Yearn For a Return To Normalcy?

The world's economy is not fully emerge from recession after global meltdown. Post-crisis was creating many wishes and fantasies that thing will be going back to where it used to be. However, to be realistic, let's call it out here - that there will be no going home again for the average of us.

The surest thing now is that the business environment and its whole landscape has been forever altered. Many global companies(MNCs) and financial institutions not only affected badly, but some even wiped out from the market such as Lehman Brothers. Googling for and browsing at Lehman's website today creates a kind of loss and historical feeling; and it is as good to say - study about dinosaur extinction !

In the aftermath of this unprecedented crisis, regulators(Central Banks) and governments around the globe will now map out better control mechanism. Expectation on "rational behavior" that suppose to safeguard us from faulty or bad decisions economically is now no longer reliable.

In assessing this post-crisis issue, the psychology is now also going to be totally different. The new economic order is very interesting and promising, however, it is too early to yearn for "return to normalcy" after many months living in uncertainties.

Bracing For Hard Times

I've been not posting any article for a long time since Nov 08 to attend to more pressing matters.

The starting point of a credit crisis that caused current global recession is generally a kind of "Goldilocks Scenario." It is characterized by overwhelming liquidity (not only on the investor side, but also for companies), by low default (and high recovery) rates, and by subdued risk aversion among credit investors. Global recession sparked by a chain of reactions happened in this order:

It started with excessive liquidity, then linked to -> excessive lending -> excessive leverage -> excessive risk-taking. Then, this activities followed by tremendous spread tightening especially in credit derivatives universe, then trail by credit bubble - exogenous shocks and/or fundamental dislocations. Lastly, the burst of the bubble that caused the spiral global credit crunch which in general all the economist called it "global recession." And today the crisis is really really really global.

In summary; this is how normal folks like us to understand what actually happened in this sequence:1) First-order effects: direct credit-linked losses(investments). 2) 2nd round effects: Spillover effects onto other financial market segments. 3) 3rd round effects: Spillover effects onto the real economy. I'm sorry for unable to put this in simple term, but how to explain it to our normal folks in the villages or smaller towns. Just explain and focus on the 3rd round effects will do, e.g. :

1) Reduction of rubber prices from what used to be around RM4.00++/kg to around RM1.00++/kg.
2) Reduction of CPO prices from what used to be around RM4,500/ton in Jul 08 to hovering around RM1,200/ton in early Nov 08.
3) Add on - closing down of Western Digital in Kuching Sarawak(Malaysia) and many employees being laid off as the business cannot maintain cash flow stream to keep afloat due to contraction in production demands.

We have to somehow to face it right here and now especially for the first 6 months of 2009. That is the time where the real 3rd round effects will be 'acute' and nobody knows when it will last or hit the rock bottom. The best way is to downsize in everything that non-core in our daily expenses. In my case, I adapt to the crisis with no driving to my work place daily, just come inside Light Rail Transit(LRT) capsule and within 30 minutes will reach my office. The car just park at driveway and just need to start once a while or joining colleagues for short coffee talks after working hours.

By just doing that small adjustment, the saving on fuel, tolls, and parking fees can be quite substantial. Skip the unnecessary jammed and stress. I can relax and better prepared for the day far ahead of the curve - reading books, journals, periodicals, pullouts etc. We have to change, adapt, and look for many options for efficiency during this tumultuous times.

Change Phobia

Today, we live in a time of rapid and massive change. The speed of change is really trying our soul. Many of us are very frightened to embrace change and learn about new things because of many assumptions, prejudices, and prejudgments which already solidly formed as our “mental baggage.” This mental baggage will make us moving very slow in our life journey.

Why is it so difficult to change?

Believe it or not, we acquire knowledge from the time we were born, and some medical experts and psychologists suggested perhaps even before our birth when we still inside our mother’s womb. We also acquire the stocks of words that formed our thinking patterns, the convention or norm of our culture, the beliefs of our parents, and the philosophy that pleasure us or make us resist to things that rattle our thoughts.

During our childhood, we enter formal education in school. If our parents can afford it, we might be lucky to attend good school with the best brains – best teachers and smart students around us. There we learn many subjects the way our teachers and textbooks teach them. Further, we start to learn on how the world is functioning according to the society’s acceptance or rejection on what right and wrong. From there, we will express ourselves in an established manner to succeed in our studies and mix with our colleagues.

As we get older, we move to higher level of education, more and more knowledge acquired by us, then more and more “mental baggage” being loaded into our already-weighty “mental trolley.” We should be lucky if we receipt positive and good values. In some occasions, if we are not paid extra attention to so many inputs, we might receive negative or bad values along the way that can put us into a situation called “educated incapacity.”

Those values that we learned will become our thinking, our beliefs, and our problem-solving tools, and that will determine our level of acceptance to any unprecedented or possible change that come our path.

Hibernating

I have found this interesting news cutting from The Borneo Post - one of Sarawak's dailies, and think it is worth to share here. I found it motivational as far as topic on adaptation or survival is concerned.

LONDON: Scientists have found an Antarctic fish that hibernates to conserve energy during the long southern-winters. The cod Notothenia Coriiceps enters a dormant state, similar to hibernation in land animals like Hedgehogs, British scientists said. Researchers already knew Antarctic fish had antifreeze chemicals in their blood and their ability to effectively put themselves "on ice" is another remarkable adaptation to an extreme environtment. - Reuters
Deatils - url: http://filaman.ifm-geomar.de/Summary/SpeciesSummary.php?id=4702

How great is God creation!