The word “conviction” confirms the outcome of a process of proving. After weighing the evidence, sifting through facts, conviction emerges cognitively through what William James called the “slow heave of the will”. Conviction is solid. Conviction is grounded, based on a foundation.

Mania, on the other hand, is an enthusiastic effusion bouncing high in flight from its opposite tendency, despondency.

The trouble with determining the difference in market recovery from recent lows, is that upward movement might reflect either. Certainly, the factor of “hope”—- that enlivening compound of desire and expectation, is reflected in post G-20 spin. However, as Philip Stephens writes in the Financial Times of April 3, 2009 (“A summit success that reflects a different global landscape”) the very real outcome of the meetings is the willingness, or at least the appearance of the international community to reflect upon its current, shared situation.

Stephens writes that the deep significance of the summit “lay in its unspoken recognition of the remaking of the geopolitical landscape.” That is, he reckons, “ the world…is at last catching a true reflection of itself”. How very well said, Mr Stephens!!! This is no insignificant achievement: but a mark of our world’s civilizing capabilities. We are talking about joint action, rather than magnifying the kind of difference that might lead to ugly conflagration. Here is true accomplishment, not optical illusion.

Arguably, this is a data point in the process of arriving at “conviction”. It is enormously significant in suggesting a process through which recovery must proceed, though without the empirical proofs required in arriving at a satisfactory answer that we are “in recovery”. Rather we are attending, paying attention— a step “toward” recovery.

Indeed, simultaneously with the G-20, the reckless decision by the US Financial Accounting Standards Board (FASB, that rock-solid bastion of independent integrity) to abandon mark- to-market assessment of toxic assets held by banks (good for banks…. bad for us small investors, combing already sanitized financial statements to assess the “value” of an investment) and the market’s upward trajectory over the last few days, especially in bank stocks—- suggests that desire might outrun convinced long-term expectation, especially when that expectation is genuinely diminished by further (now legalized) obfuscation. That, unfortunately, suggests mania.

So, on sum, at least from reading today’s FT, its one point for conviction and one (at least) for mania.

The genuine hope is in the triumph of reflection, as Mr Stephens has keenly noted. Much more of that, together with a clearing of the fogs which cloud the future horizons upon which earnings-potentials are predicted, and enterprise value is appraised, will help us build (nicely aided by expectation and desire) our genuine conviction that we are climbing from the bottom.

So far, no real milestones.

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A Conviction in Economic Recovery


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