Thursday 31 December 2009
The last 18 months in particular was evidenced by a constant attack on the ‘Western Capitalist’ model, due to the deep and prolonged recession, set off by the Credit Quake of 2008 – 2009.
As it is a ‘Quake’ and not a ‘Crunch’, we have and still are experiencing aftershocks of varying magnitudes.
However, the irony of economic activity is the dichotomy the theory and reality actually presents us with.
If we focus on just one of these little ironies, it is the story of scale.
Economic theory would have us believe that ‘Economies of Scale’ is desired as the Total Cost curve is lowered, thereby maximising profit at the point where the Total Revenue curve is at its apex and the Total Cost curve at its base, with the gap in between representing profit.
Yet, with banks being “too big to fail”, this flies bang in the face of the economies of scale theory.
Therefore, there is a delicate balancing act and a ‘Stakeholder’ management approach that we need to follow and implement in the years to come, in order to address one of the inherent weaknesses in the way in which we have managed and controlled the capitalist economic system.
Don’t get me wrong on this point though, I am still arguing for a Libertarian approach and philosophy. What I believe the problem is that the libertarian philosophy is watered down and contaminated; thereby diluting and distracting focus from its core principles, thus rendering it merely an aspiration rather than a true and meaningful alternative to a more politically controlled socialist approach to economic life.
One of the goals and aspirations I have with this blog is to inspire and educate, thereby encouraging a constant questioning of the status quo which will hopefully lead to a change in mindset and economic growth “so that we can encourage the growth and development of sustainable human endeavours ...”, as the concluding sentence in the header to this blog page testifies.
To this end, I wish everyone a very prosperous and happy start to 2010, whether it be the end of the first decade of the 21st Century or the beginning of the second decade...
Let 2010 be the year in which we encourage more equal and equitable access to markets for all willing and able participants in the capitalist market mechanism. However, let us all have tolerance and respect for the points of view and practices which do not encourage a truly libertarian philosophy and approach too. It is only in sharing and respecting that we will all get along and make progress somehow.
theMarketSoul © 2009
Friday 25 December 2009
Most of my musings on this web log is focussed more on economic themes and ideas. However, today I want to turn my attention more to the value question related to corporate structure and the importance and significance that structure can play in change management and the behavioural aspects around a corporate restructure.
Monday 14 December 2009
As an eternal student of economics I remember reading Samuelson & Nordhaus's 'Macro Economics' as an undergraduate commerce student. Terms like "the paradox of thrift" will remain with me until I too will grace the equivalent of the Viking's Great Hall of Warriors in Valhallha...but first I must find my 'sword of doom' to wield in battle against other greater minds on this battle field for the ground-swell for knowledge and understanding in the arena of Applied and Behavioural Economics.
From 'Analysis to Synthesis' is my current battle cry. As a Behavioural Profit Mechanic I have through subtle means tried to persuade traditional accountants to appreciate the 'Art of Accounting' versus the science of the purely technical application of their chosen vocation.
Statements like 'dancing around the cauldron of the monthly management account stew' are completely misunderstood and construed as a maverick's flight of fancy.
Yet analyse the deeper meaning of that statement and you will discover that I am battling against the 'tyranny of the status quo' by creating a visual metaphor for a totally worthless exercise of chopping the financial story-board into these artificial time frames called calendar months, in order to create or colour a picture of financial performance. And yet every management accountant will have to come clean and confess to the most dreaded phrase of this tyranny...'Let's just accrue to budget'.
Any guilty consciences out there?
I for one will admit to in the past having fallen victim to this practice...
theMarketSoul (c) 2009
I look around me see if there are any economic lessons to pick up on, as our laboratory is a constantly seething, bubbling cauldron of activity. Yes, off course I am referring to the laboratory of the experimental, behavioural economist...
And the answer to the question is a resounding yes.
An airport transit lounge is a hive of commercial activity. A few are individual travellers, pairs or family or loose- family groupings. Some are grumpy, happy, tired, confused (you obviously spotted me in the crowd) and a range of other states of being.
Everyone knows they are only there for a specified period of time and are desperate to avert the chasms of boredom enveloping them.
Hence some clever people invented the 'Duty Free' shopping experience. What a great way for retailers to boost their profit margins, whilst making us all believe we are saving money because the sales (or consumption) tax has been removed?
We are off to another transit hub, where they introduce another twist in the tail - the foreign exchange issue. Better leave your calculator behind and trust in the information asymmetry of the estimate conversion factor...
theMarketSoul (c) 2009
Thursday 3 December 2009
- Lack of the correct language being used
- Lack of an understanding and appreciation of the free market system in general
- Lack of a differentiation between mechanistic systems and human behaviours (partly stemming from a lack of the correct technical language being ustilised) [The morality of the market vs the morality of people (also referred to as agents) operating within the market]
- A lack of appreciation and understanding that economic value and measures are not monetary related, but that money is a subset (via Monetary Economics), within the wider discipline of Economics.
Monday 30 November 2009
Moving swiftly on to the next paragraph...
What struck me most about the trip was how different the atmosphere and people were in Ireland. Now I only spent time in the Ballsbridge area, very close to the old / new Landsdown Road stadium.
We won't re-visit the 15 - 10 defeat the Springboks suffered on Saturday at Croke Park against the 6 Nation champions Ireland, except to say that it was highly insensitive to the gorilla bands of Springbok supporters scattered all over the sports bars and pubs in Ireland to screen the match again during the time that they needed to drown their sorrows in the national dark liquid... Personally, I blame the mist and fog over Croke Park for this latest installment on our misadventure of an autumn rugby tour.
However, the three things that struck me most about this flying visit was the fact that:
1) It rained a lot in Dublin and the wind made it quite bitter and cold,
2) That even if people speak the same language as you, there is always the possibility that you won't be able to understand a word they are saying and finally,
3) I can't remember a single thing, because I must have been blind drunk for 23 hours and 12 minutes of this trip. (I needed the two hours to sober up at the airport or be put off my flight).
Therefore to conclude: It must have been a good trip, otherwise I would only have remembered the bad bits...
Have a good rest(ing) of the week.
I certainly need the recovery time.
theMarketSoul (c) 2009
Saturday 28 November 2009
Seeking Success Stories of NOT Looking at One's Personal Email at Work
There is this odd shaped device next to my computer that emits ringing sounds every so often. I try to use that to contact remote people.
Then I discovered these two appendages below my body. Apparently I can use them to get up from behind the desk and walk over to someone in the same building and get them to do things for me or share information with me. I found that utterly amazing!
I use that email thingy only to transport files across the network to people who might not have access to secure folders or servers on my end.
I discovered real people, with real lives and interesting tales to share this way.
Someone actually confided in me the other day that this is what life was like in the early to mid '90s.
It sounded great and I think they lived on a nice planet back then.
The other day another amazing thing happened. Somebody actually came to see me! I think I might have a convert here....
* * * * *
I will be very happy to receive comments and examples of similar experiences as part of my research for an article entitled: "The loss of civility in Corporate Communication".
theMarketSoul © 2009
Friday 20 November 2009
Sunday 15 November 2009
Sunday 8 November 2009
Tuesday 3 November 2009
The rest is a matter of degree (or weighting) attached to the forces influencing these battle lines.
What I mean is this:
Civil society values stem from classical liberal and now more accurately libertarian philosophy, which advocates:
1. Minimal government
2. Private property ownership
3. The rule of law
4. Minimal taxation
5. Personal responsibility
Political society has a different approach and view of the world, with at its core a desire to achieve 'social engineered' outcomes, via increased government mechanisms and interference in free or 'free-ish' markets and its focus on behavioural aspects of human (and market) interactions.
It is this tug of war between the two groupings that then creates opportunity and opportunism (which for good ends or bad) gets exploited by unscrupulous market participants as they know that the reach of the 'rule of law' falls well and truely short of creating a guiding 'moral compass' or what I refer to as 'The Market Soul' © 1999 – 2009.
The Market Soul is in essence an inner guiding principle which springs forth from the well of higher levels or awareness of our own Spiritual and Emotional Intelligences.
A new book to be published soon by Dr Lieselotte Badenhorst entitled "Loony Intelligence" explores some aspects of these cognitive intelligences better.
To return to the issue at hand, which is that the Free Market is flawed, I would argue that in the opening gambit the argument is flawed; that the Free Market is not flawed but does require an injection of a moral and spiritual guiding compass, something referred to in the original article as: "for companies to start[ing] to embrace corporate ethics is their leader 'getting religion'."
The system is not perfect, but the degrees to which political society and civil society shape and draw the battle lines between how and when governments interfere, how to regulate effectively, how to encourage personal responsibility, either by 'socially engineering it' or 'farming it out to the market', how to pay for this system (fair and equitable taxation) and the framework within which we operate, 'the rule of law', is what will shape and inform the agenda in the near to medium term future.
The outlines of the debate and agenda is only now beginning to take shape, but in the meantime the unscrupulous agents in the market are making hay, whilst the attention is distracted or incorrectly focused on the wrong areas of trying to deal with the fall out from the crisis and the way in which we will deal with the mountain of debt still coming at us like an ever increasing
Idea Merchant at theMarketSoul © 1999 - 2009
Original article referred to in the above posting:
Thursday 29 October 2009
Wednesday 21 October 2009
All we are doing is buying time, (in essence restructuring the principal debt burden) and deluding ourselves that the fundamental problems have been solved. Which of course is not the case.
I think Paul Samuelson defined economics in one of his textbooks as “...the study of scarcity...”
Yes, the crisis was born out of the scarcity of liquid funds or assets, but a large contributor that became a key driver which exacerbated the crisis was regulatory driven, especially the misconstrued IASB (International Accounting Standards Board’s) IAS39 Financial Instruments: Recognition and Measurement standard.
Remember, money or monetary values (currency) only act as a proxy or crude measure for the ‘real economic’ measurement of value and output. At a basic level we have been experiencing a large equilibrium shift away from the traditional factors of production (land, labour, capital and technology & innovation) and the holders or owners of these factors of production, to a fairer distribution and access to these factors of production.
When the equilibrium cannot be maintained at a specific unsustainable level we experience some form of ‘discontinuity’, such as the current crises we are experiencing.
In the old Western oriented G8 or now G20 democracies (and one or two new monarchies throw in together with a quasi-communist regime for good measure), the old G8 leaders thought they were immune against the odd banking crisis . Recall here the Asian Crisis of 1997-1998, the Russian Financial Crisis of 1998, the Argentinean default of 1999; all minor disturbances in the developing economies which did not affect the West.
However, with ‘The Great Moderation’ (thank you Ben Bernanke for that one) so recently behind us, the Great Credit Quake of 2008 – 2009 suddenly meant that the entire G20 club and beyond were dragged into the quagmire.
Therefore, my belief or opinion is that we are still in the midst of a major equilibrium adjustment and the ‘step down’ or up from the previous level will continue to be uncomfortable for many years to come. Asset classes will continue to try to find their new sustainable equilibrium valuation levels, and the stoking of the fires by governments with sovereign debt will only continue to contribute to dragging on the crisis for longer.
Ultimately, the market mechanism did not fail, but a few key players within those markets failed spectacularly. Pumping more liquidity into the system will NOT heal the moral hazard created before and now supported by the current interventions.
Growth is rightly touted as one of the mechanisms by which we get ourselves out of this crisis, but I can see two other unpopular tools at our disposal, one being raising tax burdens generally and the other lesser of the two evils being inflation.
Shall we jump, or wait to be pushed?
The Market Soul © 2009
Sunday 18 October 2009
Monday 12 October 2009
Sunday 11 October 2009
This will be the title of my next series of articles. For when I grew up, we lived in a straw hut in Africa, with cow dung smeared on the floors to serve as insulation or to keep the snakes away; I can't quite remember anymore.
My children don't appreciate the sense of history and perspective that living in the 'civilised' world affords them, because for cultural entertainment, we had to watch the Dung-beetles mate. What start in life was that I ask you?
Anyway, I digress.
A lot of business life is like chasing, or at least wiping off the muck and dung that life throws at you. Dung smells and so does money! And a great deal of this mucky stuff is pretty sticky, therefore dealing with the mucky stuff can be made so much more tenable if we are able to deal with the dung in the way the Dung-beetle manages to deal with it.
These (muck scraping) thoughts will be developed further...
If you are interested in hearing more about it, please post a comment.
theMarketSoul (c)2009 & Idea Merchant
It will be short and sweet. It is a note about persuasion and the art of keeping stakeholders on board. If anyone knows the secret, then please let me know.
I am searching for the elusive ingredients. And the stewing pot of persuasion.
Saturday 10 October 2009
Sunday 4 October 2009
Which was entirely a side track to the real intention behind this posting.
‘The Ice Age is Cometh’ was an article headline in the Radio Times edition of 16 – 22 November 1974. I friend of mine came out with the rank smelling edition of the Radio Times of late 1974, that he discovered stuffed in the chimney breast of his new home. Stuffed in that chimney-breast to obviously keep the cold draughts out, as according to the subtitle the next 1,000 years could be very, very cold, with an advance of the polar ice caps and glaciers. Did I blink or something? I will challenge the BBC to dig out the programme aired in the week of 16 – 22 November 1974 on BBC 2, so that we can be reminded how quickly the agenda and the focus can shift, if we take our eye off the ball and let information asymmetry spin the agenda out of our control.
And I suppose we cannot deny the evidence currently in front of our eyes. Polar ice caps are retreating, which is true if you focus purely on an evidence based approach to trying to understand the wider system. But do make your observations and emotive arguments from within the system, or do you need to step outside that system in order to be more objective. And what about intuition? On a purely intuitive level I believe the earth of GAIA is a self correcting system but we do not have enough evidence to conclusively prove this assertion.
So, in the meantime, we swing one generation to the next, waiting for the ‘Information Assymetrists’ (yes my new made up word de jour) to set the agenda and the morals of the market.
As a soul in this market arena I just keep on being amazed, day in and day out. Please just give me the ability to take the long view…