Refreshing take on tackling a downturn

Does the thought of a recession spook you? Are memories of the last economic downturn in the wake of the US subprime mortgage crisis fairly raw? It might well be hard to avoid an economic downturn, but your chances of escaping unscathed and managing the situation depend on your tenacity and desire to rethink life as you know it, according to economist Jason Schenker.

Hammering home this central theme is his book – Recession-Proof: How to Survive and Thrive in an Economic Downturn released earlier this year by Lioncrest Publishing – which makes you sit up and take notice of both the obvious and the not so obvious when it comes to your career, investment and lifestyle choices versus the evolving macroeconomic climate.

The engaging tone of Schenker’s work spread out over 200 pages split by 11 chapters stands out. The book is full of practical suggestions, a pragmatic dose of stating of what’s evident (which some of us tend to ignore at our peril), a gentle nudge towards constructive soul searching and last, but not the least, one of the most refreshing elucidation of SWOT (strengths, weaknesses, opportunities, and threats) analysis that the Oilholic has read in recent years.

To quote the author, “a recession is partly a self-fulfilling prophecy. It happens partly because we think it’s going to happen. But that doesn’t make it any less real, or any less inevitable…It’s like that famous line in Dirty Harry: “Are you feeling lucky, punk?” When people are feeling lucky, there’s growth. When people aren’t feeling lucky, there’s contraction.”

And being prepared for all eventualities is what is required in this day and age of turbulence where fear and greed are seen to be driving markets, Schenker adds. Instead of feeling sorry in the event of a recession be bold, or better still spot economic turbulence before its hits your company, life and finances, all three of which are intertwined in more ways than one.

Schenker explains how he went about staying more than just afloat in previous downturns, and how you can too. All chapters are fascinating, but if the Oilholic was asked to pick his favourite passages, one would say Chapters Two (What does your personal recession look like?), Five (Dig In) and Seven (Run) would be among the most riveting ones.

This book is not some run-of-the-mill self-help guide. Rather parts of it might well jolt you into action. But perhaps that’s the jolt you need in life to be recession proof and the lessons Schenker learnt from challenges in his own life that form part of the subject matter strike a chord.

In the spirit of full disclosure, the Oilholic has known Schenker in a professional capacity for over ten years, since his days at Wachovia and one’s own at a CNBC Europe production team; and can personally testify that he never sits on the fence in any deliberation of any sort whether we’re discussing central banks, forex or OPEC's oil production quota.

His knack for plain-speaking is reflected in the narrative of the title. But Schenker’s book appeals to this blogger not because he’s an old friend, but because his work makes one sit up and take notice of things we often subconsciously ignore whether it comes to career or investment choices or for that matter which industry conference to attend!

The Oilholic is happy to recommend this title to the young and old alike, those starting out in professional life to those looking forward to retirement. Recession Proof, for this blogger at least, transcends a typical readership profile.

This book is not only about financial survival, it’s not only about career security, not just about investment management; rather it’s about all of the above, along with the right dosage of prudence and practical advice from an old industry pro sprinkled in for good measure. Everyone could do with that! 

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© Gaurav Sharma 2016. Photo: Front Cover - Recession-Proof: How to Survive and Thrive in an Economic Downturn By Jason Schenker © Lioncrest Publishing 2016

Of inequalities, debt, oil & international finance

Rewind the clock back to the morning after the collapse of Lehman Brothers; the Oilholic remembers it vividly. The world's fourth-largest investment bank at the time ran out of options, ideas, saviours and most importantly - working capital - on that fateful morning in September 2008. However, when filing for bankruptcy, it committed one final blunder. The administrators and liquidators - spread as far and as wide as the investment bank's own global operations - failed to coordinate with each other.

Uninstructed, the London administrator froze the bank's assets and panic ensued as investors started pulling out money from all investment banks; even those few with no question marks surrounding them. It was the moment the US sub-prime crisis became a global financial malaise that nearly took the entire system down. 

Since the episode, several books have been written about the when, where, why and how; even what lead to the crisis and the inequity of it all has been dealt with. However, via his book Baroque Tomorrow, Jack Michalowski has conducted a rather novel examination – not just of the crisis alone, but also of our economic health either side of it, the proliferation of international finance and consumer driven innovations.

His claim about our present reality is a bold and controversial one – that virtually every element of the story of the past four decades points to a structural decline, one that's rooted, as in all other historical declines, in massively growing populations faced with declining innovation and lack of new energy converters or new cheap energy sources.

Drawing interesting parallels with what happened in Renaissance and Baroque Europe, Michalowski opines that the so-called Third Wave visions of mass affluence and broad technological progress hailed by Alvin Toffler and other futurists were just a fantasy.

In his book of just under 360 pages, split into four parts, Michalowski writes that in a world where political programmes last only until the next election; progress is flat or worse still non-existent. That all innovations are driven by returns on the money invested, and the major life-changing ones that propelled us onwards and upwards from the Industrial Revolution are already with us. What has followed in their wake are fads delivered to a consumer-led debt-laden world with rising levels of energy consumption. 

According to Michalowski, history proves that we were only rescued from decline and propelled along a new path by the invention of new energy sources and new energy converters – things like agriculture, sailships, windmills, iron ploughs, combustion engines, trains, cars and airplanes, or nuclear reactors – and never by invention of new information processing technologies. IT advances, he argues, usually come late in the historical cycle.

On reading this book, many would remark that the author is over-simplifying the complex issues of innovation, progress and prosperity (or the lack of). Others would say he is bang on. That's the beauty of this work – it makes you think. For this blogger – it was a case of 50:50. There are parts of the book the Oilholic profoundly disagrees with, yet there are passages after passages, especially the ones on proliferation of international finance centres, debt, hydrocarbon usage and pricing, that one cannot but nod in agreement with. 

Perhaps we are wiser in wake of the financial crisis and have turned a corner. That may well be so. But here's a tester – drive away from the glitzy Las Vegas Strip to other parts of the city where you’ll still see streets with plenty of foreclosed homes. Or perhaps, you care to visit the suburbs of Spanish cities littered with incomplete apartment blocks where developers have run out of money and demand is near-dead. Or simply check the inflation stats where you are? And so on.

In which case, is Michalowski wrong in assuming that there is a "de-education and de-skilling of the rapidly pauperizing middle class and dramatic polarization of the society between rich and poor. Very high levels of inequality are proven by history to be absolutely destructive. As malaise sets in, they become a major contributor to decline."

Some of the author's thoughts are hard to take; some of the dark quips – especially one describing Dubai as a Disneyland for grown-ups – make one smirk. None of his arguments are plain vanilla, but they make you turn page after page either in agreement or disagreement. You'll keep going because the book itself is very engaging; even more so in a climate of persistent inflation and stagnant real incomes. 

Michalowski says that unless current trends change dramatically, the next forty years will bring more of the same. If so, we are looking at an entire century of decline in incomes and living standards or a "true Baroque era." Now, whether one buys that or not, the way the author has used history to make a statement on the macroeconomics of our time is simply splendid and a must read.

The Oilholic is happy to recommend it to peers in the world of energy analysis, economists and social sciences students. Even the enthusiasts of digital media might find it well worth their while to pick this book off the bookshelves or download it on their latest gizmo.

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To email: gaurav.sharma@oilholicssynonymous.com

© Gaurav Sharma 2013. Photo: Front Cover – Baroque Tomorrow © Xlibris / Jack Michalowski