The Conventional Wisdom

Received this from the FT.com yesterday and was also thinking about the way forward for Singapore. Hadn't we been first rate students of conventional wisdom? Weren't we lucky that running the ship of state though very tough is never as fast or brutal as the financial markets? And if you wonder why things have anyway become so complex, tough and unpredictable that is because the tail is now wagging the dog. It should be the other way round right? But these days, the world economy and politics march to the tempo of financial markets. We have lost control and have no courage to take it back. Well, they can help by making a good example of Goldman Sachs.

Adopting best practice is the sure way to work the hardest for the sake of feeling safe. Very tiring. Much better to understand the world better than anyone else, frighten them with taking risks which we know are actually not that risky. That would be replicating the boldness of our early days when we leap frogged the region using MNCs. Naturally to have the same spirit and achieve the equivalent results, we mustn't be using the MNCs this time.

For the moment we are bereft of ideas. We have a new Cabinet and I think it is the best we could hope for at the moment.

I had liked the concept of complex adaptive behavior but I fear it is too theoretical and at risk of being a candidate of conventional wisdom tomorrow. Well, as long as it isn't conventional wisdom yet, it is potentially useful.

There will be more monetary elixir after the end of QE2

In 1958, Harvard economist John Kenneth Galbraith was looking for a term to describe certain ideas that were commonly held, intellectually accessible, and yet fundamentally flawed. To define such widely spread misconceptions Galbraith wrote: “I shall refer to these ideas henceforth as the conventional wisdom.” As an asset manager, I’ve come to view conventional wisdom as the surest path to investment underperformance. One might even amend the old Wall Street saying to read: bulls make money, bears make money, but conventional wisdom gets slaughtered. Consensus opinion is generally a sign to get on the other side of the trade. http://link.ft.com/r/UXDMSS/0GTI1A/RUPL8/S39UXP/WLNWIR/MQ/h?a1=2011&a2=5&a3=18