When things are "fluid" to use the popular term, it is important to think in a broader context, to go meta if you will. History, geography and anthropology are great tools to think about finance and markets. As a former anthropology student focused on sustainable economics,the stimulus talk sounds a lot like bad Worldbank and NGO planning for other countries. Big bag of money chasing an ill defined problem with immeasurable goals. How do we know if it worked?
Juan Enriquez does a very powerful job of thinking meta in a video with a question. How many stars will the US flag have in the future? FYI D.C. is thinking about becoming a state. Check it out video and think about a few questions. How many more countries will there be in a few years?
A few points in the video
- Some US states are net payers vs. receivers of federal government largesse a factor that will become important with looming New York and California defaults. Today the Irish, Italian and Eastern European strains on the EU could bring it to a restructuring. Non-EU Switzerland which is a series of cantons also has banking risks that exceed GDP.
- The decline in duration of a fortune 500 member from 94 years in 1935 to 14 years in 2006 reflects macro institutional churn increase.
- The rate of change and why countries or regions split apart (hint: it is often about money)
- Don't take your country, political regions or currencies for granted.
An interesting chart from William Easterly shows China to have a either a Democratic deficit or a false sense of autonomy. China is probably in for some deep changes in the next 6 months.
For the long term investor geopolitics is starting to become more important as the scale of shift moves up from company:sector:economy:country to global. It is time to think meta and then perhaps to act meta. Watch the video and read some Bill Easterly. He is a specialist in development economics. For those of you not aware development economics is basically when really smart people try to stimulate an economy. Easterly shows when and why external stimulus fails better than anyone.
