The Unsinkable brian cork™

Brian Patrick Cork is living the Authentic Life

Brian's Book Report for 2008

December22

Many of you know my story.  I went to three High Schools in four years – and, all I cared about was getting to the Olympics.

I some how got into College, and Radford University became my portal to the world – past, present and future.  There I met Dr. Nick Pappas who inspired me to care about history and learn (understand) how we can impact the future.

This is a situation report on the global economy.   Speculation, attempting to find order from the confusing and rapidly-changing datastream.

  1. The roots of this crisis lie in the cumulative decisions of us all — collectively — over the past 3 decades.
  2. The problem grew to become major problem as a result of regulatory decisions made over the past decade or so.
  3. We passed the last exit during the 2001 recession, with the government’s decision to supercharge credit expansion instead of allowing a natural recession to rebalance the economy (as Volker did in 1980-82).
  4. The financial crisis ignited in December 2006  with the collapse of the mortgage brokers.
  5. It became a conflagration as a result of the governments ad hoc response, incremental steps taken into the void without a plan.
  6. The financial crisis hit the real world in Fall 2008, a cardiac arrest of global economic activity.
  7. So far ”Main Street” has experienced only the fore-quakes, the tremors before the main event.
  8. I suspect it will hit during the next few months.
  9. Manipulated, albeit effective and dramatic, investment and economic upswing by the end of the first quarter.

The defining characteristic of this downturn is the unexpected breaking of links in the economic machinery.  Home prices crash far beyond anything seen since the 1930’s.  Major finanical institutions crash.  Astonishing floods of government money poured onto the fire.  Perhaps this slowed the crash, perhaps it had no effect.  Every step of the way brought new surprises.

Many Americans (most?) are still in denial, believing this will be a recession like the others since WWII.  Like children on the beach looking out to sea.   “Oh, wow — look at the big wave!”

What’s next?

Viewpoints about the crisis have coalesced into three camps. 

  1. The “normal global recession” camp.  Just another cycle, US GDP down perhaps -3% peak to trough.
  2. The “worst recession since the 1930’s” camp.  A bad scene, but the world’s governments are now on the job. Fiscal and monetary policy will do the job, again.  US GDP down 5% or so.  See this example.
  3. The “worse than worst” scenario.  Government policy might not work — or it might work but only with long lags.  Uncertainty rules; the outcome is unknowable.

Those in the first two camps believe that the worst of the crisis has passed in that its course now runs in familiar channels.  The small minority in the third camp believes that the world has changed.  The post-WWII is ending.

What to watch

China.  The world will muddle through if China manages to grow its GDP at 4 – 5% in 2009 – 2010, with global gdp perhaps in the -1% to 1% range (roughly).  If China goes to zero growth — or negative — then the game changes.  Everyone must return to the blackboard to prepare new forecasts.  Forecasts for a deeper and longer downturn.

What is happening in China right now?  Opinions vary widely.  Everything is fine.  It’s on the verge of imploding.  The best answer IMO is that we do not know.

The big picture

The ancien regime lasted a hundred years, from the Treaty of Paris in 1815 ending the Napoleonic Wars to the outbreak of WWI in August 1914.  A hundred years of prosperity and peace (more or less) for much of the world.

All that died in August 1914.  The transitional period was difficult.  Thirty years of megadeaths and economic collapse, with an intermission.

The new world brought another period of peace and prosperity, perhaps the greatest 5 decades the world has ever seen.  Now the two superpowers of that era both have uncertain futures.   The world sinks into a severe recession.  Beyond that new challenges await.

  1. Peak Oil
  2. Climate change
  3. The shift of power from west to east
  4. The second demographic transition, aging populations and perhaps extinction for some major cultures.

Perhaps the new world will be even better than we can dream.  It’s up to us.

Me?  I am forever optimistic (Its just part of being me [and Racer X]).

What do you think Dr. Pappas?

Meanwhile – watch: Burn After Reading.  It’s brilliant.  The ending sublime chaos.

Peace be to my Brothers and Sisters.

Brian Patrick Cork

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What’s All This About?

"What am I looking at?", you might wonder.

Lots of stuff.

Meanwhile, here, I discuss events, people and things in our world - and, my (hardly simplistic, albeit inarticulate) views around them.

You'll also learn things about, well, things, like people you need to know about, and information about companies you can't find anywhere else.

So, while I harangue the public in my not so gentle way, you will discover that I am fascinated by all things arcane, curious about those whom appear religious, love music, dabble in politics, loathe the media, value education, still think I am an athlete, and might offer a recipe.

All the while, striving mightily, and daily, to remain a prudent and optimistic gentleman - and, authentic.

brian cork by John Campbell





photos by John Campbell

 

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