Wednesday, May 20, 2009
If the Clarion Content was a doctor, and we were checking the condition of a patient, and that patient was the world economy, we would be (still) quite concerned.
Mind you we are nowhere near as qualified as the doctor to be making a diagnosis. But in the root of diagnosis is gnosis, an ancient Greek word for knowledge, particularly of a visceral or spiritual kind. In the immortal words of Jay-Z, "I ain't passed the bar, but I know a little bit." Likewise, said the non-economist to the doctor about the world economy.
We still believe that in the big picture, the last six or eight weeks of relatively optimistic news will come to be seen as the dead cat bounce. Hence we are worried. On the one level we are loathe to even discuss it, because the vortex generated by bad news and pessimism is at the center of the vicious cycle deflation hawks fear. Bad news leads to pessimism, which leads companies and consumers to further slow spending, which generates more bad news. And deflation hawks remain, two of our best placed financial sources; one CFO and one fund manager, both see tons still to be worked out of the financial system, especially on bank balance sheets. This unresolved and tangled web of debt will and is exerting a massive drag on the economy.
Our view sees the sweep of history as a tapestry, a tableau always in motion, always being created. Actors from all different planes influence elements of scenes dynamically, everywhere, ala the butterfly effect. As Alvin Toffler put it, "The power system in any society is subdivided into smaller and smaller power subsystems nested within one another. Feedback links these subsystems to one another, and to the larger systems of which they are part. Individuals are embedded in many different, though related, power subsystems." We especially like the tapestry because it encompasses a sense of the fourth dimension, it comes into being over time. As the Clarion Content remains sour about the state of the economy, inevitably then our worries about the world economy bleed into concerns about world political stability. Times of great economic stress bring times of social stress.
Two thoughts about the stitches that are being sewn in the tapestry even now. In unintended homage to Don DeLillo who in the inspired novel Underworld recognized the deep links between sports and politics in America: 1) the industry of professional sports in America is about to get its comeuppance, and 2) President Obama is being presented stark choices: pragmatism, progressive policies, or the old line left. Each conjuncture, sport and presidential course setting, presents opportunities and challenges. The point of departure, in history and tapestry, is where things have come thus far. The biggest stress points, as Obama has recognized, are enablers of tremendous opportunities for change. Great (and terrible) things can be done in an age of flux. Things can and do happen that are not possible in more stable times. Hopefully the czars of sport and the athletes realize this in time. Hopefully, President Obama plots the right course. The tapestry is being woven daily.