Future Shock

This post draws significantly on Michael Farrell.

Alvin Toffler captured the zeigeist of his era with is publication of Future Shock in 1970. He described the psychological effect on individuals and societies with the premature arrival of the future and the effect of "too much change in too short a period of time." He argued that "change was going to accelerate and that the speed of change could induce disorientation...with future shock, you stay in one place but your own culture changes so rapidly that it has the same disorienting effect as going to another culture.

His insights into the political culture were very telling. He noted that politicians seemed totally unaware of what was going on around them, and were content to continue to fund and managed antiquated systems that were the handiwork of the past.

This brings us to financial markets of 2011. Market practitioners of the mid 2000s will not recognize this drive to more parochial, less global, simplified financial system. Risk assessment, market forces and regulation are driving this change. At the same time, funding old systems has lead the U.S. government to a decision where the immediate needs of national debt crowd out private expenditure and investment.

Where does this leave us:

First - the state of markets is a chaotic mess. The simulataneous execution of radical monetary, fiscal, and regulatory reforms is introducing systemic risk into the market. Rather than change one variable in a complex system and test the outcome regulators and policymakers are changing virtually all of them at the same time. The lack of visibility into the inter relatedness of these changes increases unintended consequences.

Second - in times of chaos, those that survive are not necessarily the biggest or the bravest or the ones most capable of seizing opportunity. In times like these, survivors are nimble, smart, resourceful, and lucky.

Last - these are also times of great opportunity and progress. Such is the future.