Monthly update: Economic collapse and cocktail parties
Oct 29, 2022 5:06 am
Coming up this month:
- A sneak preview of how the economy will collapse
- I hosted a party!
- How we chose a "just weird enough" way of educating our son
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💥 The end of the world: A preview
Whole books could (and probably will) be written about the events of the past month. And while it's been notable for many things (the shortest tenure of any PM, the near collapse of the bond market, the discovery that boring old pension funds have been up to some pretty exotic stuff on the quiet...), one observation struck me more than any other:
This is a sneak preview of how it all ends.
A theme running through my book The Price Of Money is that everything is based on confidence. Seemingly unsustainable situations can be sustained for longer than you'd rationally expect, as long as confidence is there. And when that confidence is lost, it doesn't happen gradually: it's like a switch is flicked, and the delusion that everyone has happily been participating in vanishes in an instant.
If you look at the numbers in the ironically named "mini-budget" that set off the recent chain of events, they're not that crazy. (I'm not endorsing the plans as a good idea, just looking at the magnitude of the figures.) Sure, it would have involved borrowing more money than had previously been planned. But it doesn't come close to touching the amount of extra borrowing that was suddenly needed in response to Covid, and the markets weren't as rattled by that.
Yet for whatever reason – whether it was the reason for the extra borrowing, the lack of warning, the timing, the messenger – this particular set of measures caused that confidence to vanish.
Once that had happened, the markets immediately started demanding a higher interest rate for holding UK debt. Suddenly, the gigantic debt pile that didn't seem like that much of a problem looked a lot more scary. Interest rates that had been slumbering along at close to zero were yanked up rapidly enough to severely damage the stock market, property market and bond market. And the Bank of England was forced to stage an intervention to prevent pensions from collapsing.
It seems like the intervention was enough (or the panic wasn't serious enough) to prevent the entire system from collapsing – but it's the perfect illustration of the systemic vulnerability that my book describes.
My guess is that the eventual mega-collapse will originate in the US and affect the whole world, rather than be home-made. But it's impossible to say what the cause will be or when it will happen – because in an economy this fragile that's propped up with confidence alone, the breeze that topples the house of cards can come from anywhere.
🍹 My 2-hour cocktail party
Until I read Nick Gray's book The 2-Hour Cocktail Party, I had absolutely zero desire to throw a party. Frankly, I don't really like going to them – much less taking on the hassle and responsibility of hosting.
But Nick's book turned that around, and got me so excited about the possibilities of throwing a party... that I did:
The genius of Nick's model is that it removes every objection you could have – both as a host and a guest:
- What if no-one turns up? Well, there's a system to ensure that doesn't happen (I had zero no-shows, and everyone arrived on time).
- Do I need to spend all day cooking? No: no food required.
- How will I leave without it being awkward? Not a problem: it's designed to only last for two hours.
- What if I don't know anyone? There are features designed in (like icebreakers) to make it easier.
I followed Nick's instructions to the letter (even the potentially strange bit involving a harmonica), and it worked perfectly. I caught up with old friends I hadn't seen for ages, met new people I probably never would have got around to scheduling a one-to-one with, and loved seeing some of my favourite people making new connections with each other.
Nick's recommendation is to have a party in the diary every 6-8 weeks, so I'm planning to hold them regularly. Do you live in London? Do you want to come? If so, just reply and tell me a bit about yourself.
🎓 Just weird enough
I know, from hearing from a lot of readers, that many people want to do something different when it comes to educating their children. Whether it's because they want the flexibility to travel or they're just uninspired by their local options, they're seeking something new – and they want me to potentially mess up my own kid first and report back.
Well, they'll be somewhat disappointed – because my son started at a "normal" (ish) school last month.
So-called "world-schooling", where you provide the education yourself while travelling and having no experiences, sounds amazing in theory – but there was no way me or my wife wanted to spend all day with our own offspring. My friend Jeremy pointed me towards this company that's set up solely to serve "nomadic" families, but the model is very new and limited in terms of locations.
Then there's the option of spending longer stints in each place and putting the kids into local international schools for a couple of terms, but it takes a certain type of child to thrive on being thrown into new environments so often.
And I think that's the main challenge: however lacking the actual educational aspect, "normal" school can give kids a stable and reassuring social environment. I've already seen my son grow in confidence from establishing a group of friends, and it'd feel brutal to whip him away and stick him somewhere else (potentially even with a different language) just because I fancy a change of scenery.
Our concession to "doing things differently" was to seek out a small, strange independent school. There's no uniform, mixed-age classes... and most importantly, it actively encourages students to take time off during term time. This gives us the option to take a (say) month-long trip by bolting a couple of extra weeks onto an existing school holiday, without needing to completely disrupt everything.
I've heard from people who are pursuing a whole range of totally non-traditional options, so I know they absolutely can work. But for now, our choice is just about weird enough for me.
🍿 Media picks
⏰ I've always thought that some of the ways we chop up units of time are seriously odd, but this Twitter thread perfectly lays bare the full insanity
👻 This video shows ways you're secretly tricked by companies. Some of them are seriously sneaky.
🤖 The development of AI that can synthesise people's voices and images probably hasn't received enough attention – and suddenly, it's reached a point that's both scary and exciting. For example, this interview between Joe Rogan and Steve Jobs – which, despite the evidence of your own ears, never happened.
That’s it for October! Feel free to write back and let me know what you've been up to.
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