“To run a pricing market for a non-renewable resource off rationing short-term supply and demand makes no sense.” – Gregor MacDonald
One of the worst traps in thinking about the future is assuming that your images of 20, 30, or 50 years ago are still likely, or even possible, in the future. Gregor illustrates this beautifully in his post “Jett Rink’s Speedboat,” about how today’s major oil finds will never lead back to some cheap oil pseudo-paradise of the 1950s and 60s. They cannot. Because this world is so very different.
Notice also his comments on how hyperbolic oil companies are becoming from oil field “discoveries” that sound dauntingly difficult – and how the market responds anyway.
as tried, to no avail during the 1980s by now-depressed executives. As a result, these jaded, weary bureaucratic warriors will attempt to shoot down anything that even smacks of an earlier attempt at greatness. Their tool of choice will be to compare the current strategic situation to the decade of neon and shoulder pads.
*Note of caution!* Some classic strategic blunders will always apply, and should be taken mostly at face value. Pay attention when you hear, “Don’t invade Afghanistan. We got the Soviets to do it in the 1980s, and it’s really nasty.” This one is true! They learned it in the 1980s, 1950s, 1920s, 1890s, 1120s, and so forth back to Alexander the Great. It’s a good bet.
Now, let’s explore this technique in an economic situation rapidly unfolding before us. Many of my regular readers may be aware of the somewhat significant difficulties in the banking industry due to developments in the housing sector. (Ahem.) Everything – how do you say? – caught on fire and burned to the ground after people around the world decided that their three-bedroom ranch with a 1950s kitchen was worth EIGHTEEN MILLION DOLLARS, and then the banks developed ingenious financial instruments around this unusual state of affairs.
