Syzygeist

These Authorities Have to Go

Libya's Gadhafi struggles to hold on to power the only way that dictators of force can hold on, which is with more force. Just how brutal he will continue to be, and how effective, is still to be determined.
How far will this go, and to what effect? 

The debate over the economy is still fully on between the recovery and double-dip camps, but the spreading uncertainty from Libya to Saudi Arabia may favor the latter. Chinese economist Andy Xie points to Mideast (37% of the world's oil production) instability and potential gas price increases to infer that stagflation may be just around the corner. He notes that the oil shock of 1973  triggered a market crash and laid the foundation for stagflation thereafter. OECD countries now have leverage levels that are 50% too high, and must come down, he observes. That is deflationary on its own. Meanwhile, the US continues to flood the world with dollars, which is inflationary.
What is important here is the degree of uncertainty in the system. The Libyan crisis will have its own effects in that country, and has roiled Saudi Arabia, whose leadership has just announced new levels of largesse to keep the population in line.
But what is really going on here globally?
Authority the world over is being questioned and challenged in new ways - faster, more broadly and deeply - in a new era of communication. In the mid-1990's, we postulated that the Internet would act as a universal solvent to erode authority structures of all kinds, from the top down, bottom up, inside out, and so forth. Power would shift to the "end-user." This was long before Google made answers available to most questions or Twitter allowed differing versions of the truth - as well as lies and distortions - to spread at the speed of light, 140 characters per Tweet.
We now know quickly - as can anyone anywhere who wants to ask - that the Greek government has to meet a major hospital deficit in a hospital that has 42 gardeners but no garden. We know American public safety officers bulk up their hours in their final years so they can retire on pensions of 100 percent or more. We know that Democratic state senators fled Wisconsin in order to dodge their responsibilities to address budget deficits, apparently believing in the power and efficacy of denial. Technology guru Mary Meeker has just published a report to suggest that America Inc. is functionally bankrupt on the costs of Medicare and Medicaid. These two entitlements were approved largely by and for Baby Boomers with apparent disregard for intergenerational fairness, let along practicality.
It's all coming home to roost, all over the world. It has to.
The point here is that "the authorities" have made a mess in many places, not limited to Libya. Gadhafi & Co. did not bother to build infrastructure with its oil billions, leaving a poor and uneducated populace now with a void to fill, when/if Gadhafi falls. (See here the first CNN footage in Benghazi, where Gadhafi has already been pushed out.) His is not the only regime to abuse power and abrogate the responsibilities of leadership. So his is not the only regime to sow the seeds of crisis, which cannot and will not be avoided.
The question now is, what will we do? Violence in the streets is the only choice for those who have no other choice. The US mess hopefully will be addressed by those who stay in the room and try to fix the problems with real solutions. But Wisconsin is not the only state where protesters have picked up the vibe from Middle East and staged long and persistent demonstrations against failed leaders. And material support - in the form of pizza for Wisconsin protesters - is pouring in from Egypt, Turkey, and around the world.
Authority that underestmates this unprecedented connectivity, both in how it connects and educates people, is learning fast that a new model is forcing its way forward, outward and down. It is not contained or slowing, only expanding literally at the speed of light. How does your "official future" fair against the potential for stagflation and continuing global unrest?

Out of Your Own Way

A reader last week responded to my blog "Be Your Own Coach" with a reference to Cognitive Therapy - an approach to addressing negative ways of thinking that are often implicated in certain forms of depression. This prompted me to look up the term and I followed a number of threads that I found quite useful.
The reader had also reminded me of lessons I learned some years ago while sailing alone in the ocean, when the only therapist aboard is oneself.
I did not know at the time of that journey that I was suffering anything clinically called depression, which I would discover later in life. Depression can have many root causes, both genetic and experiential, and often reflects a dilemma that one cannot solve. One such dilemma might have contributed to mine, about which I then knew very little. No one had ever told me that melancholy, or deeper, darker states of feeling are not man's natural way of being.
What I did know was that a strange and uncomfortable sense of emotional distress could creep into the cabin with me. Call it a dull whine, a high or low frequency background noise, a trembling in the system that might be associated with nails on a blackboard, or strange footsteps. Something creepy, but more deeply rooted. A slipping downhill with an uncertain endpoint, not good.
Part of sailing alone is knowing that there is no one around to help, so the experience teaches you to be your own best friend, even if that has not been your habit. (I had learned by then that mechanical self-steering devices for single-handed sailors, on which they rely heavily, are often named after their mothers. Need we wonder why?)
I discovered quickly in the ocean alone that the background noise or whatever it was could deepen to a point where I would not feel like doing much of anything, even those things required to keep the boat balanced and steady under existing sea conditions. And it did not take long to learn that this was a bad situation to develop, and I could not afford to let it happen.

I found I could intervene in that sense of slipping downhill. It was actually as simple as taking action - early - to do something to make me feel better. Make a cup of hot chocolate and drink it slowly. Concentrate on the pleasure and comfort it brings. Read a chapter in Patrick O'Brien's sea novels. Revel in that world. Play a favored aria from La Boheme loudly on my little boom box. Sing along. Possibly take a nap - but be careful not to take the system down when something needs attention, or was about to.
All this came back with the reader's note last week and served as a healthy reminder:
If that bad feeling is coming on, take care of yourself in simple ways that you know will work. You are the first one to get the warning, and the one who will benefit the most.

Be Your Own Coach

An old friend who is struggling through a dark period in life (recent death of a cherished parent) is trying to climb back into the light, so to speak, and called to talk things over. I found myself suggesting something that I realized I would do well to listen to myself.
In Little League coaching, the suggesting rule of thumb is 5-1, positive to negative. Say 5 positive things to a player for each correcting or critical observation you make. 
It works. They learn faster, play better, have more fun. 
I learned this a few years ago when I coached my son's team and found it is not my natural way. I am quite good at spotting what is "wrong" and suggesting what should be done to "improve." 
I was raised by two parents who watched quite carefully and commented on any shortcoming, error or misstep they saw in their children. There might be a bonus for exceptional performance in the form of praise or rewards  (or sometimes just an absence of criticism).  It often seemed that love itself was conditional on good behavior (and to some degree on good manners and general appearance.) It certainly wasn't enough in my family to simply be. 
I sometimes have to fight this now in myself and in the way I treat my own children (and others). Being truly positive is a challenge. The negative is often trying to find its way in, as if it were just as "good" to see what is wrong as to see what is good. 

It isn't.

So in this spirit, I encouraged my friend, be on guard against negative thoughts and feelings about life around you, and yourself. Try to outnumber them 5-1 with positive ideas. It's a way to become a better coach to yourself.

You may find you play better, learn more and have more fun. 

And tomorrow is another day.

 

What Now Do You Dare?

Current events in Egypt and spreading effects in the Middle East underscore that the world is changing rapidly. It is not obvious where some things are headed. The have-nots are increasingly empowered and inclined to express their desire for fairness and a bigger slice of the pie. What form this will take is not clear. Many of our past presumptions do not hold, and will not.
In the United States, the leadership, such as it is, is spread between executive and legislative branches and a troubled populace. We are all grappling with what seem to be intractable problems: a stalled economy, high unemployment, unbalanced budgets, need for deep cuts (and rebalancing of inter-generational claims).
In financial markets, analysts are seeing a breakdown in historical correlations, as the prices of equities have risen with gold prices, for example. The emerging role/power of China is one critical uncertainty; the unsettled Mideast another; the developed world's debt and economies another; and the potential impacts of new technologies, for better and for worse, still another.
The rear view mirror does not appear to be the place to look for a sense of direction.
My thesis for individual and organizations is this: we all have to be willing to take a new set of risks. That means being open to ideas that might have seemed unacceptable, even inconceivable, not so long ago.
We have to give up our notion of the "Official Future" - what we imagined would be true, or wanted to be true (everything will be fine).
It will not be. Scenario thinking will help, but an initial required step is personal, in terms of our own risk appetites in both thought and action. What do we need to reconsider - and consider doing differently - that can really make a difference? What should we stop doing, in order to start doing what?
Does it make more sense to finish college or go out in the world to work to address social and technical problems?
Should we be curtailing immigration or actually increasing it to bring new energy into the country?
Should we get out of the wars we're in, but adopt universal conscription and national service, dedicated to national and global challenges?
If everyone at this point clings to the notion that all the same sacred cows are sacred, we will not be able to feed the herd.
So I would ask: what now do you dare?

Superbowl lesson for teams everywhere

A very senior executive at a global multinational this week was discussing the importance of "high performance teams" in his management ranks. We have been working together for several years, during which his strategic vision and energy have been rewarded, but he remains unsatisfied by the tenor of interpersonal dynamics at the top.
A recent engagement within his own team had provoked a few interpersonal truths - some of which were hard to hear from colleagues and more challenging still to act upon. Would it make them operate better as a team?
Teamwork is a common corporate value and highly touted as a means to, or synonym for, collaboration. How do "high performing teams" really behave, anyway? 
An image came to mind of NBA basketball players. The best ones pass often and accurately to others. The skill of shooting baskets is certainly valuable but it takes a lot of passing to get anyone to the hoop. Whether that operates at the highest level has a lot to do with how the players feel about themselves and those close to them. This is as or more important than individual strengths and weaknesses.
The sports metaphor brought me to this weekend's upcoming Super Bowl and the Pittsburgh Steelers. On television of late they have stopped talking about themselves as a "team" and have been talking instead about their fellow Steelers as "family." 
Now what about "family," I wondered aloud, makes a "team" better? 
Unconditional love? 
Faith that others care about you and are covering your back? 
Trust that if you make a mistake, you will be forgiven? 
Confidence that others assume that you are doing your best?
A sense of safety if you tell the truth as you see it?
Putting "the family" first?
These may sound like idealizations and different from what you experienced as a member of your family. It may also sound foreign to business relationships in a company or corporation - though not the best ones. Research suggests that "visionary" companies, some of them family owned at the outset, are roughly six times more profitable than others and more fun/satisfying to be in because they have core values and they live them.
The Steelers are talking about a feeling. And it is a feeling that is largely lacking (if not entirely missing) from many corporate and business environments. And often missing, it would seem, from teams of all kinds.
A sense or feeling of "family" denotes a set of behaviors and values to pursue in corporate behavior, whether as part of "high performance teams" or more broadly.  
How do you encourage these? And how do you know that they are helping the workplace and the people in it?
Answering these questions is part of the work to be done if we are to raise workplace satisfaction and the increased productivity that goes with it. If you have thoughts here, please pass them on...

On books and hope – and value in the New Economy

With Christmas fast approaching, I am guilty of a selfish desire to sell as many books as possible to old and young alike, in heretofore secret hope of fulfilling a childhood ambition: to one day occupy a Heaven-on-Earth island in Maine like that possessed by the late Robert McCloskey (One Morning in Maine, Make Way for Ducklings, Blueberries for Sal) - childhood favorites all, and rooted where my mother’s family spent summers, just across East Penobscot Bay.  I have not accomplished as much along this line as I might have liked by my current age, but I am confident that since 62 really is the new 45, it’s not over ‘til it’s over (and it’s never over.) Besides, the New Economy still holds unfulfilled promise.

To that end I am hoping that this year total strangers, as well as friends and family, will avail themselves for Christmas gifts of both “Into My Father’s Wake,” and “The Deep.” These two books, aimed at older and younger audiences respectively, have a relationship on the water and in family affairs (about which some know much more than others.) Hopefully they will make some readers happy and be a gift that keeps on giving.

In a recent exercise with my daughter Emily, head of marketing and sales, we tried to establish the fair market price for our books in the New Economy, which can be directly bought through Amazon (http://www.intomyfatherswake.com) or in the case of “The Deep,” through our Brooklyn offices (http://www.whatcouldpossiblybe.com). We are in the latter stages of getting both books into Brooklyn bookstores before Christmas. (Time is running down!!!)

Unfortunately, bookstores are suffering in the New Economy from on-line sales and on-demand publishing. It is odd but understandable that although books can be produced more inexpensively and delivered directly, pricing of new books does not yet reflect all those potential advantages to readers. Bookstores have to pay rent and staff but they provide a real experience, not a virtual one. Browsing is a physical as well as mental experience, where the greatest reading treats are often found by chance, down that stack over there. But by the time a new paperback reaches an actual bookstore, the price has to be north of $15, if not higher.

In the shower this morning I calculated that a 300-page book at $15 is asking a measly nickel a page. Accounting for paper, print, binding and distribution for the physical item, and the room in which you find it, does this seem unreasonable? I would think not. I would even hope that any randomly selected page of almost any book would have at least a nickel’s worth of value (humor, wisdom, information, writing style) in it. But this is up to readers.

I once comforted myself with a question overheard somewhere – “So many bad books are published, why can’t my bad book be published?” Then the New Economy came along and made it easier for a writer to publish his or her own book, whether bad or good (and I suspect, alas, that more bad books of all kinds are thus available and fervently hope mine is not among them.)

At a recent Christmas book fair in the West Village, I actually bought An American Tragedy (Theodore Dreiser), The Bonesetters Daughter (Amy Tan), The Heart of a Woman (Maya Angelou), Bury My Heart at Wounded Knee (Dee Brown), Fahrenheit 451 (Ray Bradbury), The Picture of Dorian Gay (Oscar Wilde), Angle of Repose (Wallace Stegner), and Rise and Shine (Anna Quindlen). Can you infer from this list that I had in mind a very bright eighth-grader who loves to read, has a talent for writing and in early adolescence must stave off the nefarious influences of New York City and American culture if she is to survive and prosper as her own creative force?

In any event, the whole stack cost me an astonishing $8. Okay, these are used paperbacks, but that is a lot of value for the price. (I would have paid at least $20, and donated another $10 on top for the charity involved, but they were determined to nearly give these away.) In the end, the only arbiter of real (rather than monetary) value will be the reader, who either gets his or her nickel’s worth per page, or puts the book down before finishing it and says, “That’s enough of that!” They might still be way ahead for whatever price they paid.

I hope this Christmas will be generous in its collective curiosity about our books, and that the New Economy, with its global reach and transparency and ease of use, will invite new readers to our electronic doorstep, there to order, buy (happily?) and read (happier still!). And I hope that when we are discovered in bookstores in the coming months and years, the price, whatever it is, will be no impediment.

Merry Christmas and Happy 2011.

 

"Act to be?"

I recently searched the internet to see if a man I met once in 1989 was still alive – David Murdock. He figures briefly but importantly in my book “Into My Father’s Wake” (www.intomyfatherswake.com) as the source of a particular piece of wisdom. In a brief interview in Honolulu in 1989, defending his development – or despoilment, depending on your point of view – of the island of Lanai, Murdock said people who want to do anything meaningful with their lives must “act to be!” He meant that as you behave, so shall you become. He was also saying that having an ego is not bad, it’s not having an ego that’s bad.

It turns out that David Murdock, somewhere in his 60s when I interviewed him, is among the 150-200 richest men in the world, according to Forbes, and developed more than land and hotels.  He has also become a champion for consuming fruits and vegetables in copious quantities as a source of health. Now 87, he claims in the last two decades to have avoided colds and flu altogether and not taking so much as an aspirin. How? A fruit and vegetable-rich diet. You can find out much more about this through www.dmhri.org, the research institute to study and promote nutrition as a source of health and longevity of which Murdock was the principle benefactor.

I discovered this in my search as I was trying to reach Murdock directly. I wanted to send him a book and thank him for his deeply affecting impact on my life, which although brief, caused me to think about “act to be” and ultimately to promote it in my consulting practice, Best Partners (http://www.bestpartners.cc). See Number 4.

And Murdock in his way also set off another cascade of personal events this weekend. At a routine doctor’s visit last week I had learned that while my blood pressure is down to normal from unhealthy levels a year ago, my triglycerides and “bad cholesterol” are up. Stop coffee with milk and sugar, she said. Take fish oil and vitamin D daily. Come back in a month to see how you are doing.

Well, okay. I started that (sort of). I had consumed some fish oil and vitamin D supplied by a concerned friend but had not yet bought my own supply. (Will do that later this weekend, I swear.) But I did think about Murdock and his fruit and vegetables and did a little more research of my own. Consequently this morning I bought a Vita-Mix (http://www.vitamix.com): three oranges, four grapefruits, a lime and made my first fruit smoothie. My son complained that “it burned,” which it did, but it seemed like a good burn.

Is it the start of something? Maybe. I am calling it “Act to be – longer.” We’ll see how it goes. And I think I am going to owe Murdock another word of thanks.

Maybe it all depends on how I act.

 

From there to here...and beyond

I have often been asked how in the world I got from a career in journalism on the West Coast in the 80s to an investment bank on Wall Street in the go-go 90s.

An honest if incomplete answer resides in an old Sufi named Joe Miller who is, alas, no longer living, but who influenced many who sought his counsel. I went to see him after falling ill with pleurisy in 1987. He asked me what advice I would give to myself if I came to me with what was troubling me then. Without thinking about it for more than a second, I said I should try to live closer to my heart and walk in the path of my fear.

At that point Joe had a brief comment – “Most people do not do that,” he said - and then thanked me for coming to see him. I left his San Francisco apartment suddenly determined to sail my 47-foot ketch from San Francisco to Hawaii and back and to let the chips in my life fall where they might.

So I did, and in 1989 quit the San Francisco Examiner to write a book about the experience and other forces in my life.  Now “Into My father’s Wake” has just been published on Amazon. You can find it at http://intomyfatherswake.com.

That it took 20 years to finish the book and that it is coming out into the new e-economy of publishing is a comment on many things, only some of which I think I understand.  In the interim my father died, my brother suffered an injury and stroke, my mother developed Alzheimer’s and Morgan Stanley offered me a job. Then I met and married the mother of my two youngest children, bought a house in Long Island… the rest, they say, is history.

Of course I hope that people I have never met will find the book, and read it, and get something from it that is as useful to them as Joe Miller’s question was to me years ago. The made-up name of this blog – syzygeist – is intended to suggest such moments, when words or ideas or people or events or some combination of those come into alignment and we see or feel something valuable, and it helps us to change direction in ways we need to.

I marvel sometimes that Joe Miller might arguably be the reason that I later – after finishing a first draft, running out of money, getting a job with a boutique consultancy  – that I found myself “Crossing Wall Street. “ This is my working title for a comment on the world I found far from journalism or the life of a writer, which I had aspired to long ago. Life is a path, a philosopher once said, that you beat as you walk it.

Wadsworth on China

Yesterday (Monday October 18th) I watched an old friend and very wise man, Jack Wadsworth, interviewed on Bloomberg TV on the subject of China – its currency, economy and relations with the US.
I have known Jack since he was running Asia for Morgan Stanley in the mid and late 90s. I first saw him at a party for clients and was struck by the thought that if a war started and we all had to join the Navy and Jack had command of a vessel, I would want to serve on it. (I still feel that way.) Jack has run his own venture capital firm that has started about 30 new companies in China in the last half decade. He knows whereof he speaks.
On Bloomberg he had the same air of quiet composure, concern, confidence and good humor that always seems to characterize him. He did his best to persuade his interviewer that the real issue is not whether China adjusts her currency upward as Americans and their politicians would like, but whether America recognizes a labor rate differential in the world that requires our adjustment.
The idea is pretty straightforward – if a country competitor has labor rates that are roughly one-tenth of yours, you have a problem. Their currency adjustment alone is not going to fix it. You have to address it.
I listened to Jack trying patiently to explain this in the mini-bites of information that modern television news coverage allows. I have been involved with Jack in numerous meetings to discuss this issue: how the US-China dynamic should concern all of us, because if it goes off the rails, we (the world economy) all go together.
With U.S. mid-term elections approaching, a rising political theme is that China has to do something about its currency in our favor, and then somehow things will be different, better, “fixed.” Most troubling is the ring of 1930s protectionism implied – or actively expressed – if “they” don’t do what we want.
Jack’s quiet message – though I doubt it was heard through the veil of “tell me a happy truth that makes us feel better” – was simply that China cannot solve our problem. Its currency may be 5-10% undervalued, but we have a 10-1 imbalance to consider.
I would feel encouraged if I thought the American body politic can face this music and begin to dance together, but I do not. The Obama administration, public employee unions, the unemployed, Tea Party activists etc are not likely to come together with an attitude of “America has a problem that it must fix.” Wall Street and those profiting from currency market machinations could care less, as they will win no matter who loses. (Okay, some may lose there, but not the ones who should.)
Rather, we will seek outside causes for our ills and play a blame game as further difficulties come home to roost. The Greeks protest austerity. The French strike to defend their retirement age. And the US will find its own ways to defend the status quo. I predict we will look to others to blame instead of into the mirror, failing to consider that we have seen the enemy and it isn’t “them.”
What does that mean? Our currency will keep getting weaker, unemployment will remain at these levels or worsen, stock and currency markets will continue to fluctuate, and the hole the US has been digging will deepen, the reckoning yet to come.

View the clip of Jack Wadsworth speaking about China on Bloomberg here.

Look Out Below!!!

I had dinner this week with a couple of the smartest people I know in the realm of macro economic analysis and prognostication. By “smartest” I mean that what they have been willing to predict in the past has tended to come true (one called the ‘80s collapse of the Nikkei right on the button, and foresaw Japan’s ongoing troubles), so I tend to listen to them more than to others, particularly since I doubt the ability of most people to predict with any particular accuracy.

Both are extremely bearish about US prospects, for a variety of reasons – political misguidance, trillions in debt, the continued papering over of liabilities, rising baby-boom retirement and health costs coming, unemployment, etc.  Both see the dollar in deep trouble, gold rising for now, and no recovery relief in sight. The question is when the “next crisis” will unfold, and in what form.

Michael Peskin of Hudson Pilot, formerly of Morgan Stanley, an expert in pension and asset systems, points to a system of incentives that has created a financial industrial complex composed of congressional oversight, public employee unions and a banking system that has a stranglehold on fiscal and tax policy. 

Roger Cass, an independent analyst with an extraordinary track record for seeing when countries are about to hit walls (he homered on Japan when the world thought it had figured out its own economic miracle), says failure is written all over Obama’s health care and other domestic agenda. The current leadership is without a functional compass, even if it knew which direction to take and had the resolve to take it, which he is convinced that Obama & Co. do not. 

Cass just issued a report to clients that warned, among other things:

• The world is entering stage four of an ongoing global financial crisis, unfolding next in Euro sovereign debt. Unemployment, slow growth and protests will mark Europe’s near term future as the situation worsens.
• Developing countries will not be able to offset slowdowns in Europe and the US, but will suffer as trade demand slows, so there is no global rescue in the emerging (BRIC) countries.
• China is operating a real estate “Ponzi scheme” and a collapse in prices has already begun. “Across China dozens of so- called ‘Fabric Cities’, ‘Electronic Cities’, and ‘High Technology Cities’, hybrids of department stores, factory outlets, and distribution centers specializing in the named products, have vacancy rates of 50% or higher, with investors demanding the return of their investments from local governments and developers. The process in which property values were driven ever higher by this Ponzi scheme of circular fraudulent transactions between local governments and corrupt bank loan officials and SOEs is now beginning to unwind.”
• We are about to go through a period of disinflation, but “…the massive stimulus programs and the eventual monetization of the accompanying record deficits by the U.S, European, Japanese, and Chinese governments to stave off financial collapse are setting the stage for a new round of rising global inflation, interest rates, and a weakening dollar.”

And he quoted Von Mises:

“There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of the voluntary abandonment of a further credit expansion, or later as a final and total catastrophe of the currency system involved”.

- Ludwig von Mises

These are just a few outtakes of a scathing and distressing report that prompt the fair question: what to do?

Peskin believes deflation is coming, and inflation will follow, as does Cass. Both are negative about stock markets, with a few exceptions, and both are bullish on Canada, and gold. While this may not seem conventional wisdom, in my experience it is likely to turn out to be wisdom after all, so I would ignore it only at my own risk. For further insight, track these guys down and ask your own questions.