Rises and false: markets v the economy

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Hello and welcome to the Intelligence on Economist Radio. I'm your host, Jason Palmer. Every weekday we provide a fresh perspective on the events shaping your world. China's documentary makers don't have it easy. Sensors are clamping down more and more without their ok, films go nowhere. Stories abound of devious ways that documentaries are distributed. But one famous filmmaker is simply giving his away. Online and during the week, Joe Brown was a builder and plasterer. At weekends, he made himself an internationally renowned climber, tracing out new routes to famous peaks. Our obituary's editor looks back on a life lived at ever greater heights. But first, yesterday, for the seventh straight week, a record number of Americans filed for unemployment. More than 33 million people have now applied for benefits since mid March, totaling a fifth of the workforce from coast to coast.

Tonight, the faces of a deeply personal unemployment crisis.

All right, the breaking news. A record shattering 6.6 million Americans. 3,236,000 jobs were lost in the month of April.

The bills are coming and they're calling me and I have no money to pay for that.

But if you looked at the stock market, you could be forgiven for wondering if investors have just missed the news. If you take a look at the.

Month of April, the Dow and the.

S and P are looking at their best month since 1987.

Today's gains make it official.

The NASDAQ is pretty much flat on the year.

Kudos to the market and people that still believe in it.

It's a long wait from March when America's markets dropped by a third.

The stock markets in the US Is higher than it was in August last year, which really, if you take a step back, is incredible because it seems to suggest that the pandemic and really the most severe economic slump in modern history, it appears to suggest none of that really matters and we'll be back to business as normal.

Patrick Fowles is the Economist's business affairs editor.

And what turned things around? What led to a Kind of resurgence of optimism was basically action by the Federal Reserve, America's central bank, to prop up the corporate bond market. And that meant investors suddenly felt comfortable companies could raise money. And also it reduced their fear that some big companies might go bust.

But that's bond buying in big companies. What about the small and medium sized businesses that we've been talking about a lot on the show that seem to have been suffering more?

Well, that's right. I mean, remember, corporate America has this very distinct thing. The companies normally borrow through the bond market rather than borrowing through banks. So that's the thing the Fed's targeted. The problem is, for the millions of small companies across America, of course, you can't go to Wal and issue a multibillion dollar bond. So those companies are much more reliant on the banks. The Fed is trying through various tools to pump government money and central bank money through the big banks to get to those small Main street companies. But it's much more complex, it's much more bureaucratic, and so far also appears to be much less effective.

We're in the midst of earnings season here and the results haven't been all that encouraging. I mean, even if the Fed has implicitly backstopped those big companies for now, where does that leave investors at this moment?

Well, what investors are weighing up is several different things. I mean, basically there's the prospect of a lot of government stimulus which directs money towards some companies and less so towards others. So that's one factor. But they've also got this question, what else do you do with your cash? If you're an investor, you can put the money into government bonds. But the problem is interest rates are really low in America and they're actually negative in parts of Europe and Japan, which means you actually lose money if you buy a bond and hold onto it. So it's a kind of near certain bad bet. So as a result, with the paucity of alternatives, investors are piling into the stock market. But you can get a kind of sense that it's a bit half hearted because they're not buying up companies that are really exposed to a booming economy or a sudden recovery. So they're not really investing in restaurant shares or airlines or holiday shares. In fact, the thing they like the best is the big tech companies. Amazon, Facebook, Google. And that's because those firms seem to be able to make money whatever the economic conditions.

Right. Which we saw evidence of yesterday when the NASDAQ index, home to many of those firms, turned positive for the year. But even though everyone may have acted rationally so far. What about the future? There's all these fears of a second wave of infections impacting firms. Are there any other risks to look out for?

Well, one of them is just that what is logical and sensible for companies in isolation doesn't really add up for the economy as a whole. So lots of bosses hope to do a lot of cost cutting, including firing people in order to generate money to sustain the profits they have and also to pay down some of the debts that they're accumulating over the recession. And you might think that that kind of makes sense. And if you're an investor in a company, is not an unreasonable strategy. The problem is, if everyone does that together, what it means is an even deeper slump, which could suck demand from the economy. So what makes sense for one company might be actually quite bad for the economy and for the stock market in total. The other thing to worry about is fraud. And every long boom and we've just had the longest ever economic expansion in the US Tends to lead to lots of shifty accounting and financial engineering. And one thing to watch for is a really big company blow up or admit to cooking the books. And in previous downturns, think of Enron in 2000, 2001, this big company that went essentially bankrupt, or more recently, Lehman Brothers, both of those companies kind of leading the stock market down. So that's another thing to watch for.

And in the meantime, we're in a situation where it seems the big companies, and sometimes the profligate ones are being bailed out, where the little guy is really getting the short end of the stick. I mean, how's that playing politically?

It's beginning to cause real friction. And if the distinctive thing about this recession is a lot of public subsidies and government money, but going disproportionately to the biggest companies, you could see a real backlash from the public. And that could ultimately take the form of tougher regulation on big companies or, which seems very likely to me, a higher corporate tax rates. Remember, America's corporate tax rate has fallen very sharply over the last several years. And what you might see is that creep back up as the public tries to, if you like, claw back some of the benefits that America Inc. Has managed to capture.

And up to this point, you reckon then governments are doing the right thing the best they can.

Well, the reality is there's not much choice. I mean, if half the economy shut down and loads and loads of companies went bust in turn firing even more people. Remember, unemployment's already soaring. The recession would just get much deeper and be even more painful. So really, governments and central banks don't have much choice but to shoot an incredible amount of money at the private sector. But it obviously comes with enormous moral hazard and huge side effects and costs that are beginning to become a bit more visible and also generate more controversy.

Patrick, thank you very much for joining us.

Thanks for having me.

For a lot more analysis like this, subscribe to the economist. To get 12 issues for $12 or 12 pounds, just go to economist.com radiooffer. For years, documentary makers in China have understood that without the letter of approval from censors that they call a dragon seal, their work will reach just a handful of people. To get around those restrictions, one respected filmmaker has been quietly distributing his work online.

So we had this extraordinary reaction from film lovers at the end of March because a pretty respected documentary maker, Jiang Nangjie, suddenly started distributing his latest film for free and to strangers who hadn't even asked him for it.

David Rennie writes Cha Guan, the Economist's column on China and is based in Beijing.

So there's a very famous review site in China called Douban. And there's a button that you can push if you've read about a movie that says, I'd like to watch this. And film lovers who clicked I'd like to watch this new documentary that Jang Niangjie has made about this miner's lung disease, were astonished to get a private direct message from the filmmaker with a link to download the entire movie from the Internet and watch it for free. And this caused someone to write a blog post that then got tens of thousands of comments from film lovers saying, you know, my goodness, what has happened to our kind of film industry that a guy like Jang Nanjie is reduced to sending us these films for free?

And what's the new film about?

In English, it has a slightly clunky title, Miners the Horse Keeper and Pneumoconiosis. So Jang Nungjie is a really interesting figure. He's made about a dozen documentaries. He's a serious guy, but he himself comes from a very poor working class rural village in Hunan and his own family, many of them appear in this film. And it's basically about the illegal small coal mines that kind of dodged the official inspectors. And his own father is in fact a horse groom who helps carry coal up and down the mountain. And he shot it over eight years in some really brutal conditions. Often the only person working on it was him with a handheld camera. So you get to Watch these miners climbing up to the top of these freezing cold mountains. They go up in weather so bad that officials won't chase them up there down these illegal mine shafts with terrible safety conditions into their kind of village homes. And then finally, one particular miner who we focus on at the end of the film, who's dying of this fatal lung disease. And it's just awful to watch him because he had kids quite late in life, so he. He turns 50 towards the end of the film, and he has these young children who are sort of watching their own father die in front of their eyes.

And so this is just the sort of thing that would not have got past the censors had he tried.

He's very clear, the director, Jang Nanjie says that if he had asked the censors, they would have either said it's banned or they would have made such deep cuts that it would have made no sense. The film, the irony there, the really painful part is that it's not a dissident film. He's extremely careful that these Min, you know, they're cynical about government inspectors and talk about corruption in the kind of government. But it's not an anti Communist party film. It's just really an extremely plain fly on the wall documentary about the incredibly tough lives of these people.

And what does this tale tell you about documentary making in China more generally?

It's a really brutal environment. The independent documentary making scene in China is in pretty terrible shape. It had a kind of golden age about 10 or 15 years ago, basically because cheap video cameras became available that allowed even kind of artists or writers or poets to make documentaries. But under Xi Jinping, the current communist leader, controls have got stricter and stricter. And so the little tiny windows of freedom that did exist. So maybe a documentary might be shown in a little festival sponsored by a foreign embassy or a consulate, or might be a sort of semi underground screening in a bar near a Chinese university. Those little windows, even those are now getting squeezed closed.

But I guess that's no surprise then. If the censors are busy censoring every other platform, every other kind of medium, then independent filmmakers should expect to feel the same pressure. Right?

They do, and even more so because one of the interesting things about documentary in Chinese modern culture is that it has in the past shown its extraordinary power. Back in 1988, there was a state television documentary actually called River Elegy, which was a surprisingly liberal series about sort of China's stifling traditions and how China needed to embrace the outside world, caused an absolute furore back in the 80s and a year later, during the Tiananmen Square protests, people were still voicing some of the kind of lines from that documentary. We also had a documentary about the terrible air pollution in China back in 2015. A film called under the Dome was viewed hundreds of millions of times and clearly had had the support and help of some very senior Chinese environmental officials. But then the censors shut it down. There is a voice that the Chinese Communist propaganda machine is intended to kind of blast out in a way that excludes all other narratives and stories about China, which is one of the relentless success and patriotism and nationalism. And so even raising questions that the government is supposed to care about now doesn't fit this kind of nannying, bullying, brassy, kind of bossy national narrative of greatness and gratitude to the Communist Party.

And so the filmmakers, even the well known, the well loved ones, are going to have to go ever more underground.

You either go underground or you leave and go abroad, which has happened to many of them, or, or you sell out. And some fairly well known Chinese filmmakers have sold out. And we now see the glossy products of their technical sort of prowess on Chinese state tv. I mean, there's almost an audible tell to the fact that you're watching propaganda documentary. There's this bossy, upbeat, brassy kind of narration telling you that you need to be proud, straighten your back, march behind the red flag towards the glorious future that the Communist Party is leading them towards.

David, thank you very much for your time.

Thank you.

Joe Brown had had, in a way, a number of experiences of little climbs before he did his most interesting and important one.

Ann Roe is our obituaries editor.

He was born in Manchester, brought up in a very hard part of the city. And the best part of life for him when he was a boy was getting out on the moors, messing about in quarries and mine shafts and that sort of thing. So he'd done a bit of larking about scrambling around on rocks. There was one particular climb that he always remembered, which happened when he was 16. He was up on the moors and they noticed a big white plume of water in the sky and wondered what on earth it could be. And what it was was a waterfall which is called Kinder Downfall, which was blowing back on itself with the wind. And this spectacular thing was so inspiring, he immediately thought, well, I'll climb up the rocks at the side of it. It's about a 60 foot climb to the top. It was rather icy conditions. And when he got to the top of it he suddenly felt completely different, all his senses heightened and his life, which had not seemed so good only a few moments before, was suddenly wonderful. And that feeling of elation never went away. He gained a tremendous reputation as a climber and did it really in a very careful and disciplined way that he started off in, in his local peaks in Derbyshire and Yorkshire. He then went up to Wales and learned to climb on slate. Then he went to Scotland to try snow and then fairly quickly he went to the Alps. He only started climbing about 1951. By 1954 he was going to the Alps and he was the first to go up the west face of the Petit Drou on Mont Blanc. He was also the first to go up the west face of the Aiguille de la Blottiere, which was another tremendous spire of rock. And having done the Alpine climbs only the next year, he was invited to go on an expedition to the Himalayas. And he became the first man up Kanchenjunga, which was then completely unclimbed, the third highest mountain in the world, but no one had climbed it yet. He became particularly famous because in 1967 he was filmed on the BBC climbing up the Old man of Hoy, which is a sandstone stack out in the sea of the Orkneys. 450ft, it's extraordinarily sheer.

This is the greatest rock climber in the world. A judgment made by those who have tried to follow the incredible routes he has put up. Once in a generation, perhaps, there comes a man such as this who breaks through the barriers of his craft.

He was in the company of the mountaineer Chris Bonington, who was also fairly famous. And while Chris Bonington went up the more established route, Joe Brown did his special thing, which was to find new routes up well established mountains. It was an absolutely nerve wracking viewing experience. People on the edge of their chairs. 15 million viewers for that. And after that, certainly he became a famous man. He certainly didn't climb to get to the top of mountains. That wasn't the point. The whole purpose of climbing for him was to find new ways up, really, to negotiate round rocks, to get to know the mountain, to try the sides of it that no one had tried before, and to try to go up cracks and across deep aisles and extremely difficult terrain just for the challenge of it. So if he didn't actually end up at the very top, that didn't matter at all to him. It had been the experience of finding a new way up. And in his day job as a builder and a plasterer, he would be holding the mountains in his mind all the time at his favorite climbing cliffs, thinking, you know, what's the new way up that one? Could I just try that crack or that ledge? Because he came from such a poor background, he had really no money to climb and he didn't have much time either. And what was typical of him was that he fitted the climbs into his weekends. And the same was true of the companions that he gathered to climb, because he didn't go alone. He always had a companion or a little tiny team with him and they tended to be working class northerners just as he was, and they were new as far as rock climbing went, because it had been a pursuit for the middle and upper classes, certainly before the war, partly because you needed fairly expensive equipment. You also needed a fair amount of leisure time. But these were people trying to fit rock climbing into their working week. And so he did a lot, he and his companions, to democratize rock climbing. He really found fame very difficult, didn't like it at all. He was naturally quite a shy person. He turned down any request for public speaking, saying that he liked to eat his meals at home. He was just a down to earth fellow. But you know, the money was always very difficult and in a sense, if he'd made more of his fame, I suppose he could have got richer because he didn't have enough money for proper equipment for a long time and was just using ropes that he found or nuts that he picked up on railway tracks. And even when he became more famous, really didn't have the wherewithal to get any fancy equipment to do the climbing. Not that this mattered especially to him, he just loved doing it for the sake of it.

Ann Ro on Joe Brown, who's died aged 89. That's all for this episode of the Intelligence. If you like us, give us a rating on Apple Podcasts and see you back here on Monday.