Thursday, April 10, 2008

A Real Headful.....

The most challenging part of trying to be a good, attention-paying citizen, is the sheer volume of stories and information streaming past every hour in the news-stream.

Last night I was reading about how the property market in the UK is tanking. The story there is the same as in many other jurisdictions. Housing prices that rose to giddy heights atop a market awash with cheap money for the first time in ages. Many banks were prepared to lend up to 100% of the value of the house to almost anyone. More careful banks are exposed to loss if they dealt with the less careful banks. No one knows how rotten the mortgage portfolios of any given institution might prove to be. The Economist sees it as the beginning of a bust and details several factors - UK local and global - that have brought matters to a head. NZ's own Bernard Hickey
of interest.co.nz, has made a series of very watchable and informative videos looking at how this plays in our local market.

There are some very large variables operating that could make economic developments in the next few years very different to previous years. Here are just a few. Not in order of priority.

Assuming climate change is underway and gathering pace, what will the effect of that be on food, markets, economies - people? There is plenty of room for global downside unlike anything seen since WW II in simple human terms.

Everyone is waiting for the lethally incompetent George W Bush to finally leave office in the US so we can all get back to running the world on a more sane and cooperative basis again. Fingers crossed. But will it be soon enough?

China will play a huge role in the years ahead. One they have not played before in global history. In earlier times, China was a world unto itself, at times the ruler of a huge chunk of the world's people. Later, China was a broken empire of feuding warlords and easy prey for empire-building European and Japanese colonisers. Now, China is neither insular nor weak.

Population is the issue underlying most others. Climate change is dangerous precisely because there are so many people living in places that may be in danger due to change. If the worst happens and their crops don't grow along the drying Ganges or their land is submerged as the seas invade Bangladesh, where do these people go? What water will they drink? If there weren't so many people, we could just move to the places that became better due to climate change and abandon the places that got worse. Our children would be looking at land along the coast of the Arctic Ocean for the best places to build the beach baches of tomorrow for our grandchildren and beyond. We'd move endangered species to new places and enjoy a warmer, wetter future for all. No problem. Lots of space to go around.

Nice dream. But we aren't that smart or generous.

My brother told me this week about a young Canadian woman in Cuba a few weeks back who thought she could win an argument with the Cuban staff of a charter air operator. They would not let her on board the jet without either paying for the 10kg her luggage was overweight, or removing the excess weight. He says she argued with them for a long time, citing market forces, public opinion, the tiny size of her 10kg....everything. They said they took Visa or MasterCard or cash. They pointed to a nearby ATM machine. She insisted she had NO money. Ok, so they said she would have to remove the excess weight if she could not pay for it. They looked weary and finally suggested she document her concerns and send them to the Cuban embassy in Ottawa. Her boyfriend finally told her to shut up. The other 500 people waiting to board the two jets were with him. She went to the ATM, got the trifling amount of money required and paid for her extra 10kgs.

We'll see similar scenes when it comes time to pay for excess carbon emissions.

Trying to evade the rules and then lying about the money aside, she clearly thought her 10kgs was more important than the rules she had agreed to abide by as well as all the other people there, waiting to board two flights.

Everywhere is the evidence that we doesn't realise how small we are compared to the world around us. We don't understand scale.

It's a common story. It's like happens all the time. Last year, I was involved in a campaign in Ontario, Canada. We had a committee in each electorate and their job was to run the local campaign. Each electorate had roughly 100,000 voters in it. Some committees clearly knew what was required and scaled up to do the job and reach the 100,000 voters. Some others, bless their hearts, thought that holding a public meeting at the local library every week (or two) and inviting the local newspaper to cover it would be enough to get the job done. Attendances were in the dozens, at best, and the other 99,950 were blissfully unaware.

On YouTube, people with 200 subscribers have fun. People with 20,000 subscribers are stalked and go into hiding.

I see this again and again. We have built this big complex world full of millions and millions and millions of people. Meanwhile, most of us behave as though we were part of a bus tour with our friends and family along for the ride. The other people are just part of the scenery. The few who do understand the real scale of things are too often shouted down by the "bus riders" who block any change to the way things are on the basis that they don't see it a necessary. Mainly because they don't know. Ignorance is too often their shield from both change and responsibility.

These experiences shape one's assessment of what the future may hold. So far, any effort to actually deal with global problems has instead seen the wrong problems focused on and the solutions to those wrong problems have been spectacularly wasteful, wrong-headed and counter-productive. Iraq has been very instructive in that regard. Wrong problem. Wrong solution. Spectacularly counter-productive and wasteful.

The lemmings are running. The cliff is that-a-way. I hear their siren call: "Prosperity and success through endless consumption and growth this way! This way!"

Excuse me while I stand aside and avoid the rush. I hope you'll join me. There is so much for us all to learn and think about while we try to rescue those among us headed for the edge, riding their buses, besotted by the call of the siren who promises something out of nothing.

Are you cashed up, holding tangible assets and debt free? It would appear to be the best place to be if times are about to get rough and deflationary in real terms while being inflationary in nominal terms.

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