Dear Mum…do you remember…?

This is actually “Did you see the film The Big Short: Part Two?”

Dear Mum,

You remember when we used to chat over a coffee and get excited about the latest big thing I was working on?

Do you remember when we were talking about how some stuff made me angry – and you can create change when you are in that state (my Dad used that one all the time in his campaigns, didn’t he?) Then there were the things that got me all excited – you can create change in that state of mind too. But it was when I got excited and angry about some things that everything came together on my projects…Excited Angry is where I am right now. 

That book! 

Oh My Gosh…that research. What was it, well over two years? Travelling, experiencing, reading, mapping it…then the writing bit. More importantly ripping it up. Starting again. More research. How did I – given I use what happens to me most days to form what I am going to do next – after all that editing and ripping up and editing again, then hating it and then loving it (but not that much loving), get to the point of holding a printed and bound manuscript that looked something like finished, to be able to send out for people to read? Tens of thousands of words that actually all joined up…in chapters! I mean like a real book…how did Christopher James Pomfret get to that point? 

My book came back into my life this week…with the power of a sledgehammer it hit me right over the head.

This will make you smile when I remind you about “The Myth of Smith”:

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This is what you call a screenshot. It is a scene from a movie someone told me to go and watch last week. As soon as I saw this my mind flipped right back to the book. The film is called “The Big Short”, it not only got me even more Excited Angry about what I am doing right now, but it also made my book relevant.

Ten years…Mum, it is ten years since I wrote the book!

We both know that I did not write down these words “the world’s financial markets will go into meltdown inside the next 12 months”. But you will remember I built the book around a 231 year old mistake that I believed the entire philosophy of economics had been founded on: there was a big chapter called “The Myth of Smith”. If I remind you I used, as one of a myriad of inspirations, that amazing book called Ishmael by Daniel Quinn, you might remember Quinn explains “the law of things” and how humanity has been served very well, in general, by using a “trial and error” system – the insights from success and failure if you like – and used the example of building the first flying machines.

I used his idea to explain that the economy was built like a flying machine had been back then. After early failures that nose dived just before or just after take off we got to something that appeared air-worthy. You see once past the take off bit the plane – like the economy – appears to be flying. The flight felt good, defying gravity and many other “laws of things” because, apparently, the design was so good. The pilots, enjoying the view, allowed complacency to set in. The first sign of a flaw in the design was only when the first bumps came along. No problem. The pedals that the designer had thoughtfully built-in came in really handy. Pedal power saw the first bumps off. But things got a tad worse and the pedalling got more and more intense at certain points.

The passengers, loving the flight, had no idea that there was any pedalling going on at all. They remained in complete ignorance of even the need for pedalling – I mean they were sold that this was a perfect flying machine, right? The first hint of trouble for them was when suddenly those flying this plane could no longer pedal any faster and the plane suddenly began to lose momentum. I could talk you through what happens next, but it unwinds really quickly from the point of losing momentum. The moment the passengers understand what was occurring was too late for them. Ironically, they had their own button that says: “Park your Position”, however, none of them thought to check what that meant. You see the passengers were “living the life”: busy watching the movies, spending huge amounts on the shiny toys kindly brought to their seats on a trolley and gorging on the refreshments.

Mum let me press pause there and get back to the film…and this critical point:

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This is why this film has become almost an obsession for me in the last week. Mum the film explains NOT just what happened in 2008 – yes one year after I wrote my book – but it depicts the stories of three different sets of people that not only saw it coming, they actually knew what would be the catalyst. Well, just one man did and the other two sets of people – none of whom knew of each other until some time after what happened in 2008 – found out via someone else of both the seismic situation that was developing and the opportunity it presented to them.

I have watched this film awe-struck. It has given me peace of mind, to a certain extent. I now realise I cannot judge anyone for not getting what I was saying. You see this man was telling people about what was happening and in a way that meant they could make a huge amount of money…and they still didn’t listen!

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Very, very interestingly he was not the man that first worked out the way in which the whole thing was going to unwind.  He found out about it when many people were ridiculing those that had seen it…in other words he took a look from a different angle! He did his research. He was right to! He then made it his mission to take advantage of it, but no matter how many people he told, the majority of them then ridiculed him. But he was protected. He could not fail to make a lot of money – for which he made no apology – and, to be fair, he did his best to tell lots of other people. But hubris and complacency – and probably a big chunk of stupidity – meant that most called him by the name of “Chicken Little”: a cartoon character who saw that his fellow citizens were facing certain doom and rushed around screaming “the sky is falling…the sky is falling”: he too was met with ridicule. Hollywood, fiction and fantasy does seem to have an incredible bearing on reality sometimes!

Let’s recap…whilst I was doing my research – let alone the actual writing – these incredible people saw what was about to happen and how it would happen. As you can imagine it was rather more complex than my synopsis, but the result was the entire economy went into chaos and the Global Monetary System did come very close to total meltdown. Yes we saw these types of queues outside every Northern Rock branch in the UK:

northern rock run

The first run on a UK bank since about 20 years before Grandpa was born and he arrived in 1899! But this could have been the view the entire world over.

How did this extraordinary situation occur and panic set in? Pretty simple really: hubris, greed and a whole bunch of other factors came together and, guess what, no matter how hard the pilots pedalled…the inevitable happened.

What kind of other factors? 

When good people do things that don’t seem to be too bad that actually go on to turn into truly evil! Those kind of other factors. This character is exactly that as she represents what are supposedly independent agencies, that, it turns out, the banks able to put pressure on to turn a blind eye to unethical practices ignoring the consequences:

s&p lady

Interesting that she wears these glasses and complains of an issue with her sight. And her excuse for bowing to the pressure:

not our fault 1not our fault

Oh Mum, when I see those words, you of all people know how they make me feel: one of my core themes was and remains “Nothing has to be the way it is, simply because that’s the way it is”! 

The economy did lose momentum…just like our perfect flight from before…and panic set in as the ground was hurtling towards EVERYONE. The button that was there to press – that offered a protected position – was now “unavailable”. Those that were fast asleep missed the whole shebang and woke up just in time to see their own demise: their life in tatters.

People said: “that is the way of things…” 

Mum those words disgust me to my core…I mean disgust me…and they make me an awful lot of Angry to go with my Excited.

Remember, Daniel Quinn argued that “trial and error isn’t a bad way to build an aircraft” and then he added in what I believe is a prophetic way: “but it can be a disastrous way to build a civilization”. 

For 231 years we had built our “civilisation” (oh for want of a word that is so, so much better) on a mistake, because we built our economy on a mistake. People will throw their hands up and say: “why does everything have to be about the economy?” Probably, I would have agreed over a decade ago, until I realised that everything is about the economy, and there is zero doubt that:

“trial and error is a disastrous way to build an economy”.

Why?

Because we didn’t learn from a single, damn one of the errors…we simply kept pedalling, then hitting the ground, then getting back up there and pedalling all over again. Never learning from the last time…because the powers that be peddle the same old crap! 

Need some proof?  We are right back there again – within ten years! It is now a 241 year old mistake…did I say mistake…economic catastrophe. CDOs unwound to produce the last meltdown…it seems here we go again:

cdo reinvented

Mum, this is my moment…I actually do know how to show masses of people out of this before it happens…all they have to do is listen. Ah yes…that is a slight problem of course.

And finally for now…on a truly personal note the one man that saw what was happening before anyone else is called Michael Burry. He did so because he never looked at anything the same way others do…he can’t! You see I since read an article that says he – like your Great Grandboys – has a special gift that enables him to see from another world into ours…he has a form of autism and with it an extremely special gift. 

Oh by the way…guess who they are already calling Chicken Little?