I have a variety of different frame of minds that takes me during the day, and for each of these there is an appropriate book. I would go so far as to say that even the time of the day affects what literature I might pick up.
Right now, I am vacillating between three great books of completely divergent styles. I have drawn the opinion, as I like to come up with excuses, that it is because of my addiction to the web and Google searching that my attention span is so flimsy that finishing one book takes an inordinate amount of time and will power. In my teenage years I was able to devour books quickly and without much effort, but now I find it a real challenge.
My arguments are not unfounded, there are research papers putting forward similar arguments to the effect that the internet has irreparably damaged the “Google generation’s” power of concentration. Elsewhere, the Guardian published an article questioning the Google generation’s attention span. It states that we are also much less likely, because of the effects of the internet, to carry out in depth studies in topics, and instead are liable to only look at the surface of a topic. So how do we take steps to counter-act the demonic powers of Google?
The book that I am finding most intriguing but I find it hard to review is the J-Curve, A New Way To Understand Why Nations Rise and Fall. This is the second book I have by Ian Bremmer. The first was equally as fascinating and proposed a different theory to the one posited in this volume. The other book I have read, The Fat Tail, is a fascinating analysis on the unpredictability of events. And how standard risk measurements fall flat against large risk shocks that are extremely difficult if nigh impossible to predict. The peculiar thing about these books is they both base their premise on graphs and the predictability of events. But since Ian Bremmer is the President of the Eurasia group, a company whose business is to predict risk and find patterns his style of writing is understandable. And there is something very satisfying in finding patterns in world politics and the world economy, making the world seem less random.
A book that is a very popular read in order to understand the unpredictability of events, is Nicholas Taleb’s Black Swan, that has a cult following. But his writing style is much more anecdotal and billowy than Ian Bremmer’s, which I find tiresome.
In the J-Curve Ian Bremmer proves his theory by providing several country analyses for each section along the J-curve. In part, what makes this book fascinating is the reader’s ability to fact check the theory just by looking at current political events, to ratify whether the theory works in practice. Another element of the book that I find enjoyable is the inclusion of concise but informative historical summaries for each country. This has given me incite into geo-political areas until now I knew very little about, for example Iran and Saudi Arabia. He highlights the draw-dropping extent of Saudi Arabia’s oil wealth and how dependent the power holders are on that wealth for political stability.
The other two books that I have been reading on and off are George Orwell’s Keep The Aspidistra Flying, and Napoleon by Frank McLynn.
Underpricing geopoloitical risk.
In concordance with an article written by the chief economic advisor to Allianz, Mohamed El-Erian, I posit that the position of today’s economic and political decision makers are downplaying the role of geopolitical risk on global stability. El-Erian draws on the political events taking place in Ukraine, as markets fail to respond in any serious way to these political developments.
Recent political developments are being seen as isolated events. Turkey, Ukraine, North Korea, Iraq and Egypt are some examples of disrupting instability that did not manage to destabilise economic growth the way the domino theory connected global risk, causing markets to panic during the cold war.
One thought why geopolitical risk is perceived as having a diminished effect on financial markets is that everyone has strong reason to stay in the open market. Even totalitarian regimes have a strong impetus to remain within the free market economy. This was not as much the case during the 80’s and 90’s with Cold War dynamics, with many countries with quasi-autonomous economic systems, without a middle class dependant on international trade, countries could act much more like black swans.
But even if Russia or China are less likely to damage ties with the West (see Obama’ sanctions on Putin’s Oligarchs) other less stable countries with independent wealth might cause fluctuatiions in the Market, but there is a realisation that the international financial economy is able to absorb isolated incedinces of geopolitical instability.
Another reason why markets are less effected by geopolitical events in recent years has been the West’s passive responses to international crises, with a general lack of engagement which has prevented to a certain extent escalation, unlike the Bush era.