One of the most exhaustive, comprehensive, cerebral and unimaginably superior lectures ever delivered on the topic ‘Global Economic Meltdown’.
Mr. T. Ramaswamy, quoting Einstein “I can predict the motion of the stars but not the markets” commented on the economic downturn of the recent times. He remarked on the placid latitudes such as people bemoaning at the inability of the able and best minds of our times in failing to predict the catastrophe and the cascading effect thereof.
Quoting Irving Fisher “I fancy that over-confidence seldom does any great harm except when, as, and if, it beguiles its victims into debt”, he claimed that the economic catastrophe was indeed speculated by many a people. To substantiate his point, he furthered us proofs from ‘The Economist’ magazine that anticipated the housing bubble way back in 2004; article from OECD, IMF in 2004-05; Prediction by Economists Nouriel Roubini & Robert Shiller. Commenting on the behaviour of people during the times of these publications, he said the general population was undergoing the ‘psychology of denial’.
Mr. Ramaswamy commented on the evolutionary characteristics of human brain. Pointing out to the studies made in various fields such as behavioral psychology, evolutionary biology and sociology, he exclaimed that it was the reptilian brain (prime mover of emotions) covered under thick shadows cast by the dog’s brain (the prime mover of loyalty) and rational brain (prime mover of rationality) that forms the rationale behind all the behaviours of humanity and certainly the behaviour of buyers and sellers in markets. He added ‘Rational brain waits, but the reptilian brain seeks instant gratification, and eventually the rational brain is foreshadowed subconsciously by the preponderance of the impulsive and instinctive reptilian brain’.
Quoting from ‘Mean Markets and Lizard Brains’, “the key to our biological success is the source of our financial difficulties”, he observed that the bizarre ‘herd instinct’ of markets can be explained from the evolution of human brain. In further to his assertion, quoting from the same book “Our lizard brains made us all financial risk junkies”, he noted that the explanation can also be derived from other fields of study such as Sigmund Freud’s ‘Id’ and ‘Ego’. Freudian study indicates that the ‘constant state of flux’ of the external environment puts the bridge between ‘Id’ and ‘Ego’ at risk. Freud contended that ‘Ego’ gets carried away by the external environment, while the ‘Id’ is stationary.
To finish the jig saw puzzle, he pulled out exploratory studies from rich and diverse fields by men such as ‘Michio Kaku’ and ‘Jared Diamond’. The speaker claimed that the 1930s recessionary scenario is strikingly similar to the present one, for the Debt to GDP ratio of US in 1930 was close to 300%, and presently it is around 350%. He added that India’s ratio that stand at a fairly decent rate-140%, coupled with the demographical advantage we are bound to see in the next two decades, would certainly propel us into periods of progression.
In a different context, he quoted from ‘collapse of complex societies’, commented on the ‘Medici Effect’, and pointed out that diversity spawns hitherto unrealized intellectual episodes. He commented on the lives of ‘Leonardo da Vinci’, ‘Michelangelo’. On his explorations into Carlota Perez’s studies, Mr. Ramaswamy professed that after every catastrophe or a crisis, there comes a period of progression. The tremendous display of awe and vigor in our countenances was a manifestation of the great lecture that ended with the speaker’s contention ‘for younger generation of today, there is a gold mine awaiting you’.