Standing on the Berlin Wall

Mar 02, 2021 | Mark Ryan


Driving to school, my daughter glanced puzzlingly at an in-progress real estate development near us, then asked: “How come the government is letting them build more houses -- I thought our population wasn’t growing?” Woven in to her question was a solar system of misapprehension, cratered with teachings from teachers who’ve tarried mostly inside walled gardens since they themselves were small children. Forgive me, some of my (hopefully not former) best friends are teachers, but hear me out. Given its cruciality for our society, why oh why in heaven’s name don’t we have entrepreneurial basics woven in to our curricula? Maybe we could substitute this fresh material for a smidgeon of the open hostility those same schools have for enterprise.


I LOVE new real estate developments as much as I loved my Tonka tractor when I was a boy. It’s not just the awakening that the freshly upheaved dirt stirs in me. It’s because I’ve helped finance them, and I’ve seen up close that for every house built, a dozen or so men (yes, mostly men) get to go to work for a couple of months. Beyond the bacon they bring home, they build places for other people to fry theirs. And there’s really and truly nothing naughty about this.


The needle of it is that nearly every home ever built – and practically all the ones worth living in, were built by somebody who, at some point bid on a project just to keep his guys working. He hoped to make a profit – and for goodness sake let’s hope he usually did, but he could never say for sure if he would. This crazy world of uncertainty is mostly unknown to the majority of the people who benefit from it. But it’s like… I don’t know – dirt. It’s everywhere, and we mostly rinse it off unappreciatively, and call the big winners “filthy” for winning. Moses was on to something when he warned about coveting.


You’re standing on the Berlin Wall. Look east. Then look West.


Try this tomorrow. Drive to your child’s school, or the store, or wherever, but this time ask yourself how that whole experience came to be. Be thorough about it. The houses, the cars, the songs on the radio, the iPhone glued to your passengers, the pants you’re wearing, the deodorant in your pits, your socks, the fast food restaurants, the mall, the bakery, the pavement, the street lights (a friend of ours came to this country with nothing and is now a major street light manufacturer. He very nearly lost everything 20 years ago. Now he’s an institution).


This tapestry of functional utility is fueled nearly entirely by people who put some of their own savings at risk, and ran with an idea they weren’t sure would work. And in many cases it didn’t. So they tried again. And again. They’re a little crazy maybe. But the government’s role, to most of them has… not entirely nothing -- only mostly nothing, to do with their decision to go for it.


These dreamers are a small minority. And the extent to which they profit bears some relationship with how blind most of us are to their lives, which is okay with them. So, yes Virginia, there is a construction clause in the city bylaws, but there’s so much more to that story. Once upon a time…


In Markets: Can equities tolerate higher bond yields? – The spike in yields of late has sent shivers through stock markets, which recently reached all-time highs and whose valuations are seen as stretched. But this rise in yields, if contained, isn’t necessarily bad news for stocks. Rather, it suggests to us that the rotation into reflation-driven cyclical stocks may have legs.


U.S. equities exhibit dispersion as value outperforms growth – U.S. equities mostly lower, but Dow Jones bucks trend and trades higher for the week (as of Thursday). Value out-performance is accelerating, and leading indicators rally to near pre-COVID-19 highs.


Regional highlights: Canada’s big six banks’ earnings results beat expectations; British pound leads G10 currencies in 2021; Trading tax increase in Hong Kong.


More here: Global Insight Weekly


Enjoy your weekend! Winter clings but spring wants to sing!