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