Mysteries of the Noise


Do you remember the dark months you held the sector at Mametz— / The nights you watched and wired and dug and piled sandbags on parapets? / Do you remember the rats; and the stench / Of corpses rotting in front of the front-line trench— / And dawn coming, dirty-white, and chill with a hopeless rain? / Do you ever stop and ask, 'Is it all going to happen again?'

From "Aftermath"

By Siegfried Sassoon


US stocks made a healthy show yesterday, with the Dow up 188 points. Fears of a crash subsided, according to the papers, on earnings and unemployment data. Blah. Blah. Blah.  Meanwhile, we got a glimpse of Bombay's new huge, ultra-modern airport when we arrived. It is an engineering and architectural marvel… 

An airport is necessarily a rational, planned affair. Travelers, luggage, airplanes – all must function with as much efficiency as possible. Schedules must be kept. Procedures must be followed. Order must be maintained. 

But all around the airport was chaos. Support towers for a modern highway rose up out of the dirt… where chunks of broken, discarded concrete had been abandoned. Tools… building supplies… shacks and sheds… trash… and, of course, throngs of people mingled in complete disorder. Why don't they straighten the place up? Why not put things away? Why not impose some order? Will India always be a poor, messy confusion? 

"You will never understand India until you've read the Bhagavad Gita and the Vedas," cautioned an old friend. We didn't have time to read the ancient texts. So, we kept our eyes and ears open.

Last night, we made our way through the festivities for Kala Ghoda in central Bombay to the Sassoon mansion. The streets were crowded. Pedestrians. Motorcyles. Automobiles. There was little open space. Women in their bright sarees… odors of spices on the sidewalk… vendors selling jewelry and drums. Horns honking. It was Bombay, after all. 

David Sassoon was a rich Indian Jew who moved his family to England in 1833. His grandson, whose quote is featured above, fought in WWI and chronicled the foolishness of it in poetry. In the inner courtyard of his house – now a museum – local poets recited their verse to a sparse crowd. A young woman with a very English accent had the stage: 


“What am I to make of all the sounds? 
All the noise. 
Is it real life…the real thing…all there is…and nothing more? 
Or, is it all illusion and distraction… 
Diverting my attention from the deep mysteries of my own soul?”


We didn't stay for the answer. Is it all an illusion? Maybe. But it's all we've got. Better make the best of it. And that is done not by exploring the mysteries of our souls, but the mysteries of the noise.


Is Corruption a Growth Engine?

Our colleague began explaining the poor performance of Indian equities to us.   


“Everyone is India is corrupt. Well, not everyone. But there have been so many scandals that it’s no wonder people don’t want to put their money in Indian stocks.”


But the more he explained, the more puzzled we became: 


“India has always been a very corrupt place. It's the only way to get anything done. You need to bribe someone. But Congress passed a law requiring public disclosure of the contracts between the government and private business. For the first time, you could look at what really goes on. Naturally, you find corruption. The deal makers didn't want to be prosecuted, so they simply stopped making deals. As a result, the big capital investment projects came to a halt and the economy suffered.”   


It sounded as though it wasn't corruption that hurt the Indian economy, but the lack of it. Our colleague added: 


“This stage will pass. People will get used to this new transparency law. They'll figure out how to be corrupt without getting caught. The economy will pick up.”


And how will Indian stocks do? Will they get back on their feet? Finally, he said:   


“If you go back to 2000, you see that everybody's favorite market – the US – has risen about 50%. That's the S&P 500. Compare that to the Bombay stock exchange. The BSE 30 rose 600% since 2000. And the fundamental conditions have not changed. India is young and poor. America is old and rich. Which one will grow most in the next 10 or 20 years? Probably India.”


Yes, once it figures out how to get its corruption mojo working again… India is set to boom. Or not. 



The above article is from Diary of a Rogue Economist originally written for Bonner & Partners.

Bill Bonner founded Agora, Inc in 1978. It has since grown into one of the largest independent newsletter publishing companies in the world. He has also written three New York Times bestselling books, Financial Reckoning Day, Empire of Debt and Mobs, Messiahs and Markets.





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