Paul Hodges, my good friend and colleague in his excellent Chemicals & The Economy blog describes the “Minsky moment” for the global economy, when deleveraging accelerates. Hyman Minsky, the famous old economist, described how long periods of stability were followed exactly what we were seeing at the moment.
One former investment banker once said of my articles, “if you predict the end of the world for long enough, it will eventually happen”.
In a petrochemicals context, though, I’ve been worried that the more that things went up – including pricing and a flood of investment predicated on a very simplistic view of growth – the greater the fall. At last May’s APIC, somebody very senior in the industry was virtually saying that down cycles were no more. His company is now sitting on a huge inventory loss and depressed local and export demand as it prepares to bring on stream a huge slug of new capacity.
Let’s hope that the same irrational idiocy doesn’t take hold of the industry ever again.