Markets relationship to peace and terror!
<Ike in response to some questions>
Present levels of global markets are based on peace dividend. You take the peace dividend out and global economy will come to a stand still! Global economy which is represented by DOW 10,000 plus is a sign of the vitality of human race and its ability to regroup, reemerge from devastation and recuperate from ashes of desperation. Economies of nations who slit the throats of humans like lambs are bound to go through a process of fragmentation and disintegration. Their only chance of survival is to either shape up or ship out. Reality check for pariah nations on one hand is a new ‘elan vital.’ Oil rich nations with a lot of wealth but which are suffering from real term ‘intellectual poverty’ are now required to integrate with the progressive new world--- a multi-polar world where basic human rights and equality of gender is respected and this is a dawning reality. All kinds of devastation in the past have brought new exponential growth rate of innovation and human prosperity. Walk into wasteland of Afghanistan and one would appreciate loaf of bread and drop of clean water. When human constructive will succumbs to desires of megalomaniacs like what we saw in Afghanistan, societies simply disintegrate and degenerate.
People ask me why I don’t trade markets with that pre 11th Sept vigor. I tell them my markets are taken hostage by few destructive minds. Until these men roam free we are all at risk, get hold of these men, get them, try them, and send them to a hole and our earth will once again become a safer and better place to trade and enjoy.
Humanity has sadly paid a high price but there is a positive aspect that humanity has learned from its experiences and has moved on. In this time and age we stand on cross roads , where, on one hand, there seems to be a path of irreconcilable differences between ideologies and on the other, a liberal way that ensures the long standing precept of live and let live. The global markets are a sum total of trust, respect of life, human productivity and tolerance and all of these factors are properly and efficiently priced in the markets. Take some of these factors out and markets tumble. Terror and markets cannot co-exist, political will to up root terror is our best chance to ensure continued prosperity on global scale and avoid mass poverty and destruction of societies that have flourished as a result of trickle down global welfare affect.
The most frequent question I’m asked is how are global markets related to continuation of the pre September 11th trend of a connected world? The world since the 1990 fall of communism has seen a gradual increase in trade, commerce and prosperity that naturally has impacted the levels of markets globally. This peace dividend has contributed to the Bull Run that we saw from 1995 to 2000. If peace and connectivity of the world is threatened we’ll see that the present level of the world markets are unsustainable. The basis of a 35 trillion dollar global economy is founded on the assumption that free trade is the name of the game and capitalism, human trust and respect of life is the universal system on which various global economies will interact with each other. Capitalism, pluralism and ‘live and let live’ are the primary dictum of prosperity in today’s age. Take these factors out and you are inviting the vandals in with the associated mass destruction.
Events like September 11 threaten the very fabric and building blocks of the world economy. The sensitivities of global economy incase of repeat incidences are very high. Any terrorist instigated major incidence in the future can result in massive erosion of confidence that can lead to implosion of global economy. This, in turn, can cause and accelerate the descent of global economy into an economic ice age. Closed systems represent total anarchy and death. The attack of 11th September was an attack on the entire human capability of production. US being the oasis of global economy and its main stay, any attack on US economy that undermines its capacity can impact the entire global economy. From Europe to China and from Latin America to Greenland the impact of a slow down based on confidence erosions can be devastating. Hence, the doctrine that the present icons of new global uncertainties should be checked and flushed before it is too late is emphasized on. It is imperative that a continued non-stop political will and human effort by the global community should demand eradication from this new emerging threat to global economy.
I would assume that the 1980s cyber age in terms of historical progress of humanity is as important, if not anything more, than the inception of industrial age in 1750, when the use of inanimate sources of power allowed industrial man to transcend the limitations of biology. Even if we go much further back in pre historic times the present transformation is no less an important epoch as transformation of savage Paleolithic hunting man to domesticated Neolithic farming man. These three eras are fundamental important transformations in human history. With the industrial revolution the steam engine was a groundbreaking invention. By converting heat into work mankind in the industrial age, man was able to exploit new source of energy. British steam engines in 1870 had the capacity of 4 million-horse power that was equivalent to the power generated by 40 million men although their population was only 31 million.
Today with a population of 5 billion, the world sits on knowledge-based economy of more than 5 trillion- trillion-horse power, which is nearly 1000 times the productivity of the early industrial age. The population required to produce this kind of output would need 520 trillion bushels of wheat. This is beyond the physical limitations of world productive capability but the reason we can sustain these kind of energy levels is because of economy which is based on knowledge that seems to have no physical barriers.
Today, knowledge and connectivity has extended the frontiers of global economy to new horizons and underlying strength of these new vistas is knowledge, peace and connectivity. All these three ingredients which form the basic fabric and pillars of global economy are threatened incase of uncertain terror based environment. All these transformations from pre historic times to present age had one unique factor and that was that the intensity of savagery had been reduced. Human beings surely but gradually transformed from savages to higher level of understanding and skills. Undoubtedly, there have been events in the last millenium that may indicate that all seemed to have been lost for humanity. Massive atrocities were conducted in the name of war resulting in mass annihilation. However, the world always found itself due to its innate ability to recuperate and to get back on its trajectory of growth and development.
Once again, today, with new opportunities we find ourselves grappling with new challenges and threats where the hidden enemy is the ‘savage cave man’ with a puritan agenda, once more, out to devastate the great human progress. Humankind has progressed for centuries and milleniums from cave and Stone Age to age of enlightenment. What an irony! We are now being dragged back to the cave age, which some humans consider as paradise regained. This is a bitter tragedy, which is extremely hard to explain. A revolution that is instigated by ‘full stomachs’ initiated by a new breed of revolutionaries loaded with $’s, unlike Che Guvera, is also a classic new brand of revolution of present knowledge based society. It is reprehensible, as it is not initiated by need of ‘food or want’ which are a more civilized form of dissent and basis of revolt. The reason of ‘proselytizing’ the entire world to their ‘firebrand version of extremism’ that stops at nothing but taking humanity back to cave age and age of ignorance is antithesis of revolution. It is rather a counter-revolution. No civilized person can accept it or support it. Empty stomachs bring a better convincing revolution, overfilled Rolls Royce based Jeddah Palaces originated revolutions are duds. The best they can think of is evil genius of running planes into buildings filled with innocents. It is this sick mentality that threatens the very peace we cherish so much, boredom and lack of thinking ability leaves them more to cherish the life after death with 72 imaginary houries than this beautiful phase we all are bestowed to enjoy.
It’s very difficult to quantify the impact of a closed world on a system that has exponentially flourished since 1990 when a huge peace dividend was injected into the global affairs with the fall of the Soviet Union. The corner stone of global prosperity is based on human resilience and human productivity. These two factors cannot stand uncertainty. When uncertainty is added into this equation the results are bound to suffer.
The cold war and drawing of iron curtain retarded the prosperity of Europe for atleast four decades. Even after the fall of the iron curtain the inefficient economies of the east have proven to be a drag on western European economies. The case example is west Germany where after spending hundreds and millions of deutsche marks on east Germany, the east German economy still remains mired with structural problems. These structural problems and inefficiencies find root in the social system, which was practiced, in eastern Germany. It can be argued that how did the same stock of people post second world war traverse on two entirely opposite trajectories. The west Germans due to their system based on ‘freedom, openness and respect of pluralism’ became the strongest economy in Europe. Whereas the ‘closeness and lack of incentive’ offered in the east led East Germany into a decline that even after huge assistance so far has been uneasy and an uphill task to tackle.
Economy is a science that has renowned notoriety of being known as a subject where two economists really agree but one thing on which every economist agrees is that economy, very simply put, is a subject that explains human endeavor and human ability to produce based on incentive. Take endeavor and incentive out of the equation and economy of any nation inevitably suffers. If we extend this definition to our whole global civilization you will see that the strength of our global economy is reflected by the collective endeavor of the world populous. Peace encourages human endeavor and endurance and hence improves per capita productivity at all levels. War takes all this away.
Nations hit by war, as history has shown us, are led into a cycle of fragmentation, economic decline and end of productivity. The Weimer republic post World War 1 was one such example. The present day examples are countries like Iran, Afghanistan and Somalia. All these countries have suffered from war and as such lost great deal of economic ability to produce and this lack of production has led to decline in national production and associated hyperinflation. These examples highlight the toils of war and violence on national economies. On a global level the peace dividend has huge ramifications which cannot be understated. The present 35 trillion dollar global economy cannot function and stay at this level if fear, war, terrorism or any other negative measures become a norm. This may lead the world to be divided into distinctive blocks of free and closed societies.
The world we live in today is not the same world in which we lived in the 1980’s. In terms of connectivity we are very well connected. The knowledge revolution has taken over the world. On one hand, it has offered opportunities of prosperity and increased wealth for nations. On the other, such revolution based on openness and pluralism has elevated concerns in closed societies that their very way of life is threatened. This has definitely given rise to new kinds of threats to the global system- Threats which are based on ideological Puritanism. This kind of threat is far superior, as it respects no conventions of strategic engagement. It has the ability to divide the world into two distinctive blocks because it calls upon the faithful to defend citadels that have long lost their vitality. The new process of enlightenment and renaissance within that half of the world which missed it in the 16th and the 17th century, finds it’s roots in connectivity of the world. The interconnected free world based on pluralistic values where two parts of humanity- that is man and woman- share equal rights, is an alien thought to these societies who have jealously safeguarded their closeness over centuries. On one hand, these societies emphasize on education and want to selectively choose the benefits that the open world offers their countries. However, on the other, they wish to maintain their old system of closeness, inequality and lack of pluralism. It is this contradiction that spews anomalies in shape of master terrorists.
For global economy and markets to prosper and reach new heights it is necessary that terrorism fear, uncertainty, and other negative factors be eradicated. Not only will that bring people closer together but it will also promote good will and peace, which are essential for a stable and progressive economy. The inverse relationship of markets with uncertainty and terror is well established. A renewed bull runs need these new post 11th Sept factors to be addressed with a renewed political will that these icons of terror would never be allowed once again to hijack the peaceful coexistence of global communities. This peaceful progressive existence makes our ‘mother earth’ such a beautiful nice place to live in, it is our collective duty not to allow some demented, senile thinking individual to steal this beauty from us. |
