It has been three years since the “King of the Bubble Boys” made his armchair trip around the world predicting the collapse of economies from the Philippines to Turkey. As several of us in the Philippines responded, it was not going to happen, and, of course, all the economies he mentioned, including Malaysia, are astonishingly still alive.
The problem with his inaccurate analysis was that comparing the Dutch Tulip Bubble of 1637 to current economic conditions is about the same as comparing the Dutch Empire then—when they ruled northern Taiwan—to the geopolitics of today.
The reason nobody seems to get it right is the inseparable relationship of politics and economics. Actually, one person did get it right; Bill Clinton advisor and political strategist James Carville. One of his three points for the 1992 US presidential campaign was “The economy, stupid”, beside “Change vs. more of the same”. It is interesting that nothing has changed in 24 years, and expect it to be the same 24 years from now.
My rantings about the existence of cycles began with a relatively insignificant luncheon meeting about something that I have no remembrance of. However, a snippet of conversation with the man sitting across the table has been with me for almost two decades.
Dr. Sixto K. Roxas needs no introduction for those who know his history as a pioneering development economist, as well as a banker. Sufficient to say that the strength of the Philippine banking sector, of which I have written of innumerable times, is in part a result of Dr. Roxas’s wisdom and work.
One thought from Dr. Roxas stayed with me: Every three years the Philippines has a minor event and every six years there is a major event.
The research on the subject of hundreds of different cycles is vast. Some require putting the “square peg in the round hole”. Some cycles theories require perfect hindsight and are worthless for looking in the future.
However, I have written that what we find is an accurate cycle that shifts between the “public” and the “private” sectors. Simply put, during the public time of the cycle, people trust everything. During the private time, people basically trust nothing and both apply primarily to the strongest force in organized society—government. While governments believe they control economies, in fact, the people do. It is just that the people give up control for a while until things become dismal and then they take control back. That is what has been happening.
As I previously wrote, the US presidential election pitted two of the most unqualified candidates in history and that fact is not confined to the US. As a result, the world is experiencing a major amount of post-elections political chaos.
The “bubble” that the experts were worried about was not economic. It was political. Next year will continue this period of “Political Hell” as trust in government continues to evaporate. Then will come the economic chaos. But don’t think of it as a bubble bursting; it is evolution. Darwin’s finches are a group of about 14 species of birds living on the Galapagos Islands. They are all similar, except for body size and the shape of their beaks. The beaks adaptively evolved to allow the birds to feed on what food was available in their particular area from hard nuts to soft fruit and wiggling insects.
“Government” designed a “New World Order” beak shape that didn’t work. The birds had to take back control in order to thrive and prosper. That is what “The People” are doing now.
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