while I'm waiting for some processing to complete, I'd like to offer my assessment of another of the storms approaching - the world financial situation.
For some time now, as a portfolio manager, I have felt the economic and general business structures in the world are insufficiently stable for long term sustainability. The reasons are many, but certainly the whole shareholder short term maximisation philosophy is a strong failing.
I expect it will all collapse, but not in the near future. The reason being because coming out of the 1990's the international business community put in a big effort to fix some of the immediate problems. I may touch on these another time. So in the short term, I am looking for a serious meltdown, but not a complete collapse. And I keep watching for the indications this meltdown could occur soon.
It nearly happened with the Asian crisis, then again with the 11 Sept crisis. There have been more since, but not as serious.
Now we are faced with the US sub-prime loans crisis caused international credit crunch. World share prices have been extremely volatile. One reason for this is that there are so many now who play the rises and falls on the stock markets, that they amplify the volatility.
The big question, is is this crisis sufficient to push the world into a meltdown? i don't believe so, even though the US looks very doggy, especially with inflation in both US and China on the increase - meaning the Fed's hands are restrained in its ability to use interest rates to pull the US out of a nose dive. Strong reasons for a recession in the US through next year.
The really interesting thing, is that with a controlled effect in the US (ie, not all happening in a bang) the rest of the world is discovering just how little it now needs the power of the US market to sustain international growth. China, India and the EU are now huge internal markets and rival the US in economic size and significance. There is little to match the US in its sophistication and single country market size, but it is becoming increasingly economically irrelevant.
There are political consequences of this. I expect the US's time in it's unilateral world scene is now finished - what could have been done, and what wasn't done... ah well.
We haven't seen the end of the sub-prime fall out, in the US or internationally. I don't expect it on its own will deliver the knockdown blow, but it has weakened the world financial markets, even though it has not flowed across into the 'real' economy of most countries except US, where consumer confidence and employment levels are beginning to show consequences.
But should another major problem arise at this point, then we are in for strife. What could that be? The inflation problem is growing, but most analysts think that can be carried. There is always the possibility of a major storm or earthquake, in some financially critical area. Then we have the political instabilities of China and Pakistan.
My concern is the US bombing of Iran. I know they want to, but I expect the new faces in the advisory positions of the White House are yelling caution especially during this sub-prime instability. We know Saudi Arabia and Israel are pressuring Bush to level Iran's military and general power functionality, before the US leaves Iraq, or the mess there will be far greater than it already is. I really do expect Bush will have to do it, madness tho it is - he just will not tolerate leaving office with a nuclear Iran in power in the wider Middle East.
That will blow the petrol prices out of the water, and bring the whole card pack crashing down. Unless he holds off till the Financial markets are stable again, and even then talk it through so the markets are ready.
The reason I raise this economic instability issue, is because although the tsunami on the horizon is Global Warming, it is the combined impact of more than one catastrophe at the same time, that is going to bring about a total collapse which will leave us wandering the hills. So more than ever now, we have to watch the sub-plots as well as the main one.
I am not alone in this concern of a multiple 'perfect storm' event. Big business is also gearing up on how to prepare, and there have been some notable books. We should also be alert to the wider world scene, as it is coming under pressures now in ways it has never before in human history, except way back in the ice-ages.
my processing is finished - i'm off.