Change, Change, Change

The whole thing is changing. Don’t get scared, don’t get worried. It was bound to happen and has been predicted for ages, both in the short term and the long term - not least be people like Alvin Toffler, whose wonderful book The Third Wave I’ve been re-reading recently.
One of the things that Toffler points out is the level of inertia inherent in our society. We like what we already know, so when things start to shift, we get all flustered and apprehensive. And even if our current situation doesn’t really work for us, at least it’s familiar - and most of us prefer the predictable to the successful.
The recent volatility in the stock market is a good example of this. For some years now, interest rates have been low and it’s only been a matter of time before they inevitably started to rise. There were various reasons for the initial plunge in the cost of borrowing, but one was that it’s a strategy to help the economy to boom. Low interest rates discourage people from keeping their money in cash and entice them to invest in the stock market instead. It also makes it cheaper and easier for people to borrow money to set up and expand businesses. As a result confidence rises and when say, green and ethical enterprises are being developed to support the environment (and make a huge profit), no-one gets worried. In fact we all sit around congratulating ourselves on our integrity and how well everything is going.
But of course, when it’s easy to borrow money, it isn’t exclusively available to eco-dynamic flakies like us. It also gets lent to those who would (in less adventurous times) be regarded as a higher risk. Particularly those who may have a weak record of repaying loans or who simply don’t have the income to service their debts. These people are sometimes known as ‘sub-prime’ borrowers. Or what we would call ‘poor’.
Of course, lenders are happy to do this when the residential property market is soaring upwards, because if a sub-prime lender defaults on their loan (read ‘if a poor person can’t pay their debts’), the value of their property should have increased anyway. So when they’re kicked out of their house, it can be sold at a profit and the lender can easily reclaim the debt, plus interest, plus various expenses for the trouble these ghastly sub-prime borrowers have caused them.
The only downside is that the poor people then have nowhere to live. But hey, that’s not really our problem, is it?
So why is there such a flap on? The overall valuation of the stock market hasn’t altered by more than a few percentage points. What has changed is the current desirability of certain investments. And the shrewd investors who anticipated this and sold before the market peaked are currently nosing around looking for stocks which have plunged in prestige (and therefore price) but not changed in value. If they can find these, they’ll therefore be able to buy them at a discount. And when the market recovers (as it’s already beginning to do), these will increase disproportionally in price. And the overall market will rise again as a result.
So about the only people who will lose out are the poor so-andsos who’ve lost their houses.
So what’s my overall point? We human beings aren’t very good at being emotionally committed to long-term change. It’s true that we may accept the idea that transformation is a good thing. We can also design and develop short-term strategies to support it. But when there’s an unexpected shift (i.e. one we didn’t anticipate) we get all scared and uneasy. About the only exceptions are people who have renounced this world such as deeply spiritual evangelists. Or suicide bombers.
And why is this? Well, it’s partially because we reckon that the way to be safe is to be able to predict the future. And if we hit a volatile patch (especially following a fairly stable one) then we get thrown. But it’s also because the stock market represents money. And we human beings are committed to this stuff. It has both internal and an external expressions for most of us, representing safety, security and success. So when the markets fall because of dodgy loans to deprived people, we start to feel iffy. Then when they recover due to the US Federal Reserve pumping in billions of dollars and a group of shrewd investors making millions, we begin to feel good. Make sense? It shouldn’t.
Alvin Toffler’s book is based on what he calls a ‘revolutionary premise’ that ‘…even though the decades immediately ahead are likely to be filled with upheavals, turbulence, perhaps even widespread violence, we will not totally destroy ourselves….the jolting changes we are now experiencing are not chaotic or random but…form a sharp, clearly discernable pattern – and they add up to a giant transformation in the way that we live, work, play and think. And a sane and desirable future is possible. We are the final generation of an old civilisation and the first generation of a new one and …much of our personal confusion, anguish and disorientation can be traced directly to the conflict within us and within our political institutions between the dying civilisation and the emergent (one) that it thundering in to take its place’. So don’t be scared. Don’t get upset. You’re doing fine. You’re already safe. It’s just that the world is changing.
Robin Currie is an Independent Financial Adviser specialising in green, ethically-screened and environmental-sensitive fi nancial products. For an appointment call 01392- 411630 or e-mail robin.currie@barchestergreen.co.uk. You can also log on to the website www.barchestergreen.co.uk. Robin also runs the highly acclaimed workshop Making Friends With Money which is being relaunched in October (details on www.makingfriendswithmoney.co.uk) or call 01392-346336.