The Great White Wail

Following Kevin and Wayne’s achievement of a seat on the G20 lifeboat for the GFC, it is not surprising to find that there are different perspectives about the direction in which the harpooners are focusing their attention and its impact on smart companies.

The Europeans and the Americans who created the financial crisis are a long way from home and are looking for support to maintain the continuing impacts of stimulus packages in order to maintain the artificially raised levels of consumer and business sentiment.

The Chinese and the Australians that have weathered the worst of the tsunami have naturally started to worry about their perennial target – the long white knuckles wail about inflationary pressures and the impact of global currencies and protectionism.

The former have been influenced by domestic concerns with their economies continued growth and in particular the concerns about continuing difficulties in getting executive greed under control, managing derivative manipulation risks and of course, the steady rise to a peak of longer term unemployment on investment opportunities.

The latter group are seeing the need to shift from a demand lead, consumer satisfaction recovery to an infrastructure and supply side investment in nation building, giving consideration to the need for a new international reserve currency which is a new Bretton Woods model which is driving up the sharemarket, the price of gold and financial and mining stocks of those companies that actually do or make something.

Many SME owners will have experienced calls from the money market jockeys that are trying to grab capital from funds that have been deployed into cash and bonds to encourage a flow of speculative funds into new forms of risky investment following the collapse of Great Southern and Timbercorps tax manipulations.

It is suggested that Governments around the globe are going to encourage savings, investment schemes and other forms of re-securitisation of the domestic and commercial real estate markets, so SMEs should get in to bridging schemes that are supposed to create “white” investments with AAA paper and leave the banks to manage the “red” bad loans while the going is good for the firms that are taking up deals in such things as heating oils and high-tech equipment.

On the other side of this great “white” wail about recovery is the pressure from those who gave us the GFC in the first place, by believing that we could trust the banks and creators of spurious, untrackable derivatives – the source of the “red” bank crashes -and cut back fiscal expenditures, permit continued bonus payments of hundreds of millions in golden parachutes and tighten both credit to all but those SMEs that do not need it, while raising overall taxation to pay out those with the worst records of excessive risks.

Even the illustrious predecessor of Ben Bernanke – Dr Greenspan – is saying “the presumption that were going to be able to resolve this without significant increases in taxation is unrealistic”.

So for smart companies, the message is becoming clearer. Governments are going to raise the prices of imports while encouraging export credits.

As 2010 shifts from stimulus package life support to being expected to lead a private sector recovery, funds will be shifted towards import substitution, opportunities for local suppliers and local technology partners for ports, harbours, transport and communications investments that can generate a combination of green jobs and blue collar votes.

Now is not the time to believe that the inflationary wail is going to stay submerged for long, as the emergence of a new global currency and increased savings pressures could lead to the W shaped economy that would follow further signs that the US dollar is plunging and gold and uranium stocks are surging.

The one certainty for next year is that business as usual is not going to find a sea of calm waters.

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Dr Colin Benjamin
Entrepreneurship and Strategic Thinking Consultant
Marshall Place Associates offers a range of strategic thinking tools that open up a universe of new possibilities for individuals and organisations committed to applying the processes of innovation, creativity and entrepreneurship.

Email dr.colinbenjamin@marshallplace.com.au
Contact: CEO Dr Jane Shelton, Phone +61 3 9640 0099