Niall states it well at the end of his work on p.341: "the career of an average Wall Street CEO is just over 25 years, which means first hand memories at the top of the US banking system do not extend back beyond 1983 - ten years after the beginning of the last great surge in oil and gold prices." When you remember that our financial system is only people as talented and stupid as the rest of us, then some financial perspective makes sense.
The book felt a little slap dash, perhaps because the timing worked out so well and it was worth publishing sooner rather than later. So I was not really convinced of its comprehensiveness, nor whether the highlights it picked really all sat together well. But, read as a series of articles on key aspects of financial history, it's a great overview for most of us.
In the historical perspective, it does indeed feel that we are truly in a phase of transition. The US has been able to assert its 'empire' through economic power as top dog. But the US overplayed its hand in the last 20 years through leverage and asset inflation, while China and others have gained a much stronger hand. I see a world of more balanced powers.
It is interesting and scary to think back 100 years to a similar time of global economic integration which did nothing to stop a period of world wars. I am more positive, but there is no doubt that there could be the possibility of a thrashing US or China confronted by internal economic troubles.
In the case of China, I believe that ongoing growth can only be maintained with increasing individualism, free markets and in the end democracy. That is a tough transition to manage. Meanwhile, the US has a heavy debt burden and a dysfunctional political system, but fundamentally has the resources and the constitution to remain the most innovative and competitive country in the world.
In this future, I see the Anglo-American love affair with their houses become more tepid. Prices are still sticky and so high. In a world of more economic power balance, the best scenario is of continuing flat valuations. Even London and NYC will remain attractive global centers, but competition from others will see their values hold rather than go back to their high rates of growth.
Of course, I'm happy for you to ignore my predictions. I liked best of all his references in the afterward to how well we fool ourselves in our predictions. It is revealing that LTCM built their models with only 5 years of history and were blindsided.
He quotes Peter Bernstein: We pour in data from the past...but past data...constitutes a sequence of events rather than a set of independent observations, which is what the laws of probability demand....History provides us with only one sample of the ...capital markets, not with thousands of separate and randomly distributed numbers.'
He also lists out some of the common heuristic biases that are well known to any one reflecting on decision making they have seen in businesses, politics and the home!
The book felt a little slap dash, perhaps because the timing worked out so well and it was worth publishing sooner rather than later. So I was not really convinced of its comprehensiveness, nor whether the highlights it picked really all sat together well. But, read as a series of articles on key aspects of financial history, it's a great overview for most of us.
In the historical perspective, it does indeed feel that we are truly in a phase of transition. The US has been able to assert its 'empire' through economic power as top dog. But the US overplayed its hand in the last 20 years through leverage and asset inflation, while China and others have gained a much stronger hand. I see a world of more balanced powers.
It is interesting and scary to think back 100 years to a similar time of global economic integration which did nothing to stop a period of world wars. I am more positive, but there is no doubt that there could be the possibility of a thrashing US or China confronted by internal economic troubles.
In the case of China, I believe that ongoing growth can only be maintained with increasing individualism, free markets and in the end democracy. That is a tough transition to manage. Meanwhile, the US has a heavy debt burden and a dysfunctional political system, but fundamentally has the resources and the constitution to remain the most innovative and competitive country in the world.
In this future, I see the Anglo-American love affair with their houses become more tepid. Prices are still sticky and so high. In a world of more economic power balance, the best scenario is of continuing flat valuations. Even London and NYC will remain attractive global centers, but competition from others will see their values hold rather than go back to their high rates of growth.
Of course, I'm happy for you to ignore my predictions. I liked best of all his references in the afterward to how well we fool ourselves in our predictions. It is revealing that LTCM built their models with only 5 years of history and were blindsided.
He quotes Peter Bernstein: We pour in data from the past...but past data...constitutes a sequence of events rather than a set of independent observations, which is what the laws of probability demand....History provides us with only one sample of the ...capital markets, not with thousands of separate and randomly distributed numbers.'
He also lists out some of the common heuristic biases that are well known to any one reflecting on decision making they have seen in businesses, politics and the home!
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