By Barry Randall Is anyone else out there tired of the "recovery?" Unless you've been hiding in a cave for the last six years waiting for Mayweather to fight Pacquiao, you've probably heard "recovery" more than "Twerking," "Taper Tantrum" or "The Uber of Whatever."
The Case for Optimism
That is, with interest rates remaining at essentially zero for the fifth year running, we couldn't possibly have recovered from the awful Great Recession. As far as I'm concerned, that is pure bunk. Consider the following: Interest Rates are at all time lows. Worldwide. Got a good idea for a new product? A company? A whole darn country? Cash is available. Come and get it.
The charts favored by the efficient market nuts, you know, the ones in which the future is fully predicted and discounted? Did those charts predict in 2011 that a billion Africans would start entering the consumer class? That they'll all want smart phones? And cars? And electricity? No, I didn't think so. But the Africans do want those things. Along with the Mongolians, Cambodians and Bolivians. That time-worn narrative about how when Bernanke flooded the world with QE billions, he'd unleash a tsunami of inflation? Well that was wrong. It turned out that a few hundred million people needed a loan.
Oil prices are near historic lows, when adjusted for inflation. The same is true for natural gas. And coal isn't even worth putting in a Christmas stocking anymore. Energy, which is an expense for the 99% and which provides a living wage or a stock-option fueled bonanza for relatively few, is cheaper than ever. But that isn't even the good news. The good news is that in wide swaths of the world, solar power is now cost-competitive with utility-scale electricity generated by coal or natural gas. And yes, that generally includes the impact of subsidies.