Saturday, November 29, 2008


Ode regularly tops my list for providing a disparate, yet comprehensive collection of views and opinions. In the current issue Paolo Coehlo relates an enlightened tale, Our Lady the Juggler and the editors compile the Top Bestselling Books Around the World by collating the top-ten lists of ten independent bookstores from around the globe. It contains a series of articles on the global economic crisis in which Noreena Hertz's Death of a Paradigm stands out. Noreena, a siren of reason, justifies her numerous credentials in her lucid and humbling analysis of the economy. She points out that the present affords a opportunity to set a number of schemata right; however, she notes, "That means the smartest politicians will be those who aren’t only willing to differentiate themselves from the laissez-faire past, but who are willing to engage in a transparent exchange of ideas about what kind of world, what kind of society, we want."

A good example, which even the most forward-thinking of politicians may have to rescue, is the American auto industry. Currently, it teeters like the statues of overthrown revolutionaries. These companies have not learnt, even the hard way. Ford, of the three, has perhaps learnt the most since it adopted green production techniques and buildings earliest, but it never has crawled out of the financial hole that these changes were intended to rectify. Chrysler, for a while at least, was insulated by the weight of Daimler; thus, GMC, independent and prospering remained brazen in its devotion to SUVs and trucks (and suffers for it). Nevertheless, remember that these companies reaped the rewards of these strategies for a number of years. Unfortunately, like most current economic paradigms they were unsustainable; thus, like all the sub-prime signing bonuses, profits have vanished.

First let us get some perspective. One point that I heard on a recent radio interview needs to be repeatedly stated: bankruptcy does not mean that car production will disappear and all related jobs will disappear in North America. Furthermore, it does not mean that the brands will disappear (think of Nestle, Interbrew, and the unsavoury Altria). What it means is that these companies will be purchased at a stock price for which they are deemed profitable and will be trimmed to make this a reality. Thus, the real issue revolves around pride, and American pride should not be tied to unprofitable behemoths from another era of economic evolution. They have had their day in the sun. They convinced North American governments to build roads for their cars, opposite to train companies, and instilled a mindset of the unconquerable horizon. What could be better than letting them fall to their self-appointed fate and carefully blowing on their ashes so a flaming phoenix arises?

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