Wednesday, December 03, 2008

Economic Maelstrom

Economic Maelstrom

The news is all around us - there is no need to reprise it here, other than to say that economic disaster seems to be right around the corner. Today it was leaked that CitiBank is advising their larger clients that massive inflation is the better of two probable scenarios that impend, the other being civil unrest accompanied by worldwide wars. Many financial pundits on the margins are foretelling hyperinflation. American Express reports that the most wealthy of their cardholders are slowing down their spending the most. And the federal government has gone on a spending bender that has never been seen before. What is a person to do to try to sort this all out? What does the future hold?

In times of unrest, first principles are the first to go, when they should be the firmament upon which any logical analysis should be based. So allow me to set a few first principles out. First, we can always assume that people in power, when threatened, have the propensity to do almost anything to keep it. Second, it is always the first reaction of humans to see impending disaster whenever the unusual threatens to occur. And third, even though it may be difficult to see it while events transpire, everything always works out for the best, as all new realities have their winners. Even the Black Death ushered in a period of exceptional wealth and learning, which we now call the Renaissance.

There is no way to know what to do right now. Many are recommending stockpiling gold and ammunition, canned goods and commodities. I say that anyone who is just beginning to do that has not been paying attention for the last decade or more. (Full disclosure - I have been following that advice since 1973.) In our (or any) urbanized and interdependent world, planning for a short period of unrest is prudent, but believing that you can put up enough of anything to provide for security in a prolonged, or even permanent realignment of economic forces is foolish. If things really change, you had better adapt to the new reality fast, since your canned goods will go off on you in a couple of years on the outside, and ammunition runs out pretty fast if baddies want what you've got.

But the first principle that must sustain us in these (apparently) dark times is the fact that crisis begets opportunity. If Paulson and his fat cat friends are about to take a tumble, that makes room for whomever has the brains, luck, and determination to ascend to power positions that succeed theirs.

So, the Zero Base Thinking approach to these troubled times is about the same as the correct approach to most everything else: stay on the balls of your feet, and be able, and willing, to move in whatever direction promises opportunity. Don't get bogged down in any prediction of what the future might hold, but stay aware of what is happening. Be ready to move quickly, but remember that people say and do things to feather their own nests, not yours. Doom and gloom may get pundits an audience, but that does not make them correct, or their predictions true. If America is akin to Weimar Republic then that would have to mean that we are a very minor participant in the world economy. That may sell papers and attract viewers, but the size of the audience is no metric of truth. Like AGW (the global warming fraud) popularity does not make for good prognostication. How many know that global climate has been cooling for years, and no warming has occurred for over a decade? Lies that feed fears move faster than truth, now and forever.