Hello DJ, I quickly dashed off this top-secret message to you in case this thread chokes on dogma, sloganeering, name calling, and propaganda from the entire political spectrum.
We may not be able to correctly interpret events much longer, if we are not already beyond our predictive capabilities and capacities, even as more information becomes available, because intentions, measures, counter-measures, information, and misinformation are all in a state of flux, and getting more so, especially now that the economy is hitting a soft spot and advancing armor is meeting a hard pocket.
We must figure out a way, a process, to think about what may affect our financial position. We must not default the interpretation of what has happened, is happening and will happen to others with agendas that do not include the protection of our financial position.
I cannot think of a precise construct, and can only describe certain elements that may make up such a construct.
(a) We must take account of exogenous events, whatever they may be, as in arrangements of nature, noting their perceived probable impact on the world at the moment of actualization as measured by the likelihood of these events triggering responses in populations and leaderships. An example would be that the Arabs live next to the Turks;
(b) We certainly will have to take measure of primary and first order responses to exogenous events, namely those responses that are triggered at the onset of exogenous events listed in (a). The responses are categorized and then standardize in description, for simplicity, in order of severity, as in aggressiveness/benign-ness, as in the likelihood of triggering second order responses of same description in the short term, and in triggering second order responses of more severe nature in the longer term. An example would be the Turkey of old, as in Ottoman Empire, absorbs the territory of what is today Iraq, a primary and first order response characterized as moderately severe but not inordinately so given the historical time period. The initial second order response was tepid at best, and grew more severe as time wore on;
(c) We then must figure out the probable range and most likely second order responses, namely responses in answer to primary responses listed in (b). An example would be a bunch of nation-states, and internal/external private initiatives ganged up on the Ottoman Empire, in turn changed its nature, and ultimately led to its crumbling; and
(d) Always the engineer, we also must consider the multiple feedback loops, and the attenuation and amplification characteristics of each and every loop, the rhythmic frequency that triggers non-linear responses of each of the loops, and make a guess at the aggregate affect on the character of third, fourth and … nth order responses.
If we are able to model a construct that takes all of the above (a) through (d) into proper account, we can then guess at what may put us in a better position than we are in already.
Given that I cannot figure out such a construct, and do not even pretend to know what will happen, and even have doubts on the full range of possibilities of what may happen, I do the only advisable act I can, I hold gold.
Having taken care of what I cannot know, I am guessing that …
(a) Saddam will fall because he is bad, unpopular at home, and is therefore weak
(b) A 900-year conflict will not likely end simply because nothing has been able to end it so far
(c) Iraq may not be rebuilt because it may not be manageable, especially if the US troops are pulled out and not replaced by troops from other nations of equal conviction
(d) US military influence may extend and plant itself solidly in the midst of a 900-year old conflict, or may leave the region
(e) Many more nations will try to produce nuclear weapons and delivery capabilities, some will succeed
(f) Alliances will be realigned and new alliances will be formed
(g) Globalization will be deformed
(h) An age of less rules and more weapons is upon us
(i) The financing of such an age will be progressively more stressing
(j) Taxes will rise, currencies will fall, inflation will go high, and economies may go stagnant
… and I repeat my earlier guesses …
Message 18105328
October 11th, 2002
… Currencies? Hold a bit of each, and shuffle as they grind against each other.
I suspect that the big picture frame has been constructed already and we can see its outlines very clearly. What remains to be spotlighted is the picture itself, with all its gory details. I suspect that:
(a) The US will still, due to its debt powered locomotive role, remain the consumption capital of the world, and forced to remain there until its balance sheet is totally ruined and its boomer retirement completely cancelled by the fact that all the world will competitively devalue against the USD and cycle back the trade dollars with gusto, buying assets and liabilities, collecting returns off the backs of retirees wannabies working 60 hour weeks;
(b) The US will export soldiers to keep the peace until overwhelming exhaustion;
(c) Japan will continue to bleed productive capital and passive wealth, supported by old folks’ bank accounts and domestic companies looking for a globalization edge, via outward bound foreign direct investment, depreciation, devaluation, and portfolio flight;
(d) China will continue to aggregate capital, invest in infrastructure, do structural reform, and build factories, until all productively employed at better than current domestic pay rate but lower than international compensation scale;
(e) Arabia will continue to export oil, until conflagration, technological obsolescence, or exhaustion;
(f) Russia will continue to act as a counter-balancing stick in a uni-polar world, either recover fully or break up completely;
(g) Europe will continue to enjoy its 35 hour work week, olive groves, ski chalets, out door cafes, and immigrant cheap labour, supported by a world printing plenty of cash, thus allowing socialism to thrive;
(h) Latin America will continue to live from financial crisis to political emergencies, supported by occasional capital injection by global banks;
(i) Africa? Simply not clear; and
(j) Australia/Canada will continue to dig and live off the bounty that nature provided.
Why are we at this juncture, on this particular cusp of what may be an abyss? Because of some exogenous events, some primary and other secondary responses, a wallop of amplified and a dollop of attenuated feedback loops.
In any case, stocks and bonds are valued too highly under the circumstances.
Chugs, Jay |
