Years ago, I had my office in a building that was built hundred years earlier. The cracks in the walls were apparent even when I stepped-in for the first time. Couple of years later, a good friend warned me that I was putting my life at risk along with those of my colleagues; why not move elsewhere, which I did, eventually. But I moved back soon after, as that was more comfortable for all, discounting the risks involved; anyway, it had stood for hundred years, why not a little more time, at least for our sake; a risk we took, stretching our luck! Though father time has taken its toll on some, the rest are still around to recount this tale!
The state of the world economy is similar to that dilapidated building, which still stands after thirty years! We are used to our habits & any change is uncomfortable. We hope, even foolishly, that the good times will last. Cats are said to have nine lives, but we should be better blessed! Haven’t we survived the great depression & many others? Despite the great sell-off, things bounce-back soon after; with newer solutions in hand, and the central banks reassuring us! Demand has to lead the revival as people have to live! It is only some getting richer & while the others poorer; an internal readjustment but overall, the problems are soon water under the bridge!
But, how many lives do we really have? With us getting more over-confident after every crisis, with some taking them as another buying opportunity of stocks & other assets, with their absolute belief that things will be back to square-one; will it be plain sailing all the time? And similar to the risk I took along with my colleagues moving back to a crumbling building & living to tell the tale! A few days ago, Bernanke reassured that the FED would take steps necessary to fight off all evil! Nothing much to worry, we are all in it together!
President Obama came to power promising to fix the economy and other issues that were in disarray. Once the US gets its act together and again giving the thrust & momentum, the lesser mortals can ride again on its coat-tails! After all, who will dare topple the apple cart; not China, which has to keep their masses away from trouble by delivering more & more growth & jobs and for that the biggest economy has to be refueled with their reserves, mostly by investing in their Treasury bonds. With everyone putting their shoulders to the wheel, the whole economy will be humming again!
The old ways of workings cannot be undone, as any drastic steps to face their reality, mainly by living within our means, will spell belt-tightening & sacrifice! Our lives are so intertwined that none would dare rock the boat. The patch-ups will continue, almost like the Gulf of Mexico oil spill that was capped by throwing everything we could lay our hands on & more, with the hope that some, at least, would find the mark & do the trick!
Similar to my decision that was more to do with enjoying some existing comforts than fixing the problem, even the mighty are taking the same route; hoping that the luck will hold at least during our lifetime! The coming generation, of course, should be smarter, installing solar panels & other devises, including newer measures of counting the riches, making all our liabilities disappear with a master stroke. Everything will be based on renewable resources; the slate wiped clean, maybe, every day! The past is history, not going to repeat! Let the dance & music continue, uninterrupted! The future should take care of itself; let us live for the moment! Hope there is no child in the crowd shouting that the Emperor is naked!