Blue Dots Partners

In recent days your crystal ball may have turned cloudy, making it impossible to see past Brexit to Fixit. Problematic, of course, but not sufficient to cause you to panic. Being the rational and experienced person that you are, you want to find the answers, then take corrective action professionally and personally, and feel better and more secure as a result.

Unfortunately, that is Mission Improbable given what is likely to be a lengthy period of political and economic uncertainty and volatility.

When it comes to the global economy, it sometimes feels like financial markets are driven by a processor that obeys only a portion of Moore’s Law. The speed and throughput of business continue to rise dramatically but the misalignment of the business leaders, economists, and politicians who program the economic chip drivers means they are unable to create a balanced and stable platform. So, the resulting cost and reliability of the system fluctuate wildly and unpredictably.

A look back at economic gyrations can provide a quantum of solace during the present turmoil and a basis from which to gauge the future. Glances backward also emphasize that although we may learn from each boom-to-bust cycle and avoid making identical errors, there is always something new or ignored to create the next cycle

There have been many periods of uncertainty and economic disaster that rival or exceed what we see today. I am not quite old enough to have experienced the five historical crises that The Economist magazine cites to demonstrate how historical economic slumps shaped modern finance. The essay is enlightening and is also a fun read because we can distance ourselves somewhat from those mistakes and their outcomes. As you read the essay and speculate on how to fix breaking or broken systems, consider The Economist’s contention that “…institutions that enhance people’s economic lives, such as central banks, deposit insurance and stock exchanges, are not the products of careful design in calm times, but are cobbled together at the bottom of financial cliffs. Often what starts out as a post-crisis sticking plaster becomes a permanent feature of the system. If history is any guide, decisions taken now will reverberate for decades.”

What comes next in our world of the unexpected? If you know, that’s great! Don’t keep it a secret. Until then, I offer two thoughts. One from a famous sports figure and the other from a nobody.

“When you face a crisis, you know who your true friends are.” Magic Johnson

and

“For every economic risk or disaster, there is an equal or greater opportunity ready to be exploited.”