Monday, November 3, 2008

"This Too Shall Pass"

And when it does, what follows can be the best if we use our best resource.

The phrase "This too shall pass" and the associated ring story were made popular by Abraham Lincoln. King Solomon searched for a cure for depression. He tapped the collective wisdom of his wise men for advice: Make yourself a ring and have thereon engraved the words "This too shall pass" they advised. The King carried out the advice and every time he felt depressed, he looked at the ring and his mood would change and he would feel cheerful.

A wise crowd behind a wise man.

Like me you may be jaded by the non-stop talk about financial crisis, recession, wealth destitution, damaged societal welfare and worst of all depression. But let’s put things in perspective.

Yes, our global financial systems have suffered what may be described as a near fatal heart attack, and while they are still very ill the best financial surgeons are pooling their talents to solve the problems. The surgeons, aka government leaders and central bankers, are working hard together to stabilize and reduce the likelihood of another financial heart attack.

The origins of the financial crisis (a credit but more latterly a liquidity crisis) is that we all have bought vast amounts of property that produced toxic by-products that clogged the arteries of the financial system. It is true that we could not have bought these properties had money not been lent to us. It is also true that some of our lenders, although not all, were aware that the lending they facilitated was risky.

Before the financial crisis our economies were not in great shape. Yes they were growing a little, but many economies had become "fat and happy" and very inefficient after almost 10 years of prosperity. Ireland was the poster boy of the" fat and happy" club.

Now, partly as a result of the crisis, our economies are not growing or worse are actually contracting. This means that people are losing jobs, losing homes, losing “nest-eggs” and a sense of security for the future. Millions of people are stressed and worried about their future and their contentment and peace of mind are damaged. We may still be fat, but not nearly as happy.

The financial and economic shocks to our systems, and indeed our psyches can perform a very useful service. Yes they will be painful, but pain whether it is financial or physical alerts us to our problems.

While we all (you, me, bankers, regulators, the media etc) are responsible for the current correction what’s important now is focusing on the specifics of the problems, to ensure we do not undermine the positive impact that a recession can have while avoiding the evils of a depression.

We all caused our current problems, and we must all be involved in the solution, not just the government or regulators.

Those we have placed in leadership positions in our countries are stepping forward but neither they nor we should be short-termist. They should not keep economically defunct industries, practices and procedures alive with borrowings, but they should increase investment in our competitiveness and productive capacities. It that means an increase in borrowing which it will then so be it.

Our countries have huge amounts of natural and neural basic resources, but to increase our wealth we must increase our intellectual and physical capital, i.e. we really need to make changes to our education system, our attitude to work, our attitude and use of resources, and national and international infrastructure. Education seems #1 to me.

A laser focus on such matters is no magic pill. These are medium and longer term deliverables (i.e. more than can be achieved in 4 years). They will not provide the immediate feel good factor as we suffer withdrawal from the almost instant gratification that the explosion in consumer credit facilitated.

Our #1 untapped resource is the vast collective intellect that we have only started to use. Harnessing the "wisdom of the crowd" has a very big potential role in improving all of our lives. If we do it, we all have a voice and will feel part of the solution as well as the problem. We can solve some wicked problems, like climate, resource, growth, social, and economic challenges. In simple terms, there exists between us the best information on how we solve our key challenges. If our leader’s embrace and permission new systems like prediction markets to operate in a transparent prudent way I am convinced that we can contribute in no small part to the solution.

Recall, that US Department of Defence believed a prediction market could provide valuable information on growth, risks and social issues. Hundreds of academics, dozens of Fortune 500 companies, and millions of people believe that prediction markets can help provide valuable information on economic, financial, social and environmental issues.

Improved ways of working, regulating, and consuming are all within our grasp if we tap into our greatest resource. Our intellect! And the great thing about I.Q. reserves as distinct from our oil reserves is that they increase the more we use them.

We have harnessed the energy of a small atomic globe in the last century, and we can harness the collective intellect of our much larger one in this century. The only question is when? The leader's that we have or are about to elect need to be as brave and innovative we are.

And whether you are a president, a plumber, or a regular person just like me no matter what today or tomorrow holds never forget the wisdom that a wise group gave a wise king.


Intrade said... said :

    It is very true that the collective intellect will be the answer to our current problem. I am sure great leaders and creativity will be surface in these difficult times. I know I have been more innovative in starting and running my own business.

Intrade said...

Tron said :

    As a newcomer to Intrade I have been amazed when researching how closely the favoured positions here have mirrored what happens in reality and can only agree that prediction markets could be a major help in future.

Intrade said...

mike2020 said :

    Great article, inspiring hope and motivation!

PS: there's a grammar error in "If our leader’s embrace and permission new systems"

Intrade said...

DiscipleOfWar said :

    I will remember the story of King Solomon's ring after everything else fades from memory.

Intrade said...

allthebettert said :

    perhaps it is the rally, obama or whatever but your post really struck a cord. great post and story. empowering comments - thank you

Intrade said...

Ant in NC said :

    It's certainly nice to hear some encouraging and inspiring words in our current state of affairs. The biggest problem I believe you address, however, is our seeming dependancy on the quick-here-and-now-fix mentality that has lulled many into a state of resignation. If there's not a quick, easy fix it isn't worth it.
That's a frightening concept. What worthwhile endeavor is not filled with some challenge, some difficulty? For example, walking past the piece of rubbish on the sidewalk is easy; taking the few seconds to pick it up and throw it away is hard. Not that hard, but certainly harder than taking some effort out of your way to make a positive change in your sidewalk. Or your world. What might serve us all best now is to keep an eye on that Solomon's Ring...and also to look around at our own world and see what little changes we can make to create a better place.
If we can make enough small changes for the betterment of everyone, the world would be that much better. (Hmmm...perhaps a Disney soundtrack should be playing in the background of this...didn't mean to be so sappy and altruistic, but maybe that's what the world needs.)

Intrade said...

War Prophet said :

    Nice post John. But "This will Pass"???
I pulled most of my money out of the market about four months ago, about the same time I started trading on intrade. I think this is a great year for trading.

Intrade said...

cathy said :

    Regarding the value of prediction markets, an interesting study would be to examine how predictions become "self-fulfilling prophecies."

Intrade said...

Adam Neira said :

    The reference to King Solomon is apt here. It has been prophesied in the Tanach that a male descendant of David, via Solomon, on the patrilineal line, will at some point in human history become sovereign of a Messianic Government, based in Jerusalem. This divinely mandated command structure will benefit the entire world. The true potential of humankind will unfold over the ensuing years and decades. All of the pieces of the divine jigsaw puzzle are present right now. This is the year 2008 ! We are reaching a critical time in world events. The universe is stable, ordered, benevolent and expansive. A world government structure that reflects this intelligently designed paradigm is imminent.

P.S. Scientists have recently discovered that no matter how diabolical the present configuration of a Rubik's Cube is, it can always be solved in 27 moves ! World Peace by 2050 anyone...

P.S.S. Prophecy is immutable...

Intrade said...

Peirano said :

    The value of the Prediction Market, once realized by many on both sides of an issue, may be subject to manipulation. The sampling of folks, and cash, participating in the market is small enough at this point that, once the market becomes a daily news story, could be easily manipulated with a relative small amount of cash.

"This, too, shall pass"

Intrade said...

Anal Retentive said :

    What does it mean for our leaders to "permission new systems"?
Also, it is "Department of Defense", not Defence.
I do not apologize for being nitpicky. Any time I see an otherwise intellectual and well thought out article riddled with spelling and grammatical errors, the author looses a lot of credibility with me. Seriously, a major point in your article is education and intellect! At least use a spell checker.
You make some valid points but the tone of the message sounds mostly like an Intrade sales pitch to me.

Intrade said...

ZPF said :

    Anal Retentive before posting a critique, you should really try to look some things up on your own. So, since you’re asking, “Permissioning new systems”, is simply a phrase similar to “Permission Marketing”, meaning that the only way to get our leaders to agree to a new market such as the Prediction Market is to ask; and thereby the leaders give “Permission”, for us to trade in this international medium called Intrade. As for “defence”, there are two ways of spelling this word, “defense” or “defence”, they are both in Wikipedia. Since Mr. Delaney is from Ireland the common British spelling of this word is “defence”.

Intrade said...

vuilgat said :

    Irony thy name name is Anal Retentive. The correct spelling in the UK is 'defense'. But in which country is the word 'loses' spelled 'looses'?
Seriously, a major point in your post is grammar and spelling. At least use a spell checker.