Bretton Woods - No. Globalisation - Yes

Greetings …

I had the pleasure of attending the FCIB Conference in Budapest a couple of weeks ago. The key-note speech by the Chief Economist of Fortis Bank was amusing, interesting and informative. This was a veritable highlight. Some comments that stuck include; the USA resembles the Roman Empire before it fell, with a near zero savings rate and a $9 trillion debt burden. You can hear the silent cry of US residents – so we have no money, never-mind let’s go to the mall and spend some more of someone else’s money! The prediction is that – if we are all very lucky – the lenders to the US citizenry will not ask for repayment until about 2012/13. So we only have to deal with the sub-prime fall out for now.

The other point well made, amid many a chuckle, was that (i) globalisation, and (ii) technology have changed the rules for the world economy, so the Bretton Woods US consumer dominated model and the associated control mechanisms no longer apply.

Participation in the world economy has grown ten fold since 1990 (800 million American-European-Japanese participants to 6000 million citizens) and technology has made the world ten times faster. Business has been turned on its head by technology and open access, from a heavy asset based fixed address model to an intelligence-connectivity model. Nation states have lost control since intelligence and connectivity has no fixed address.

The positive spin-off for all world citizens has been enormous. Sustained and stable economic growth, low inflation and low real interest rates; despite the world financial crises companies in the real economy are still in good shape.

Were you at the FCIB conference I Budapest? If so, what were your impressions? If not, do you agree with the sentiments that I have poorly represented above?

Regards Ron

PS: Find out more about the FCIB on www.fcibglobal.com