The Screaming Pen

Providing Global Insight, Context, and Perspective

Classic Pen: On Prose and Politics

We shall not cease from exploration
And the end of all our exploring
Will be to arrive where we started
And know the place for the first time.

T.S. Eliot, The Four Quarters

Of the events of the 1930’s leading up to the Second World War, no other event inspired young ideologues more than the Spanish Civil War. Young Intellectuals enlisted in droves to fight on both sides, including the writers Ernest Hemingway and George Orwell. The socialist backed International Brigade, funded in part by the Soviet Union, allied with Spanish Republicans in an attempt to defeat the Spanish fascists led by General Francisco Franco in a war that served as a precursor to the war that by 1940 engulfed most of Europe.

A portrait of the artist as a young man

Nancy Clare Cunard, a left wing intellectual living in Paris at the time, sent out a questionnaire to two-hundred writers living in Europe. She posed the following question: “Are you for or against the government of the Republican government of Spain? Are you for, or against, Franco and Fascism? For it is impossible any longer to take no side.” The Anglo-American poet T.S. Eliot responded with a “neutral”, leading to the assumption by Cunard and others that he was either politically ignorant or sympathetic to the fascists. This was not true, however, as he was a believer in “via media” or the “middle way”, a belief that moderation is the only stance that takes into account the shortcomings of human nature. During a debate between T.S. Eliot, a fascist writer, and a communist writer, T.S. Eliot mentioned the following:

“Fascism and communism, as ideas, seem to me to be thoroughly sterilized. A revolutionary idea is one which requires a reorganization of the mind; fascism and communism is now the natural idea for the thoughtless person. This in itself is a hint that the two doctrines are merely variations of the same doctrine: and even that they are merely variations of the present state of things…. What I find in both fascism and communism is a combination of statements with unexamined enthusiasms.”

Eliot believed that these “unexamined enthusiasms” led to irrational decisions during a time when rational thought was completely necessary.

This example of moderation is still relevant today, as we are faced with an increasingly polarized nation where sides are being taken and decisions are being made, sometimes irrationally. It is always important to take a step back and objectively examine issues in context. At we attempt to place news events in context, while providing non-partisan analysis and perspective.



August 22, 2006 Posted by | Author: JPL, Business, China, Energy, Europe, Financial Markets, Flat Tax, Uncategorized | Leave a comment

The Stampede of the Global Herd

Yesterday marked the eleventh day in a row that the MSCI Emerging Markets Index fell, an event that has not occurred since August 13, 1998, the very same day that Russia defaulted on her foreign debt. Russia’s debt default marked the spread of the Asian Contagion, a financial crisis that swept across Asia after the devaluation of the Thai Baht. This time it appears that things are much different, as the fundamentals of many emerging market economies appear quite strong. And although Indian Brokers, who witnessed shares drop more than ten percent before the government intervened yesterday, will probably not find solace in solid fundamentals, it appears that the current drop in the emerging markets is due to investors fleeing risky assets in the face of a global tightening cycle, possible inflation, and cooling global growth. And although some investors are losing their shirts, it appears that this may be a price correction, not a crisis.

Seeing Red

Come On, Let Me See Ya Grill

Wait and See

While yesterday’s returns marked the end of an eleven day downturn in the emerging markets, it still did not end the doomsayers from predicting that today’s economic conditions are similar to either 1) the conditions preceding the October 19, 1987 crash or 2) the conditions that led to the Asian contagion. This could not be further from the truth, as there are crucial differences between now and 1987. In 1987, stocks were pricey, and treasuries were quite cheap. Today, equities are historically cheap, with investors paying a premium for treasuries. This is important because if investors flee equities all together, which would be required for a crash, they would have to pay a premium for treasuries as housing is showing signs of cooling, and the dollar is relatively weak. The spread of the EMBI+ to the Ten Year U.S. Treasury note still remains at close to record tights, signalling debt investor’s continued confidence in the fundamentals of the emerging markets. In 1998, the spread widened sharply, signalling falling confidence in the emerging market economies.


Although this is probably not a crisis, it could signal a change in investor sentiment, especially as monetary policy tightens worldwide. The managers of Large Cap mutual funds, some of whom have been predicting a return to their asset class for the past several years, may finally get their wish as investors may continue to flee assets that love loose liquidity such as emerging market stocks, commodities, housing, and small capitalization stocks. It will be important to keep an eye on the international markets, along with less risky asset classes that may benefit from the global herd fleeing risky assets in favor of traditionally safer bets. If there is not a change in sentiment, however, this may be a great buying opportunity.

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May 23, 2006 Posted by | Asia, Author: JPL, Emerging Markets, Financial Markets, Investing, World Markets | Leave a comment