Great generals like Alexander, Genghis Khan, Frederick, Napoleon, and Patton invested considerable time in planning and in ensuring that their armies were always prepared for battles. But their plans were never cast in stone. It is not necessary for them to lead in battles although some like Alexander did.
The trick is to maintain a helicopter view scanning the battle ground while the battle is in progress but ever vigilant for break-through opportunities. Once an opportunity presents itself often in a fleeting moment, a great general would immediately seize it. The ability to sense whether a situation is an opportunity that should be seized or a one that should be passed up is what differentiates a great general from an average leader.
A fitting example is the biodiesel crap in which many corporations have sunk millions of dollars without any chance of recouping their investments. Pattern recognition would have easily established that it is not an attractive opportunity primarily because its future competitors relying on nanotechnology and biotechnology can capitalise on the technology s-curve that will one day enable them to leapfrog biodiesel's value proposition. Furthermore, the recent high oil price increase were not so much due to peak oil production as to peak money creation which means the high oil prices were transitory.
As for those who cannot even smell an opportunity, they are the foot soldiers who will always be the casualties of battles.
Tuesday, March 31, 2009
Monday, March 30, 2009
Not Super Power but Super Trouble
China has often been proclaimed as the next superpower by many commentators. This is an ill-informed judgment. A proper pattern recognition would reveal that it is in line for vary bad days ahead. A brief look at China's history is in order. Throughout its history, China has always been infatuated with being solidly unified as one nation. Its writing system reflects such preoccupation. The Chinese have many dialects, each unintelligible to one another, yet these dialects share the same written characters.
However, beneath the seeming tranquility lies stresses that creep up over time. Like the geological earthquake that needs to take place in order to release the stress deep inside the earth, China must every now and then suffer upheavals to dissipate the stress build-up. China's past upheavals occurred in timely intervals of 50 years. Any delaying of the upheaval will ensure that the next will be cataclysmic.
China also was never interested in what the outside world had to offer. It built the Great Wall to keep the barbarians out. Instead it was the outside world that tried to nuzzle its way into China. The Qianlong Emperor of the Qing Dynasty summed up this attitude perfectly in his writing to King George III after receiving Britain's mission in 1793 "Our ways have no resemblance to yours. As your ambassador can see for himself, we possess all things. I see no value on objects strange or ingenious, and we have no use for your country's manufactures". His grandfather, the Kangxi Emperor whose reign of 61 years is the longest in Chinese history, issued a prescient warning in 1717 regarding the British presence in Canton, "There is cause for apprehension lest in centuries or millennia to come China may be endangered by collision with the nations of the West."
Mao Zedong was one leader who perfectly understood China's peculiarities because he was an avid reader of history. He initiated the Great Leap Forward in 1958 and the Cultural Revolution in 1966 to release the tension within the system. Millions died. However both were controlled releases. He could end what he started. Mao was cruel but he achieved his objective, which was to ensure China remained united as a nation. The alternative could have been much worse; possibly a prolonged anarchy had the state fractured.
Deng Xiaoping who succeeded Mao in 1978 embraced free market and opened up to the world. It was a foolhardy decision. Now China has no control over its future. The prosperity that Deng wrought buys respite only as long as it lasts. He had a mild foretaste in 1989 with the Tienanmen Square protests which was triggered by a price inflation. But inflation can be easily tamed compared to the catastrophic oncoming deflation which has practically no remedy.
Capitalism is like riding a bike or spinning a top. Growth that it engenders cannot be allowed to falter. China is now moving fast. Unfortunately it is not on a bike but a runaway juggernaut with failed brakes. The coming crash that we are about to behold wouldn't be an interesting sight indeed.
However, beneath the seeming tranquility lies stresses that creep up over time. Like the geological earthquake that needs to take place in order to release the stress deep inside the earth, China must every now and then suffer upheavals to dissipate the stress build-up. China's past upheavals occurred in timely intervals of 50 years. Any delaying of the upheaval will ensure that the next will be cataclysmic.
China also was never interested in what the outside world had to offer. It built the Great Wall to keep the barbarians out. Instead it was the outside world that tried to nuzzle its way into China. The Qianlong Emperor of the Qing Dynasty summed up this attitude perfectly in his writing to King George III after receiving Britain's mission in 1793 "Our ways have no resemblance to yours. As your ambassador can see for himself, we possess all things. I see no value on objects strange or ingenious, and we have no use for your country's manufactures". His grandfather, the Kangxi Emperor whose reign of 61 years is the longest in Chinese history, issued a prescient warning in 1717 regarding the British presence in Canton, "There is cause for apprehension lest in centuries or millennia to come China may be endangered by collision with the nations of the West."
Mao Zedong was one leader who perfectly understood China's peculiarities because he was an avid reader of history. He initiated the Great Leap Forward in 1958 and the Cultural Revolution in 1966 to release the tension within the system. Millions died. However both were controlled releases. He could end what he started. Mao was cruel but he achieved his objective, which was to ensure China remained united as a nation. The alternative could have been much worse; possibly a prolonged anarchy had the state fractured.
Deng Xiaoping who succeeded Mao in 1978 embraced free market and opened up to the world. It was a foolhardy decision. Now China has no control over its future. The prosperity that Deng wrought buys respite only as long as it lasts. He had a mild foretaste in 1989 with the Tienanmen Square protests which was triggered by a price inflation. But inflation can be easily tamed compared to the catastrophic oncoming deflation which has practically no remedy.
Capitalism is like riding a bike or spinning a top. Growth that it engenders cannot be allowed to falter. China is now moving fast. Unfortunately it is not on a bike but a runaway juggernaut with failed brakes. The coming crash that we are about to behold wouldn't be an interesting sight indeed.
Wither the EU
The European Union (EU) is an anachronism in a world adjusting to a new paradigm - a paradigm of fracturing of the big into small constituents. The forefathers of the EU did not realise that the EU could only come about because of the past prosperity of its member countries.
It's a common mistake of humankind to frame future actions based on recent past outcomes. One hundred to two hundred years is still recent; to define real patterns, you must go back to one thousand to two thousand years. Had the present leaders been aware of the unfolding pattern, they would have ditched both the EU and the euro. In the meantime, the EU member states would have to endure many gut-wrenching moments while their leaders go about clueless looking for solutions to their economic travails.
Only one solution is clear - BREAK UP THE EU AND DITCH THE EURO.
It's a common mistake of humankind to frame future actions based on recent past outcomes. One hundred to two hundred years is still recent; to define real patterns, you must go back to one thousand to two thousand years. Had the present leaders been aware of the unfolding pattern, they would have ditched both the EU and the euro. In the meantime, the EU member states would have to endure many gut-wrenching moments while their leaders go about clueless looking for solutions to their economic travails.
Only one solution is clear - BREAK UP THE EU AND DITCH THE EURO.
Sunday, March 29, 2009
Pattern Recognition Way to Understanding Economics
Economics is very simple, that is, if you don't get confused by the 'economists' who try to engulf you with tons of analysis. Fortunately, they themselves are perplexed by the conflicting signals churned out by the economic data. Now using pattern recognition as described in The Race for Numbers, you can quickly grasp the economic issues of the day.
In economics, there are certain rules that you must always bear, the most important of which is that economic progression or movement is sometimes circular and sometimes wavy. Sounds easy but in reality, very difficult because we have been conditioned to think linearly. Another is that a solution to an economic problem always carries with it other ramifications. For example, something that unleashes tremendous growth will create bottlenecks in other areas. In a sense, there is no real solution but just a counter-measure.
In economics, there are certain rules that you must always bear, the most important of which is that economic progression or movement is sometimes circular and sometimes wavy. Sounds easy but in reality, very difficult because we have been conditioned to think linearly. Another is that a solution to an economic problem always carries with it other ramifications. For example, something that unleashes tremendous growth will create bottlenecks in other areas. In a sense, there is no real solution but just a counter-measure.
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