In a little more than a few months the world has changed more than one can remember: A financial collapse with a slice of Wall Street gone. Impossible. A governmetn bailout of – would you believe- Wall Street. Paulson arguing that regulation is needed to stabilize the financial system. The global economy in recession, and it seems like it’s not the garden variety. It could be a depression. The election of the first African-American as President of the United States and an eoch changing shift in the electorate. The auto industry on the brink of bankrupcy. Birmingham, Alabama bankrupt. One does not know if we should buy on a rumor, sell on a hunch, or hunker down and hold. The markets are always looking forward and what they seem to be indicating is that we are now in for and have been in a bear market for most of the past decade. On average, these last 15 years or so we have a new administration that is likely to reside over a depression, bear market, major industrial bankrupcies. Welcome to the Global Economy.
November 19th, 2008 at 7:11 am
I’m looking at the silver lining. It should be “Welcome to the Global Economy!” – let’s be upbeat.
Governments bail out banks and let them carry on with the same practices that got us into the mess in the first place. Taxpayers realise this and demand greater regulation, they demand that those governments use their majority shareholding powers to lean on banks to pass on reduced interest rates, to stop charging on overdrafts, to refuse to invest in arms manufacturing, in corrupt regimes… There’s immense potential for change for the good, rather than just robbing the poor to pay the rich to carry on their unsustainable ways.
Yes, markets will change, and yes no-one knows how bad the situation is, and yet that has created a “phoney war” where people are hunkering down and waiting – but if that brings an end to unsustainable consumption, unsustainable investments, deferral to the privileged class because “they know best” – then bring it on.
November 19th, 2008 at 11:26 am
This is all part and parcel of the world trying to find stability since the end of the cold war. A world full of booms and busts — both economic and political. Until a new global balance of power (based on military, economic, techno, & socio-political/soft power) arrives, we are in for a bumpy ride.
Good news is there will be many opportunities and positive changes as we ride/figure this out.
November 19th, 2008 at 8:34 pm
So is this destruction creative enough, Mr. Schumpeter?
You forgot global warming, but the intersection of so many trends (crises if you will) absolutely provides the opportunity and necessity of dramatic change. The challenge for Obama, the American people and the world is developing a mega-theory big enough to see how these all interrelate, rather than addressing them piecemeal. What is the new reality, the new paradigm? Straight-line forecasting isn’t going to get us out of this soup.
November 20th, 2008 at 1:31 am
Wall street and derivatives, Auto manufacturers and fuel inefficient SUV’s, Banks and subprime loans, the Republican Party and Bush — these were all self-inflicted wounds. In every case an intelligent layperson could have told them they were headed for trouble. And in every case, they were looking for short-term gain in long-term businesses.
I’ve been reading Warren Buffet’s biography and the secret to his success is to understand the businesses he’s buying, have good management and be in it for the long term. So I’d say the answer to Zoltan’s dilemma is hunker down and hold unless you have the cash to buy on good information, not on a rumor.
November 20th, 2008 at 10:36 pm
“And in every case, they were looking for short-term gain in long-term businesses.”
Oh, hit the nail on the head!
November 28th, 2011 at 8:11 pm
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December 1st, 2011 at 11:31 pm
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