Scientific Classification of Life Less Useful for Laymen

In reading about animal and plant classification systems, I've noticed that the latest trends favor biological ancestry over contemporary morphology.  In other words, the classifications don't make as much intuitive sense because they are no longer based upon (superficial?) physical similarities -- i.e. physical similarities noticeable with our naked eyes.

I hope to add some examples of plants (rosids) and animals (ungulates) when I get a chance.

The New Business Cycle

The 4 Stages

Beginning approximately 2000, the following 4 stages are repeated (cycle of approximately 8 years):

1. Business is apparently good for most (even bubbly), while skeletons are hidden in closets.
2. Skeletons begin to come of the closet.
3. The business admits to being in recession, and most businesses have a skeleton or two to reveal.
4. Political fallout.

Bubble Building Phase

The dot com bubble was the most severe bubble of modern times, with equity valuations soaring to absurd levels.  This was repeated duing the housing bubble 7+ years later, and an energy / stock market bubble in recent years.  The S&P index in comparison to GDP has soared to clear bubble levels:

Skeletons Come Out

Here are a few examples:

• Enron 2001 (& related Arthur Andersen collapse)
• Global Crossing 2001-2002
• Tyco 2002 
• Countrywide 2008
• AIG 2008
• Lehman Brothers 2008

Recession Acknowledged

Eventually, the accoumulation of bad news becomes too much, and a recession is acknowledged by the political and economic establishment.  At this point, the losses become extremely widespread and affect masses of people through employment and asset price effects.  Countless tech firms went bankrupt in 2001, and massive amounts of wealth evaporated.  In 2008-2009, housing prices collapsed and unemployment soared.  

Most companies use this opportunity of an acknowledged recession to write off massive quantities of questionable assets.  Thus earnings of the S&P 500 were negative in the 4th quarter of 2008.

In fact, the negative earnings of 2008 Q4 (-$23.25) is something that has never happened before in the history of the S&P 500.

Political Fallout

Once the recession is acknowledged and the negative consequences reverberate throughout the country, there are inevitably strengthened calls for reform.  The Sarbanes-Oxley Act of 2002 set new or expanded requirements for all U.S. public company boards, management and public accounting firms.  The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 brought the most significant changes to financial regulation in the United States since the regulatory reform that followed the Great Depression.  Also, it was no coincidence that Americans voted for change in a big way in the 2008 election, with a Democratic landslide in Congress and the election of the nation's first black president.

Political Economic Quadrants for 2016

In reviewing my posts from earlier this year, it looks like I've been on to something.  What I have expected has indeed transpired, while the conventional wisdom has been surprised.

Just today we have the following:  US employment costs post smallest increase on record

U.S. labor costs in the second quarter recorded their smallest increase in 33 years amid tepid gains in the private sector... Labor market slack has diminished significantly over the last few years, which is expected to start putting upward pressure on wages...  

Yesterday brought this news:  GDP disappoints; revisions show recovery from recession was even weaker than we thought

instead of growing at an average annual rate of 2.3 percent from 2011 to 2014, the economy grew by only 2 percent. So not only was the economic recovery from the recession tepid, it was even weaker than we thought.

And the latest employment report was weak:  Mixed U.S. jobs report

U.S. job growth slowed in June and Americans left the labor force in droves... The Labor Department said on Thursday nonfarm payrolls rose 223,000 last month after a downwardly revised 254,000 increase in May, with construction and government employment unchanged, and the mining sector purging more jobs. 

April payrolls were also lowered, meaning 60,000 fewer jobs were created during the two months than previously reported. The unemployment rate fell two-tenths of a percentage point to 5.3 percent, the lowest since April 2008, but that was a sign of weakness as 432,000 people dropped out of the labor force...

The labor force participation rate fell to 62.6 percent, the lowest since October 1977

Admittedly, I'm cherry picking the bad news, and most professional commentators still seem to think that the economy will improve, although the trend is clearly more pessimistic:
The post-recession economy is worse than we thought 

Even the Federal Reserve, which has consistently overestimated growth trends, only sees the economy growing between 1.8% and 2% for the full year this year, with long-run potential between 2% and 2.3% growth.

As with the U.S. in Vietnam, we see the Fed declaring victory and moving on. I will proceed under the assumption that the converntional wisdom as to how the economy works has been proven wrong, and that new conventional wisdom is slowly emerging.

Economic conventional wisdom is politically relevant.  Both the Republicans and the Democrats are being forced to adapt their economic principles to the reality of the failed monetary practices of the Reaganomics era.  Beginning around 1982, "the era of big government ended" (Bill Clinton's words in the 1996 State of the Union Address.)  A less intrusive method of managing the economy, as opposed to the previous Keynesianism, was advocated by both Republicans and Democrats during this period.  Monetary policy under the technocratic (apolitical) direction of "the Fed" reigned supreme.  As we enter the 2016 presidential election campaign, the two parties are testing the waters with alternative economic platforms.

Interestingly, Donald Trump has moved to an early lead on the Republican side.  He has been the Republican with the most intriguingly different perspective on the economy.  Trump opposed the Trans Pacific Partnership, for example, unlike most of the other Republicans who follow the big corporate donors.  He is stridently against illegal immigration and other aspects of globalization which have harmed labor in the U.S.

The more intellectual spokesmen for the Republicans favor continued globalization.  To the Republican intellectuals, big government continues to be the problem.  Globalization keeps governments in check by subjecting societies to marketplace discipline.  In spite of populist rhetoric, almost all the Republican presidential candidates are pro-globalization and pro-big business.

The Republicans face a serious divide between the corporatists and the populists.  The Trump supporters stand to gain strength as the economy slumps, but big business will continue to wield more economic power.  While populism versus corporatism presents a wedge issue for each party, the  Republicans are more vulnerable given the strength of the Tea Party populists in the Republican media machine.  Republicans may face decades of internecine conflict.

In the Democratic presidential primaries for 2016, a somewhat similar battle is shaping up between populists and corporatists.  Hillary's position is somewhat similar to the Republican mainstream -- i.e. globalization in general is good (and nationalism/populism is bad although worthy of political recognition).  Bernie Sanders, on the other hand, is a class warrior.