I recently went skiing, going up and down the same mountain many times a day.
When the sun was shining every aspect of the terrain was alive with music making it easy to choose a path with confidence, clarity and conviction - to accelerate and enjoy the dance of gravity, nature and being alive. Later in the day, as shadows and fog rolled in, the very same familiar slopes were fraught with uncertainty, demanded caution, and eliminated confidence.
This shift, not in terrain but in perception, is an unfortunately accurate analogy for what has been going on in the world economy. Interest rates are about as low as we're ever likely to see in our lifetimes yet economies worldwide are struggling. Decision makers at major banks are enveloped by uncertainty and therefore the flow of credit to the economy is distorted at best. In many parts of the world governments are hogging an increasing share of what's available. Many of the businesses that do indeed have access to new credit have been using the money more to shore up their balance sheets rather than expand their production.
The recent annual meeting of the World Economic Forum at Davos provided some clues about how the world’s political, economic and business leaders view the weather. Though the mood was generally dour, there was less focus on prices and more on opportunity, at least on the necessity for a reemergence of opportunity as a driving force in expanding the global economy. One thing that seemed clear was that the continued focus on monetary and fiscal policy won’t create opportunity. What is needed is the confidence that the sun is beginning to shine again - that initiative will be rewarded and that the bell has rung and it is time to move forward with confidence.
In line with this, I heard somebody say on CNBC the other day that he was astounded by how much now depends upon what happens in Washington, D.C. Astounded? The rest of the world has always operated that way, with business and economic decisions dependent upon how governments behaved – or didn’t behave. The heated partisanship that now annoys and dismays so many Americans is commonplace to all parliamentary democracies, and political factionalization is the rule in all but a few societies. Putting political and ideological purity ahead of economic needs is one of the causes of increased instability around the world. In the U.S., we have traditionally tried for a level playing field, where economic and social needs are held to be equally important, and where political ideology has taken a back seat to the needs of the country. Perhaps if we saw things a little more clearly, we might return to that way of looking at the path ahead where political ideology has taken a back seat to the needs of the country. As I write this, I am once again baffled by the election process underway in Italy. Political theater has reached a level unimagined even in the most memorable Italian operas. Oh, that the protagonists on the world's stage would recognize their responsibility to cast light on the terrain ahead and do their best to provide the confidence, clarity and conviction rather than offer up avalanches of fog and noise. Then the path ahead could be remarkable. Who is going to rise to the task?