Good news - global recession is coming.

Trip Start Oct 08, 2007
Trip End Dec 16, 2008

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Tuesday, October 14, 2008

Well, I know this is supposed to be a travel blog, but right now, I am incapable of writing about my travel adventures - they seem boring. All the action seems to be now in the markets.
I have not read news in a major way ever since I handed my analyst's resignation right before the crisis started. I also admit to have largely ignored headlines that sounded as if out of financial horror movie, that were popping on my screen while I was traveling through Uruguay and Brazil this past month. Up until last week that is. I've been mostly glued to my laptop for the past 4 days, trying to catch up on 14 months of reading. The last thing I told my boss in London, right before I left for Tibet, was that my best-case scenario is that the credit crisis hits a bottom by the time I'm done traveling, and the house prices drop, so I can finally buy a house. OMG! Once again - careful what you wish for.
I would have though that watching my last savings, the one I was supposed to use to buy a house, melt before my eyes with a lightening speed would've been the worst thing I can imagine. Not quite actually. A different much more horrifying picture emerged before my eyes in Asia. The iconic image of Asian streets filled with bicycles have been replaced by a sprawling hell of scooters with increasing percentage of cars. I think the day traffic in Asia starts to resemble traffic in LA would be many days too late to save the world from ecological disaster. Don't get me wrong, I don't want to pick on Asians - they have just as much right to dream of better life and brighter future as any person in the so called developed world. The problem is, you see, that the world can not sustain "developed world" level of consumption on a world wide level. If they say the world is at a tipping point now, imagine what additional 2 billion cars would do to it.

Oh, but it is not just cars, it is everything - the food we eat (meet eaters polute more), the cloths (fashoinistas polute more), the electronics and home appliances - everything. So as the world is getting richer, it wants to consume more, and as it wants to consume more, it produces more, and as it produces more, it uses resources and pollutes more. And don't tell me that you don't pollute because you recycle and turn off your computer at night, and buy organic food occasionaly, please. That 0 calories, 150gr yogurt in your fridge comes in a plastic container, doesn't it? And what do you think would've happen if everyone in this world started using a fridge? Where do you think most of your belongings were manufactured, and do you know in how much pollution that resulted? The filth, the rotting domestic and human waste in Indian is shocking to see and smell (sorry to pick on India again), but to be honest, that poor person in India, who lives on rice and vegetables and has two (at best) stacks of cloths and walks to get around is a lot cleaner than all of us in the western societies. We stink! And we pu-pu all over the world, more than anyone else does. Don't you dare say that China polutes as much as the US. It does in real terms, but not per capita. Your average Chinese polutes lot less than your average American, or average European for that matter. Not to mention that all that stuff that is being produced in China at Nature's expense is being sold back to us. And we buy it, bcs it's cheap and we can consume more of it. We clean the gutters of our streets and like to think that we are clean, but we stink up the whole world.  
Once, when I was very little, my mom told me a story about her grandmother's chicken. The whole family went to pick up grandma from her country home and take her to town for a week. I don't remember what was the emergency and it is not important any way. What's more important is that grandma had few hens and didn't have anyone to ask to feed them while she was gone. So brilliantly, she decides to leave them enough food to last them for a week and goes back to the house to pack. When she checks on the hens before leaving for town, she discovers that in half an hour they ate all the food, the whole one week supply. "They were so heavy, they couldn't move and were just squatting in the yard, looking very silly and disorientated" - mom tells me. "My father had to break their necks at once, because they wouldn't have survived much longer". "But, mommy, mommy, why did the chickens eat all the food? Didn't they know it is not good for them?", I squeak horrified by the demise of the chicken. "I don't know", mom shrugs, "chickens have small brains, I guess".
I wonder if it was indeed the chicken brain in fault, or just nature taking its course - if there is food, you eat. If there is too much food, you eat until you burst, or become obese. I doubt the chickens knew what was awaiting them if they kept eating, but I think we do - it's all over the news all the time - we are polluting in horrible proportions, and that is slowly but surely destroying the world. And while the simple solution to the problem will be if we all collectively started to consume less, none of us would. You won't start car pooling, or buying less stuff just like that, because it is going to save the world by .000000001%^100000. It would take years of PR and public education to alter consumers behaviour, as well as years of inovation to improve efficiency. Do we have years? Not to mention that the chorus of green activists, scientists and politicians is constantly being radio-silenced by the corporate advertising - buy, buy, buy. But what public morals can't do, private finance can do overnight. Watching your 401K evaporating may not be the most inspiring sight, but might as well be that magic wand that was needed to shrink consumtion, and at least postpone the ongoing self destruction untill solution is found.  
The markets have made a strong recovery today, and may as well continue to climb tomorrow, but in my humbled opinion, the world this week is a very different world from the world a week ago. If you are poorer today than you were yesterday, you don't go out and spend more. Collectively, we are about, well, about several trillion poorer, depends on what time in the day you asked me. Even if you are just as rich today as you were a week ago, but you know how quickly that might change, you still don't spend more than yesterday, unless you are brainless, reckless idiot, which I believe people are not, especially when it comes down to their own money. And just for a good measure, on the foothill of this financial rollercoaster comes the most important sales period in the year - Christmas, also well known as bonus time or a layoff  time, depending on the point of the cycle. Anybody in doubt about the point of the cycle? I don't know what you think, but I bet, I literally bet my house acquisition potential, that there will be some pretty horrible comps rolling in the next few quarters, that the real economy is heading south, more south than last week and certainly more south than a month ago, and still south even if Obama wins, which I very much hope he does. I reckon there will be a recession caused by the deteriorating consumer confidence and I recon that will do us good that is not measurable by a market index.  
Separately, and completely unrelated to market fluctuations, here is what happened in the past month in my world:
1. my laptop crashed (no worries, had it backed up, so nothing was lost but some quality lap-top time)
2. I crossed Uruguay south to North in 4 days. Uruguay is a small country of 3 million people which struck me with it's obvious love for matte and the drop dead gorgeous male population. Since I'm on the subject, I'm downgrading Buenos Aires to the second city with most good looking man per capita and electing Montevideo as undisputed leader. For a detailed report, pleas click on the "Paid Subscription" link below. Juuuust kidding.
3. I spent couple of weeks in South of Brazil with Lu and Lari, mostly drinking caipirinias on the beach and waiting for the clouds to clear and the sun to come out. The sun did come out eventually. About 15 minutes before I had to leave for the buss station. Hence, no bikini pictures from Brazil. Sorry.
4. I made a detour to Iguaçu Falls, which is a sight spectacular and overwhelming beyond words. I think the best description came in the form of excited exclamation I overhead upon arriving at the view point, quote: "Hooolyyyy shit!". Pictures to come.
5. I've re-covered my laptop, logged on to the internet, and discovered that the world is about to collapse. Then it collapsed. And then recovered, sort of.
6. In the past week I've been conducting an indebt research into Bs As's bars and restaurants with Omri. Global credit crisis does not seem to affect them - they are New York quality at Argentinean prices. Perfect example of how - Omri and I concluded - restaurants in New York will be a year from now, in the midst of the recession.
The revelation of the month is that I really actually like finance. I am almost addicted to it. The problem is that a career in finance may not be readily available for quite some time to come. Any ideas? Anyone?

WORLD CHANGE STARTS WITH EDUCATED CHILDREN! Give a girl the life long gift of education! Support my appeal 100 GIRLS BACK TO SCHOOL! Donate at:
Hugs & Kisses, Vik

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gkv on

If a finance addict ;) may see the global good news in the (upcoming) recession, there is still much hope for the globe :))
As for the 'tradition' in finance careers - as an amateur from far and away, I believe it might be adjusted somewhere near the material/spiritual balance point, some day...

orizarska on

Re: hey
Hey Galina,

Thanks for reading my blog and for the comment!

As for the switch of the material/spiritual balance in finance... Forget it. It's never gonna happen - will never happen. And thanks god for that! Finance is efficient and unemotional, and that makes if ultimately honest. More honest than many other fields.

Let's not blame finance for all the evils in the world, shall we:) I know many people that work in finance that are smart, decent and generous. Greed and incompetence is what got us here, but these are not purely finance properties:(


gkv on

Re: Re: hey
:) you put it right, Vik.
Finances just 'visualize' human activites of any kind.
Apologies if a blaming tone sounds in my previous txt - didn't mean it, at all.

Have a good time ;)

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