system two

system two
start-up thinking in the enterprise

Tuesday, 26 May 2009

economic permafrost...

Is the economy like permafrost?

Permafrost (as far as I can remember from my school geography) is a fragile lattice of delicate, icy connections - it is extremely delicate. It regenerates very slowly.

I have a mental image of a diagram of how they built oil pipe support struts to sit above it - so it could remain undisturbed.

Once crushed - it takes years to regenerate and grow.

I wonder whether western consumer economies aren't like this. The leverage on which they were based, a fragile network of trust.

Will they ever regenerate? Given the lack of appetite for credit risk, the pension black hole and long term government debt?

Trust is such a human emotion. The FTSE continues to rise on the assumption that we're through the worst and that this belief can be artificially restored. It could take a generation. And if it does. Then the FTSE should be closer to 3000 than 5000.

No comments:

Post a Comment