Taking a Break and Taking Some Credit (Pun Intended)
I am back after taking the longest hiatus in the 16 month life of this blog. I would like to think this futurist was missed, but this is August and I would imagine most readers would be either be languidly lying about on vacation or keeping a nervous eye on the stock markets, both activities with a decidedly short term focus. The happy reason for my absence is that I was married to and then took a mini-honeymoon with my lovely new wife Victoria. Married in a Rose Garden, we metaphorically promised that to each other for the rest of our lives and of course will always stop to smell the sweet fragrance along the way.
There is much to write about in the weeks ahead as there have been many recent developments that are early snapshots of what lies ahead for us all. Later this week I want to comment on the turbulence of the financial markets that has been triggered by the crisis in mortgage backed securities and the subsequent tightening of credit. As a preface to that I am republishing one of the very first columns that ever appeared here. Published in March of 2006 it suggests that Fed Chairman Bernanke would be the first person in his position to face truly global financial issues. I always try to suggest to you what might be around the corner or down the road. In this case I was somewhat successful in that effort.
You(Might Have) Read it Here First [published March 22, 2006]
The writings here are about the future. I take a look at the Present through a futuristic filter. This means that of course to some degree, I am predicting what might happen in the future. Even knowing that, it was thrilling to find that already, in the very short life of this new blog, something written here as a prediction has already been validated.
The very first entry to Evolution Shift was written in early February and, as you can see from the list under Archives was entitled: ‘Exit Greenspan the Economist’s Rock Star“. In it I commented on the huge deal that was made about the great Greenspan stepping down from the Fed and the general report that his successor, Ben Bernanke had huge shoes to fill. The thrust of the entry was that Greenspan was the ‘last great Fed Chairman’ in the traditional sense, that Bernanke was the first Fed Chairman to step into that position with the Global Economy in place. To quote from that entry of early February:
“I believe that Greenspan was the last, great Fed Chairman in the traditional mold. The definition of success has changed. Bernanke, and those that will follow him, have a new dynamic that will be part of the effectiveness and measurement of the job: the success they have in the area of global cooperation as it affects monetary supply and other Fed instruments.”
I went on to say that this analysis was based on the fact that though the Fed and Greenspan had consistently raised short term interest rates, long term interest rates did not go up as they should have based on all known past behavior of America’s nation state economy and that this was based on capital infusions from China and elsewhere.
“One thing was clear, the Global Economy has irrevocably taken root, there is no turning back, global is a dynamic flow that is rearranging all nation state economies. What does this mean? it means that Greenspan is the last Fed Chairman to preside over, and adjust the economic levers, of the U.S. as a nation state economy. His tenure basically was simultaneous to the birth and growth of the global economy in the Information Age.”
“So what lies ahead for Ben S. Bernanke? The specifics are certainly not known at this this time, but he is the first Fed Chairman whose tenure started with the new global economy in place. What that means in terms of the Fed’s operational tactics remains to be seen. What it does mean in the largest sense is that the definition of success for Bernanke and all his successors will forever in part be how they incorporate the dynamic flow of global, and the global economy into what they do and how they analyze the metrics they look at.
“The news of the transfer of power from the Rock Star to the Rhythm Guitarist from Princeton all played on the ‘hard act to follow’ theme. As in ‘poor Ben, he has to follow a living legend’. Well, that is in fact true, but what BB now has is a chance to define “Outstanding Performance by a Fed Chairman” with a new songbook, written, and performed on the new global stage.”
Yesterday, in reading the New York Times, one of the MSM outlets I consume daily, this headline felt almost personal to me:
“Global View on Policy is Backed by Fed Chief”
The article states;
“Ben S. Bernanke, the newly installed Federal Reserve chairman, suggested yesterday that the central bank will need to pay more attention to global financial conditions in setting interest rates, moving beyond its traditional focus on domestic economic forces.
In a speech to the Economic Club of New York at the Grand Hyatt Hotel in Manhattan, Mr. Bernanke said that to understand the reasons behind movements in America bond yields “an explanation less centered on the United States might be required.”
Later in the article
“Mr. Bernanke built the prepared text of his speech around one of the most pressing puzzles in financial markets today: Why do long-term bond yields remain so low despite steadily rising short term interest rates?…Bernanke argues that other factors – including a worldwide imbalance between abundant savings…..may be a more powerful explanation for the current phenomenon……over time the challenge will come in determining whethere global forces are liekly to push rates lower than otherwise might be the case.”
The article went on to dwell about the developing view that global forces more than the historically accepted national forces were impacting long term interest rates.
So, you could have read it here first! In writing a blog with a futurist point of view I expect that entries here might be validated in months and more likely years in the future. To get validation in a period of weeks was what surprised me yesterday.
So, with tongue only slightly in cheek, I say to you: if you want to know what might happen next month, read Evolution Shift today!
Okay, back to work.