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2009-01-02 10:33:51
Viewpoint
By Sir David Tang
Entrepreneur
Pessimism is the most serious cause for the global economic tsunami.
There is an ocean of people who are now feeling so depressed that not only have they become resigned to the fact that they are in deep trouble, but they have told everybody else that they are also in deep trouble.
Pessimism has an uncanny knack of being self-fulfilling.
No wonder almost every single quoted share in the world has gone down significantly, mostly by half, if not much more.
Even the most solid companies, such as HSBC, which has no real exposure; or BP, which has significant oil reserves; or a company like Dell, which has an enormous amount of cash - the shares of these companies have traded down considerably.
That is the barometer of our general pessimism.
Big collapses
The present condition has also been a wake-up call for those who have lost sight of understanding the businesses in which they invest.
Before now, there were far too many people out there trying to profit from the shuffling of papers and commodities and derivatives and options and hedging: really sophisticated instruments - but all too clever by half.
It just goes to show that having all these smart theories and ingenious ideas is no substitute for a solid business sense based on the fundamentals of supply and demand, with particular reference to the efficiency of the workforce; all those basic components that people such as Warren Buffett emphasise and are often ridiculed for.
Let this depressing climate also be a reminder that if you grow big, you can collapse big. The higher you climb the harder you fall.
Think small
In this mania for globalisation, it might not necessarily be good to be absolutely massive.
Just look at some of the banks and car manufacturers - they are huge, and they are in huge trouble.
What we all need to do is to sit down and calm down and go back to basics.
And most important of all, shed our sense of pessimism.
It is only with a sense of optimism, preferably accompanied by a sense of energy and laughter, that we will be able to pick ourselves up from a broken Humpty Dumpty.
In particular, governments must immediately instigate infrastructure projects to increase employment, and they must force banks, particularly those that they have rescued, to lend to small businesses.
Without a general sense of gainful employment, from which the ordinary people at large can grow optimistic, we run a huge danger of increasing unemployment.
But we cannot be complacent.
We must stem growing unemployment and promote maximum employment.
Jobs measure feelings more accurately than the Richter scale measures earthquakes.
Sir David Tang is the Hong Kong-born, English-educated entrepreneur who founded the clothing chain Shanghai Tang