Tuesday, October 26, 2010

The Old and New Normal

The Global Financial Crisis has ushered in huge changes in the global economy which will impact everyone from individuals to governments. The financial world will never be the same as policy makers will attempt to stem disproportionate growth. The following is an overview of the ‘Old Normal’ (the world before the Global Financial Crisis) and the projected ‘New Normal’.

The Old Normal

The Old Normal has existed since WWII and accelerated dramatically over the last 25 years. Greed was allowed to run rampant, the winner took everything and consumers looked to maximize their position.

  • Easy credit enabled spending and production above our means, the growth of money accelerates economic growth.

  • Asset (like housing) values continually inflated enabling more credit.

  • Free Trade, fueled by Comparative Advantage (a countries ability to produce a product with the highest relative efficiency given all the other products that could be produced).

  • Massive population growth fueling economic growth and rising real (read: inflation adjusted) incomes.

  • Governments got bigger as a consequence of free market activity which was becoming more deregulated (less rules).

Obviously the party was never going to last forever and, although we have had mini-recessions since (stock market crash etc), nothing has hit the global economy this hard since the Great Depression. Economists have predicted what some of the major features of the ‘New Normal’ will be…..

The New Normal

De-leveraging - Individuals, households, businesses and governments will cut their debt and save and invest more. This reduction in consumption will mean slower economic growth.

De-globalization – Countries will try and protect domestic industries by increasing tariffs, therefore eliminating cheaper imported goods. This should also breath new life into certain industries and create (some) new jobs although goods may be more expensive as local industry will not have comparative advantage. Again, economic growth is reduced as certain countries will not be able to take advantage of trade and investment opportunities.

Re-regulation – As a way to manage and reduce risks, governments will become more powerful and intrusive in business and financial markets. Financial institutions and banks will be hampered by the harsher credit conditions. Credit growth (the growth of money) is a pillar of economic growth therefore, once again, expect slow growth.

However, this New Normal is not without its issues…..

Issues with the New Normal

During the Global Financial Crisis, governments tried to stimulate the economy with “borrow and spend” fiscal packages. This debt will have to be paid back before costs set in and stall growth further. The private sector will need to produce the wealth needed to pay the governments debts. Governments could accelerate this through higher taxes but this further dampens consumption, saving and investment effectively crippling the private sector (which they desperately need).

Unemployment will also be a major factor as some industries have all but disappeared. Those affected will not be easy to re-employ and there are high costs associated in retraining and upskilling.

Other issues: Retirement, healthcare

Monday, October 25, 2010

Exclusive Interview with Tamaki Lightning Head Coach Jim Hunter

I feel so out of place. Sitting in a trendy Devonport cafĂ© wearing beat up jeans and a t-shirt, I’m waiting to interview Tamaki Lightning head coach Jim Hunter. I’m all too aware that the primped and groomed around are looking at me as a ‘gringo’ and, frankly, it’s giving me the fear. But, Coach Hunter is a hard man to pin down though and his press policy is very similar to the methods used to grow mushrooms. Feed them manure and keep them in the dark. My awkward sweating, and incessant mumbling to myself, is broken by Coach Hunter sitting down in front of me. The decaf soy trim latte he demands makes my order of the “cheapest tap beer you have” look crude in comparison. Our early small talk reveals that he is equal parts wisdom and boyish handsomeness, like a mix between Ryan Reynolds and Bill Clinton. All my questions that require serious thought are met with him dropping his head then lifting it back up and squinting underneath his eyebrows before answering, which is very George Clooney-esque. On top of that, his smile is warm and makes me feel at home. Which is a far throw from the glitz and glamour of the North Shore.

Q: Tell us a little about your history with the sport and the Lightning?

Well, I think we’d have to jump into the ‘way back’ machine to see when I started! Ah, my first season I was a skinny 17 year old fresh out of High School and have been involved pretty much ever since then – with a couple of seasons not playing due to travel. I’ve played and coached at nearly every level and grade and for a while was involved with the running of the game.

I joined the lightning in I believe its second season and technically played one game in the first season. I’d played most of my career with (Tamaki Lightning founder) Coach Campbell so it was natural to come over to the newer Lightning as the Raiders were well established and had a solid team.

Q: How’s the team looking so far this year?

Well, we’re a young team and we’re working hard to get ready for the season. We’re improving as we go, and that’s all I can really ask for. We’re light in some positions at the moment but we have a healthy influx of rookies and so far they look like they are going to be big contributors to the program. I’m loathe to make any predictions but at this stage we’re in good shape for a positive season and I’m fortunate to have a group of guys that are putting in the effort for each other, with so far a bigger ‘core’ of players at training.

Q: What are some things that you would like to improve on from last year?

We need to be far more consistent than we were last year. The ‘09 season was marked with key personnel missing throughout the seasons and that led to a loss of cohesion and many times we had different starting teams and people rotating into positions.

The most stable group last year – in a relative sense – was the offensive line and they really were the most consistent part.

Q: The Lightning passing game had lost some of its venom in the last couple of years, how has the improvement of guys like Shiraz “The Crankin’ Sri Lankan” Soysa helped this?

Shiraz, like many others in the team have really established themselves in the past couple seasons as true weapons. We have a great receiver core this year, with a nice mix of veterans and rookies and Shiraz is certainly going to be a big part of things.

As clichĂ© as it is to say, we really did have a rebuilding period the past couple of seasons and I think we’re getting a lot closer to where we need to be personnel wise, and I’m expecting that to be a factor in our performance.

Offensively, we have Ojay returning, and he was huge for us last season; if we get the offensive line returners then those guys alone are an awesome platform; backed with some new blood at QB and we should have a nice balance.

Q: What do you see as key to the Lightning’s historical success?

Oh, that’s tough. I’d say that consistency of players; balanced units, and a solid core.

I think in our better years we were characterised as more of a passing team with a solid ground game backing that up. We were also fortunate to have some US players and coaches who prepared us well for each opponent – with Coach Y (Chris Yunker, ex Tamaki Lightning Head Coach and chief ball power-er) spending countless hours breaking down film scouting and preparing.

The core is important too. For any team or group there is always a ‘core’ of people that are at every training; they work hard to improve and they tend to lift the effort of others whilst putting in the effort themselves – there is a distinct correlation between a large and solid core and performance on the field.

Q: Last question, do you have any words for the dozens and dozens of Lightning fans around the globe?

Sure, tell them that we still have their photos posted in the lobby of the Thunder Dome, and it’s awesome to know that they are out there.

A club is more to me than ‘just’ the current team. Our past players and coaches leave their legacy and we can still see some of their attitudes now (and some are still quoted); the family support is massive and the fans around the planet watching and posting remind us that there is a small but dedicated group of lightning fans.