can we still be shocked?

[duncan drennan]

I get FNBs economists newsletters which can be pretty interesting. I found today's column particularly interesting, particularly this,

We may have to redefine what will actually shock global consumers and producers into restraint. It used to be easy to shock. Today, is there a kind of immunity, as television audiences take in more mayhem than ever before while steadily plowing through their crisps, beers and other indulgences?

and

Can we still get fundamentally shocked, sufficiently so to have growth snuffed out? The global growth process is very robust at present, the central banks merely expressing interest in taming this tiger rather than shooting it.

The most interesting thing about this is what it says about society as a whole. "Reality" TV has blunted the way we perceive things shown on television (so has all the propoganda!).

As he asks, how big a shock would have to happen to knock the growth process and global economic confidence? And if that happens, how big will the fall be?

And probably most importantly, what can we do now to protect ourselves when it happens?

[Dave A]

I'm reminded of the phrase "Let's eat, drink and be merry for tomorrow we die".

The comparison between now and the '70s seems valid. IMHO, there are three fundamental differences between the two periods

• Average per capita income is much higher
• Inflation is now known and understood
• Sentiment manipulation is far more refined

Another (perhaps relevant) theory of mine is that the health of an economy does not lie in how much money is within the economy; it's how quickly it changes hands. This is what makes sentiment the critical economic force it is today.

I'm quite sure we can still be shocked - a series of 1% rate increases would do the trick quite nicely - it's just that the powers that be know it's not a good idea.