Newsletter No. 2

Hey…has anybody noticed ?

The markets are crashing, we have a credit crunch, yet a fair number of folks are sitting on huge amounts of cash »waiting to see what happens ».
Everyone has a view on why this is occurring, but I think too many of these opinions are anchored on past models which we know now to be fallacious .

The question of the coming year for all of us is how to get money back into the markets and get people to swallow some risk again. And how do we stimulate growth ?

Traditional wisdom says that the major problem now is one of market confidence, and that we need to shore up existing institutions and weather the storm. We have been here before in some respect, and we therefore almost know what to do.

I am not convinced.

The problem is that the « market », you and me, as well as a lot of large individual and institutional investors, is not listening. We now know that the emperor has no clothes.

Is it possible there has been a fundamental shift in investor / investment thinking ?

Do we really want to bail out a company like GM or Ford ? Lock people into a dying framework for another few years ? Anybody remember the last Chrysler bail-out ? Is the company now any better ? The industry has had more than a decade to re-make itself and has failed miserably. Why not let the market do its work ? Instead of trying to fix the past, let’s create the future. It’s cheaper in the long run.

The growth and wealth of many of the countries in the NAWMW (north atlantic white man’s world, thanks to Tibor Mende ;)) was built on leveraging technology, (whether it was steam, electricity, the internal combustion engine or petroleum) and risk. Major innovation created wealth, both directly and indirectly.

Maybe part of the answer to our current predicament, oddly enough, may come from looking behind us.

There are technologies now available, whether clean-tech or others that can fundamentally change the way we do a large range of human activities ; from new energy sources, self generation of domestic power, self processing of water, to new forms of social connectivity. Mag-lev trains. Maybe its finally time to give innovation a serious policy and investment boost.
The national infrastructures of the USA and other developed countries, (i.e. the UK, by way of example) could use a serious dose of innovation and renewal. Incentives for investment in alternative energy sources could provide additional stimulus for development in new tech and new jobs. The mind boggles at the possibilities and opportunities.

While many of us are a little shy to invest in the past, maybe investing in the future makes more sense.

Hey…..has anybody noticed ?

HAPPY HOLIDAYS !!!!!!
WLC 2008-12