Category Archives: 1 Perspective

Will truth win over power soon enough?

Although this question crossed my mind in the middle of October, it kept recurring in a range of areas. For those seeking system change it is core to the philosophical question of whether humanity can adapt to systems based on love and sharing instead of greed and fear. While that thought may not bear much reflection for us in our busy lives, and may even be annoying, it is strange that practical implications of the consequences of this primitive mindset coexisting in our high tech world should present themselves in a few weeks. We’ll call it synchronicity. Let’s reflect on the big picture of where power wins at the expense of truth.

Old news it may be, but the war in Iraq is prominent. The lie of course is that there were weapons of mass destruction. The truth is that its about money and oil. See Iraq is a resounding success …

Related to this is Iran and nuclear concerns. Here again we see the rich and powerful condemning the poor and weak, while in fact raising nuclear risk. See The US’s poor example of nuclear weapon management and US sanctions on Iran – the pot calling the kettle black?

Again related is the super media ready soundbite of a war on terror, while in fact curtailing civil liberties. See King John and all that – fighting for habeas corpus and Lying to ourselves

Turning to the world of money, there was more encouragement of moral hazard. But the best example of power winning over truth is the Master Liquidity Enhancement Conduit, a ruse by big banks with messy balance sheets to get investors to buy “the good loans” off their balance sheets. When the market needs transparency the big and powerful obfuscate the situation with MLEC! See US banks want you to carry the can for their sub-prime mistakes

And then there are the environmental challenges that everyone feels. Whether its drought in the US or warm winters or heat waves in summer we know there are problems and all of the science tells us we need to change behaviour now. So companies talk about green this and eco that. But do little to change their behaviour. See Lots of talk about Environmental Disclosure, little action among FTSE All-share

And we delude ourselves with the rationale that technology and trade can feed the world. But it isn’t working now and it doesn’t look like it could, unless the human population drops a lot and soon. See Humanity’s demands on nature, in pictures

There was also scientific research published which suggests that while fairness is a genetic quality, some have more than others. The balance of economic and social influence seems to be held by those with less interest in fairness and more interest in themselves. See Behaving like monkeys

We know that education is the solution to many of our challenges because it distributes power among many. We’re even getting a better consensus on what how to educate. But this solution gets little time, capital or energy so most of humanity is left behind. See How to build a better education system and Trade, inequality and education

We keep lying to ourselves. Whether it is economic imbalances, Iraq, Myanmar, trade or our own diet, we keep hiding from the fact that we want control over others even if the consequence is that our integrity is eroded. It is all too easy to take the money today, instead of sharing life with others. Whether it is coming to terms with Iraq or economic imbalance, our deal with the devil can only be unwound at a cost.

Just jotting these notes seems overwhelming. No one’s perfect. We all cut corners. But humanity will be richer by working together. For that we need trust. For that we need truth. Humanity needs to grow up and behave more like a healthy life-form than a disjointed, dysfunctional mess. We need to live with nature, not without it. Let’s hope that as our economic systems bend under the strain of over-consumption we can adjust our behaviour and love one another a bit more.

A war of virtual imperial powers

It seems that the political dynamic of our world remains dominated by tension between imperial powers. The primitive psychology is the same as any caricature of Romans, Huns or Brits, but the banners under which they march are not so tangible. Today the powers are virtual. They are fighting for minds and souls, rather than land. Who are the players? Capitalism, America and GWB versus Islam, Al Qaeda and OBL seem to be the protagonists. Unfortunately neither side is right; they both advocate the same misguided objective of exclusive power: “We are right, you are wrong.”

It is a battle without winners, everyone must lose. If you are on either side you are contributing to greed and hate. To be right you will think for yourself. You will not be partisan, but holonic. You will agree to disagree, but not fight over it. You would rather walk away than join in battle. When there are more people who can step back from confrontation, the energy for battle will wane. Then our energies can be more wholly committed to managing humanity in a globally responsible way.

A different scale of leverage has accelerated our progress and imbalances

As has been discussed over the past months, the economic imbalances around the world have grown beyond normal measures for some years now.  Trade imbalances, government debt, consumer spending have all been beyond expectations in the US and other mature economies.  With the tremors of collapse touching many since the cracks in US housing started to show in July have focused the attention of analysts who are increasingly focused on the scale of the mountain of credit that has accumulated over the past 5 – 10 years.  Last month’s commentary characterised the pyramid-scheme type of credit accumulation that has been allowed by financial derivatives: dicing and splicing of financial assets to create derivatives more and more removed from the reality of the underlying instruments.  Analysts have increasingly focused on the dysfunction that occurred in the sub-prime lending niche as rating agencies, investment banks, asset managers, lenders, mortgage brokers and other fiduciaries became caught up in the game of singing the same tune: “doesn’t the emperor have lovely new clothes”.  And this deluded song had been taken up by all of us from regulators to consumers.

Historically one could expect that the multiple of credit to cash (which together underlie money for the economy) might be of the order of 10:1.  But this has grown, perhaps by a factor of 10, as credit builds upon credit to build an economy based on leverage.  We have bought a wonderful life, but have not recognised the mortgage secured on our future.

The challenge is to deflate this balloon of credit in an orderly manner.  And this is made difficult by the need to change human behaviour, to change our expectations.  It will be impossible for developed economies to continue the illusion because the natural resource constraints are bringing the reality of debt from “the future” to today.  There is no doubt that the currently used measures of economic growth, focussed on GDP, can only show a flat or negative trajectory while the global financial system deleverages.  This requires that regulators, governments and business must either adjust to alternative methods of economic measurement, which are increasingly advocated, or suffer the pain of depression era economies.

It is not certain how long the illusion will remain.  We all want to retain it, especially since our cultures and measures of progress are slaves to the notion that more consumption is desired, ad infinitum.  But I do not expect it to hold for long because the imbalances have reached the ends of the earth.  Our economic systems have become contained by our natural world, both by physical resource interconnectedness and virtual communications. We must learn to live together or the pain of adjustment will be gruesome.

The best advice for taking a step in the right direction is to not be afraid of letting go of the illusion.  Enlightened individuals and leaders have already started to do so.  Make an effort to recognise that you have enough and focus your energy on building relationships with family and friends, not business.

Hope is not the answer; living in reality is

By coincidence a number of comments received on last month’s musings (both News and Views and Review) drew attention to hope. Whether a quantitative or qualitative observer of life, people seem to want a hopeful sign that everything is going to be alright. It would be fantastic if that could be. But it is only fantasy. Whether your god is religion or science, the fact of nature is that there is order. And that order even extends into our virtual world of money: that world which interprets participants’ values.

But hope is not a strong foundation for planning for the future.   It is teh foundation upon which the sub-prime mortgage market ballooned during the past 5 years.  We must be drawn to the concerns of the World of Money because, while players continue to say its all fine, the actual foundation looks shaky. We know that we’ve had a good run of obtaining credit on the promise that we will pay for our consumption in the future.  But as we realise that we’ve borrowed more tahn we can hope to repay, we start to take desperate measures.  The delusion of asset prices increasing while the economic news is so dire and regulatory authorities are reacting as if there is a problem, suggests that we are desperate to continue the illusion.  Unfortunately this can only lead to trouble.  First inflation.  And if this becomes gross, then the efficiency of financial markets will be compromised, participants will be unwilling to risk what they have on the uncertain future and our ability to operate as a cohesive market will dissipate.

If, however, we allow our feet to resettle on the ground, bring our expectations back in to the realm of nature, and stop confusing consumption with happiness, the adjustment will be easier, even pleasant.  But it requires that we appreciate the human values upon which communities thrive, not the belligerent values upon which individuals rise.  Do not confuse this with a step backward.  It is in fact a step forward, but a big one.  It is elevating humanity from bestial constraints of a simple organism to the self-aware delight of a fully conscious being.  It is humanity working together as one and interdependent on nature.  The stimulation of space age technology will flourish, but we must be relish the stimulation of natural systems too.  This means making space for nature; which means moving aside.