Tuesday, December 31, 2013

Wolff: London, NYC mayors show stark contrast

Last week, London's mayor, Boris Johnson, in a speech meant to associate himself with Margaret Thatcher and launch his bid to be Britain's prime minister, opened a discussion perfectly timed to counter Bill de Blasio, who will take office as New York's mayor in a few weeks, and his vision of urban life.

Great cities have become the most obvious economic symbols of our time. They reward success. They have less and less room for failure. Johnson, in the most explicit terms possible, put himself on the side of success and the successful, going so far as to praise hedge-funders and to recall the 1980s Gordon Gekko credo that "greed is good," that success ultimately raises all boats.

De Blasio, as he takes over the world's richest city, is perhaps the clearest representative of the new ethos that success is problematic, that its rewards ought to be substantially scaled back, that it is fundamentally unfair in principle and that, however you cut it, profit to one person means loss to another.

The contrast here is even more stark, given that, in many ways, London and New York are the same city, or at least part of the same economic zone of international wealth and finance and of the monetization of brain power and market cunning.

London Mayor Boris Johnson Johnson offers praise for hedge-funders and has recalled the 1980s Gordon Gekko credo that "greed is good," that success ultimately raises all boats.(Photo: Leon Neal, AFP/Getty Images)

Johnson went so far as to specifically single out the gulf that separates the smarts, with their commercial acumen, from the stupids, who don't have the brain power and creativity to compete.

De Blasio, for his part, has tried to make outgoing Mayor Michael Bloomberg — prototype of ! the savviest businessmen of the age and an admirer of Johnson's — a symbol of market aggression and heartlessness.

In Johnson's view, the market meritocracy has created not just vast wealth but exponentially greater opportunities. The rich get richer, but, to a greater extent than ever before, so does a larger segment of everyone else.

In de Blasio's view, we have lost our way, and ought to reset at some better place in the past.

For Johnson, the terrible days of the 1970s, in a Britain beset by stagnation and union demands, are the enemy. The measure of the accomplishments of the new economic order is how far we have come from that.

For de Blasio, the 1970s seem to exist in a nostalgic haze; those days, even with the crime and near bankruptcy of the city, were more egalitarian and open.

Both men are, of course, exaggerating their cases.

London remains, and will continue to remain, a city committed to providing a vast social-services infrastructure — one that Johnson, as Thatcher before him, has done little to dismantle or alter. (His mayoral powers don't give him much leverage in that regard.)

De Blasio will need to curry as much or more favor among the rich and powerful as he will among the unions that helped elect him.

But their argument, as theoretical as it is, is surely more bracing and more significant than the one in Washington between a right-wing infrastructure representing an ever-diminishing constituency, and a liberal bloc without much of a point of view beyond being against the right-wing position. Or in Britain, between a left and a right that mostly strives to be like each other.

Johnson and de Blasio represent the alternative sides of yuppie consciousness, the aspirational urban demographic being the electoral currency of our time — in the U.S., Europe, and growing at a fast clip, in much of the rest of the urban world.

In each case, the argument is as much about how to make the argument.

Johnson, a political bad bo! y as well! as an enormously popular politician, is trying to say the unsayable: The reality of wealth creation is inequality. The more wealth you create, the more inequality there is. Hence, with a little critical interpretation, inequality is good. It just has to be managed. In Britain, the opposition is apoplectic, accusing him of being not necessarily wrong, but "unpleasant."

De Blasio, being quite possibly the most famous left-wing elected official in the U.S., is, in essence, saying the same thing, but with an opposite conclusion: New York is vastly inequitable, and we all, or at least those looking down from above — and everybody in New York looks down on somebody — ought to feel guilty about it.

Curiously, in a city where just about everybody voted for him — not just because there wasn't much of an alternative, but because we all regard ourselves in a public sense as liberal citizens — it is hard to find anybody who doesn't privately roll his or her eyes about him.

The great change in our lifetimes is that most of us live in cities — more and more, we are citizens of the urban experience rather than of individual nations. The exodus from cities was reversed, and now, from around the world, regardless of borders, more and more people, rich and poor, come to the major cities of the world every day. In some new and repurposed Dickensian fashion, we are all engaged in an existential struggle for accomplishment and self-improvement, demeaning and rewarding, transformative and frightening.

We deserve both Boris Johnson and Bill de Blasio.

Monday, December 30, 2013

Indian Gold Buyers Listen to America's Central Banker Rather Than Their Finance Minister

For almost two years, P. Chidambaram, the Finance Minister of India, has done much to make gold as unappealing as possible to buyers in his country. Speeches have been given. Tariffs have been raised. But purchasing by Indians continues at a pace to set a record next year for gold.

That is very bullish for companies in the gold sector such as Barrick Gold (NYSE: ABX), Goldcorp (NYSE: GG), Wishbone Gold (OTC: WISHY) and Yamana Gold (NYSE: AUY).

Overall, Indian imports of gold are expected to reach 350–400 tons for the April to June 2013 period, according to Sharps Pixley, a broker in London. That is 200 percent higher than a year ago. For 2013, Sharps Pixley predicts that the demand for gold in India will reach a record 1,000 tons.

While the Indian Finance Minister has been making the case against gold, America's next central banker just made a strong case for it.

In testimony before Congress, Dr. Janet Yellen, the nominee to be the next Chair of the Federal Reserve, endorsed the continuation of Quantitative Easing III. That is a policy designed to keep interest rates low by having the Federal Reserve acquire $85 billion monthly in Treasury securities and mortgage-backed bonds through expanding its balance sheet.

Related: 3 Stocks to Profit from Emerging Consumer Markets

That should result in higher inflation in the future, as trillions in Greenbacks are being created without being backed by economic growth, as previously detailed.

When that happens, gold should rise in value.

Historically, gold rises in value along with inflation. Investors flee paper money for hard assets such as precious metals. From that, the price of gold and the shares of Barrick Gold, Wishbone Gold, Yamana Gold, Goldcorp and the exchange-traded fund for gold, SPDR Gold Shares (NYSE: GLD) should all rise.

That has not happened in 2013, however.

For the year, SPDR gold shares have fallen more than 20 percent. But there is good news in the sector.

Barrick Gold is rumored to be the target of activist investors, according to an article in Barron's. Wishbone Gold just reported positive results for its holdings in Australia. Both China and India, the world's two largest consumers of gold, are buying. That and more inflation should lead to higher prices in the future for gold.

Posted-In: P. Chidambaram Sharps PixleyLong Ideas Sector ETFs Emerging Markets Commodities Federal Reserve Markets Trading Ideas ETFs Best of Benzinga

(c) 2013 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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