The “Geo-Economy” and Conversations With ‘Pop’ Smith

The “Geo-Economy”: This from the Telegraph.co.uk, and Ambrose Evans-Pritchard on 11/18/09 (via Drudge Report 11/19), “Societe Generale tells clients how to prepare for potential ‘global collapse’”.

Our posting and commentary on the foregoing is the product of: a conversation with an older acquaintance with degrees in economics, business (and more than 30 years national and international business experience) as well as some re-reads. Our acquaintance is negative and nervous and so are we.  Here’s why:

• “Societe Generale has advised clients to be ready for a possible “global economic collapse” over the next two years, mapping a strategy of defensive investments to avoid wealth destruction.”
• “ In a report entitled “Worst-case debt scenario”, the bank’s asset team said state rescue packages over the last year have merely transferred private liabilities onto sagging sovereign shoulders creating a fresh set of problems.
• Overall debt is still far too high in almost all rich economies as a share of GDP (350pc in the US), whether public or private. It must be reduced by the hard slog of “deleveraging”, for years.”
• “Governments have already shot their fiscal bolts.”
• “The underlying debt burden is greater than it was after the Second World War … Ageing populations will make it harder to erode debt through growth. “High public debt looks entirely unsustainable in the long run. We have almost reached a point of no return for government debt,” it said.”
• “Inflating debt away might be seen by some governments as a lesser of evils.”
• “Private debt is also crippling. Even if the US savings rate stabilizes at 7pc, and all of it is used to pay down debt, it will take nine years for households to reduce debt/income ratios to the safe levels of the 1980’s.”

PH Comment: In the conversation with our acquaintance referenced above, I said that from an average mans observation I would have to ask the question, “How could America possibly pay all of her debts and promises?”. My acquaintance just smiled and said, “We can’t.”

Conversations With ‘Pop’ Smith:

PH Question – “’Pop’, The last time we talked you gave us an idea of what you were working on now to prepare this week and this quarter. Could you give us an idea about how you set these weekly and quarterly projects up?”

‘Pop’: I use a notebook and a pencil or ballpoint pen and set up a week, say 11/10 to 11/17. Then I write down three projects I want to get done during that week.

It’s as important to write down the dates/time frame as it is each of the three projects because it’s the writing down of these things that makes them a personal commitment to yourself to try and get them done and on time. When I get one done, I mark it off. If I don’t get but say two of them done this week, then I circle the unfinished project and make it number one or two next week.

OBTW, I leave a couple of lines clear below each project to comment on how it went, how to do it better next time or why I didn’t complete it. Also, I’ve learned not to beat myself up over not completing a project if there’s a good reason; I just write the reason down and move on.

OBTW again, by keeping a record of your projects along with comments, you eventually get a pretty good idea of what you can get done and you then tend to make your projects more realistic in terms of both your time and talents.

I set my quarterly projects the same way save for a bit more space left for comments.

Until next time, keep your eyes on the horizon as the weathers changing fast.