?), but I can certainly empathize with what it would be like to live in a place where the chief executive officer is cozying up to the likes of Chavez and Castro and orchestrating all kinds of extra-legal activities to circumvent a Constitution which limits his tenure. I think the Hondurans have shown remarkable restraint, if not grace, in short circuiting what was shaping up to be yet another caudillo. I am not sure I could be so restrained in dealing with a politician so bent on making my country more like Cuba, which would have collapsed into a Haiti-like stink hole without decades of patronage from the Soviet Union, or Venezuela, which has only survived the loon in charge because they can pump gushers of money out of the ground every day. Honduras has bananas and people willing and able to cut & sew. But it apparently also has people who refuse to go along with the seeming spirit of the age and defend a constitution they see as a bastion against the real source of their historic oppression. The attempts to spin this defense of rule of law in Honduras as some kind of coup have been laughable, the coalescence of support for the erstwhile strongman a veritable who’s who of the self-anointed global gentry who rule on behalf of their cronies and through the instrumentality of a cadre seemingly endued with congenital bossiness. (Am I the only person who has figured out that sometimes the only way to make any sense at all of a really abstruse development is to wait and see which side certain “usual suspects” line up on and then know that the opposite must be closest to the truth?) We might find out a few months from now that Honduras only replaced one opportunist with another, it sometimes goes that way in these places, but so far I think what we are seeing is animated by the same spirit which was sweeping Poland twenty years ago. 

The human spirit is alive and well. The oppressors who would stamp these impulses out and in so doing demoralize (and so impoverish) everyone around them might win a few, but lately they are back to their losing ways. Time does not seem to be on their side after all.  It is still too early to short Western Civ. My worst fears of late have not been that the enemies of prosperity, those who traffic in the politics of resentment and contort policy so as to cater to the ravenous factions who hold them by the purse strings, are suddenly so competent as to be unstoppable. Rather, it has been the seeming dearth of those who would overcome evil with good and defend the Truth. To the degree that material comfort, a sense of security and the ubiquity of that cheap novelty which traffics as entertainment seem to have enervated the longings of our souls, it is tempting to suppose as much. We are constantly reminded, though, that things really are seldom what they seem. That retrograde load of crap going under the name of Progressivism (a.k.a., 21st Century Socialism) might play in Brussels or Belfast, but it doesn’t seem to be going down so well in our hemisphere. This fight is a long ways from over. We are in a difficult season, midsummer in a drought year, but it too shall pass. Stay long, and stay strong.