Happy Headlines and Hubris at the start of 2009

It often happens. And perhaps in the spirit of 'Happy New Year' we tend to be optimistic (whatever happened just a few weeks ago, and despite the curtain being raised over new theatres of war...).

As I left the office about a week ago, I challenged this notion, of 'Happy New Year Regardless', saying, "I know we normally say 'Happy New Year', but I think it's logical to assume 2009 is going to be tougher than 2008 - and so we shouldn't be too hasty to wish 2008 into history.' Someone (soon to be engaged) accused me of being 'negative'.

Negative is when, at the start of a bicycle race like the E|pic (for example), you say, "I don't think I can do it." Saying, "It's a tough race," is not negative, it's being critical, it's being realistic. It's an accurate assessment therefore of reality. It might not be good, or nice - but to say it is would be delusional (something the movie-going masses easily slip into).

It is silly-positivity to say, "The Epic is easy." A more appropriate response: 'It's a tough race, but I'm going to ride strong." Being disciplined and optimistic in the face of adversity is a 'positive' mindset, and no one can argue that this isn't necessary, even vital.

I find it troubling that the Sunday Times should sell essentially the news-we-want-to-hear on the front page, when experts in economics know that the financial crisis of 2008 will be remembered for decades as a major event, and one that will fundamentally change (reverse) global commerce from here on out. To embark on a new year as though 2008 never happened, and to wishfully await 'growth' and good news in the second half of the new year is dumb. It's short termism again.

In the article quoted below, oil prices are said to have collapsed. Since the article was published oil prices have risen more than $10 (almost $50 now), and Mid-East tensions could send them much higher. Also, Gasprom, is demanding very high prices for gas provided to Europe.
All our hopes for financial relief depend on energy prices.

And this is how it works. When energy prices go down, we have more money to consume - on transport, on food etc. This increases demand. And so energy prices increase in lockstep with demand (leading to inflation).

Higher demand = higher energy prices = higher prices of everything else = contraction

You can't have it both ways (in a limited-fossil-fuel paradigm). Either you consume less and prices go down, or you buy more and then start to struggle. Either way, we will see contraction this year, and a steady reining in of our over-indulgent shoppertainment and infotainment, whatever wishfulfilling headlines would have us believe.

clipped from www.thetimes.co.za After a tough 2008, 2009 looks to be just fine — and it kicks off with a whopping 19% drop in petrol prices on Wednesday. Jan Potgieter, managing director of Massdiscounters, which controls Game and Dion Wired, said: “There was a swing to electronic appliances such as TVs and TV games as more people stayed at home this year and needed something to keep them occupied.” The careful way in which consumers have spent cash this holiday season also reflects a welcome slow-down in credit spending. South Africans are also benefiting from better weather after two years of drought, and a sharp fall in international oil prices. Most economists believe it was the first in a series of cuts that, by the end of 2009, will put much-needed cash back in the pockets of consumers.