By Greg Moses
Charts that accompany the Dallas Federal Reserve’s May 26 Texas Manufacturing Outlook Survey tend to trace v-shaped signs of a struggling recovery, but the uptrend lines are still “underwater,” which means all talk of recovery is only a way of saying less worse.
About 80 percent of Texas manufacturers reported that they were not cutting or planning to cut compensation, but about one third said they were cutting jobs and weekly hours in May, which is less worse than April.
Meanwhile, says the DalFed, “Investment plans were still largely on hold,” with only seven percent reporting some increases of (or plans to increase) capital expenditures.
The MoneyTree Report of private equity activity shows 24 deals made in Texas during the first quarter of 2009 totaling $156 million. To find a lower dollar figure you have to go back to the first quarter of 1998. To find a lower number of deals you have to go back to 1995.
Texas ranks fifth of 18 regions for capital equity interest, with the Silicon Valley of California dominating the field. In Q1 2009 there were 173 deals cut there with a combined dollar value of $1.1 billion dollars. California also contributes the fourth largest region for private equity in L.A. / Orange County where 39 deals were closed for a total of $208 million.
The other two top five regions are New England and the New York Metro area which did a combined 121 deals for $700 million.
You may recall recent studies arguing that Texas is winning the business war in the U.S. because of low taxes and lax regulation. But investors prefer Cali to Texas by a ratio of $8 to one.
Once we get past the huge tech bubble of the Y2K years, we find that the overall national trend in private equity investing rose to a high of $8 billion in Q4 2007, down to $3 billion in Q1 2009.
Although I don’t have the figures for global deals, it is possible to infer from the hot stock markets in Brazil, Russia, India, and China, that capital spending is building a home of BRIC. And beyond those emerging markets are places that global capital calls “frontier” such as the MENA countries of the Middle East and North Africa, which not by chance reminds us that the MENA frontier is not far from Iraq or Afghanistan.
So the manufacturer survey in Texas has brought us around to some big questions about the kind of recovery that is possible as the frontier of “primitive accumulation” capital moves through world history. As commentators such as Jim Cramer have remarked, this recovery will likely go better in the short term if the dollar weakens. Now that Dollar Bill has proved his global power by causing a simultaneous global meltdown, it is only proper that the grand old fella should mingle a little more modestly with peer currencies of exchange.
On this point, I don’t see where the Chinese Communist Party can be all that sincere in scolding American central bankers for printing their way out of the Dollar Bill mess. I mean, Marxists should be able to do the math. Where did they think this whole game was heading as they crammed American houses full of manufactured crap.
Already I want to apologize for that last sentence. My Made-in-China winter coat that I ordered from Cabela’s is a virtual body thermos, and who can inventory which Chinese gems keep me happy at my Dell keyboard. But you’ve seen what happens — haven’t you? — when Miss Niecy shows up for a project on Clean House. All I’m saying is that there must be some kind of Chinese term for codependency.
So Dollar Bill crashes the world and then watches as emerging markets and frontiers get up quicker than he. He should know the difference between right and wrong by now. He should have read more Plato instead of going around thinking that expediency could outlast justice in the American republic.
In the end, Dollar Bill will be worth what those who use him make him worth. And there is really no way around the fact that the only thing which makes a dollar worth anything is somebody’s hard work. If July is going to be better than June — instead of less worse — it will be because so many more people have figured out how the labor power of Texas — ready, willing, and able — can do something rather than nothing to contribute to a more valuable world.
And perhaps a more modest Dollar Bill will figure out that a more valuable world will be more peaceful, too.