I will state a cavaet upfront that any and all comments re: economics going forward are gut based likely to be way off the mark. But that won't stop me from making them.
It appears to me that in the short term investor camp there are actually two or more sub sectors of mind sets. The first are probably the more traditional plays of simply finding safe harbor wherever one can during this moment of uncertaintity. There probably hasn't been this much uncertaintity in the markets since the stagflation days of the late 70's early 80's.
The second sub-set of short term investors are those parking money in longer term bonds with next to no yield. There is a calculation that is hard to understand from my gut.
I tend to be a glass half full person. Maybe it helps that I am only 40 and my horizon is still a good number of years down the road. Also we are of an age where we have seen a number of slow downs and bust always to be followed by another period of growth.
For this view to change there would have to be a serious fundamental change in the world economic structure. Over the long term I see the strongest pressures on the world economy coming from BRIC growth and competition (Brazil, Russia, India, China.
In short (is it too late to say that) I tend to follow the long term investor camp. However, I am certain there is a definate period of pain to be endured. Pain that could easily hit our household directly (ie Sears Holding Corp) we tend to bounce back often times in ways that we are not even aware of at the time.
In general, I agree with you. I tend to be contrarian in that I am skeptical when everything seems to be going well, and I guess skeptical when everything seems to not be going well. While there is certainly enough evidence on the side of those who say "it's different this time" (meaning we are in for more pain then in the past and the past is no guide because these are unique circumstances), I can't help but think there have always been periods when people thought that. So I think fundamentally, the idea of a long term worldwide economic collapse is flawed. What I am starting to believe, however, is that the United States has lost its ecomomic/production/intellectual advantage in a staggeringly short period of time, and that the momentum is such that we might never regain it. Look at our infrastructure/education system, and how work is or is not valued in our society and compare it to the rest of the world. I can't help but think that over our lifetimes the concept of the United States being the world leader won't change. And if that's the case, what's that do to our currency and the willingness of foreign nations to continue to fund our consumption?
When you put it into a historical perspective as such. Do we need to look to the last great Western Empire as an example? Great Britian would be the closest model that I can think of.
If that is the model, which I don't know the answer, what does that tell us. A quick running through of my mind tells me that the British empire was probably in decline by the early 20th century and it the successive World Wars that allowed the US to leap frog them on the world stage.
It can probably be argued that there was a short span of time which the US was a defacto Superpower. Probably till the time the USSR tested thier first nuclear weapon. While we were definately the catalyst for growth in the Western World our economic prowess was constantly jokeying with the Soviet bloc.
We have now had about 15 - 20 years on our own as a singular superpower. This time coincides with dramatic (I don't know if they are fundamental shifts)in the worlds economy.
There are definite threats to our dominance. One question I guess, is how much of a zero sum game is it. Meaning is it possible for the US to slide out it's position of complete dominance and still hold its place or does the bottom fall out the moment we no longer hold that dominant position.
I guess the final question is what can be done about it. Is the answer simply an organic outcropping our form of free market capitalism. Gov't can't mandate greatness. Can Gov't focus, inspire, reassure. What is Government's role in not only addressing the current "crisis" but the fundamental purpose of Government at this juncture, this crossroads of time?
4 comments:
I will state a cavaet upfront that any and all comments re: economics going forward are gut based likely to be way off the mark. But that won't stop me from making them.
It appears to me that in the short term investor camp there are actually two or more sub sectors of mind sets. The first are probably the more traditional plays of simply finding safe harbor wherever one can during this moment of uncertaintity. There probably hasn't been this much uncertaintity in the markets since the stagflation days of the late 70's early 80's.
The second sub-set of short term investors are those parking money in longer term bonds with next to no yield. There is a calculation that is hard to understand from my gut.
I tend to be a glass half full person. Maybe it helps that I am only 40 and my horizon is still a good number of years down the road. Also we are of an age where we have seen a number of slow downs and bust always to be followed by another period of growth.
For this view to change there would have to be a serious fundamental change in the world economic structure. Over the long term I see the strongest pressures on the world economy coming from BRIC growth and competition (Brazil, Russia, India, China.
In short (is it too late to say that) I tend to follow the long term investor camp. However, I am certain there is a definate period of pain to be endured. Pain that could easily hit our household directly (ie Sears Holding Corp) we tend to bounce back often times in ways that we are not even aware of at the time.
Found this article after reading the post kind of an interesting tangent.
http://www.businesspundit.com/obama-chief-executive-of-the-creative-class/
In general, I agree with you. I tend to be contrarian in that I am skeptical when everything seems to be going well, and I guess skeptical when everything seems to not be going well. While there is certainly enough evidence on the side of those who say "it's different this time" (meaning we are in for more pain then in the past and the past is no guide because these are unique circumstances), I can't help but think there have always been periods when people thought that. So I think fundamentally, the idea of a long term worldwide economic collapse is flawed. What I am starting to believe, however, is that the United States has lost its ecomomic/production/intellectual advantage in a staggeringly short period of time, and that the momentum is such that we might never regain it. Look at our infrastructure/education system, and how work is or is not valued in our society and compare it to the rest of the world. I can't help but think that over our lifetimes the concept of the United States being the world leader won't change. And if that's the case, what's that do to our currency and the willingness of foreign nations to continue to fund our consumption?
When you put it into a historical perspective as such. Do we need to look to the last great Western Empire as an example? Great Britian would be the closest model that I can think of.
If that is the model, which I don't know the answer, what does that tell us. A quick running through of my mind tells me that the British empire was probably in decline by the early 20th century and it the successive World Wars that allowed the US to leap frog them on the world stage.
It can probably be argued that there was a short span of time which the US was a defacto Superpower. Probably till the time the USSR tested thier first nuclear weapon. While we were definately the catalyst for growth in the Western World our economic prowess was constantly jokeying with the Soviet bloc.
We have now had about 15 - 20 years on our own as a singular superpower. This time coincides with dramatic (I don't know if they are fundamental shifts)in the worlds economy.
There are definite threats to our dominance. One question I guess, is how much of a zero sum game is it. Meaning is it possible for the US to slide out it's position of complete dominance and still hold its place or does the bottom fall out the moment we no longer hold that dominant position.
I guess the final question is what can be done about it. Is the answer simply an organic outcropping our form of free market capitalism. Gov't can't mandate greatness. Can Gov't focus, inspire, reassure. What is Government's role in not only addressing the current "crisis" but the fundamental purpose of Government at this juncture, this crossroads of time?
More questions / thoughts than answers.
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