Nor Any Drop To Drink

Although it hasn’t gotten much press until recently (no surprise given the non-coastal location), the flooding situation in the Midwest, Upper Midwest and Central Plains is threatening to set long- time records for both duration and severity. In order to provide relief for much of these areas, levies are being utilized, some of which had not been used since the 1920’s. Not surprisingly, this deluge of liquidity got us thinking about the global deluge of liquidity and how the ramifications of both floods look  similar. In many of these stricken areas, they are opening up levies that have not been used in over 8 decades, thus upsetting existing delicate ecosystems. For some reason, Uber immediately came to mind when contemplating the effects on the economic ecosystem of the flood of global liquidity. Much like the levies, the flood of liquidity gave rise to the unprofitable, omnipresent Uber phenomenon, and virtually overnight the transportation system here and globally was changed forever. You notice I say changed, with no judgement of good or bad, but the fact is that the technological advances necessary to give rise to such an enterprise would not even exist if it were not for the capital streams flowing to money losing ventures such as this. The fact that it is unprofitable, is not the point, it is highly unprofitable and firmly entrenched in a business model with no barriers to entry. Sporting a $66Bln market cap, the deluge unleashed on the transportation ecosystem has  left a trail of destruction in its path: Taxi cab medallion prices, additional urban traffic congestion, public transportation ridership decline, etc.. The differences in the two surges in flow primarily lie in the system of levies themselves. The corps of engineers and other forward thinking folks respected both the power and unpredictability of the flow of water, unlike the other kind of liquidity whereby virtual dams and levies are constructed only after the worst of the damage has already occurred.

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