Debate, and discuss, just dont Bore me.

As the days grew shorter, and the darkness hours lengthened, the people drew close in fear.  Fear of the passing of the life giving light.  Fear that the light would forever disappear and never again smile down upon them, to bless their lives, their crops, their good hunting.

So in fear, they built bonfires to chase away the darkness, and sacrificed all manner of animals to the God of light.  To appease her, and make her warm their world again.  And bring back the life giving warmth of the light.  Lo and behold, after much sacrificing, the light saw their sincerity and started returning.  And the people were glad.  And they celebrated with all manner of festivities and ritual sacrifices.  They had won the day once more.  And life returned anew.

~~~~~~~

Sounds like a nice fairy tale today.  It is a part of our history.   Today we smile and nod and laugh at our ancient ancestors and their superstitious beliefs.  We mock them for how simple and foolish they were for not understanding something as simple as the seasons, and how the planet tilts towards and away from the sun.

We laugh.

And we do the same things.

Oh, today, we understand about seasons, and days growing longer and shorter.  So we laugh at our ancestors for being such simpletons.  Yet we do the same thing.

How?  Have you listened to the news lately?  Have you listened to the talking heads populating the air waves of AM radio?  Have you actually been talking to your friend at the water cooler about the coming Armageddon? 

A thousand years ago, man quaked at the diminishing sun, because he did not understand.  Today, man quakes at the coming of a recession...because he does not understand. 

I was struck by this thought (which goes hand in hand with my contention that the population at large is ignorant of economics) when I heard a couple of talking heads "fearing" the coming recession.  "Fearing" the ending of the world because of the problems with the economy.  "Fearing" an Investment Advisor's advice to invest overseas.  "Fearing" because of their ignorance.  And the ignorance of the vast majority (not right wing in this case) of people that do not understand something as simple as a cycle - even after having lived through several.

Instead of building bon fires and and sacrificing goats, the ignorant pagans of today send homage to the new gods, and quake hoping for their benevolence and magnificence.  Who are these new gods?  Right now, we call them Hillary, Obama, and McCain.  We look to them to push back the "darkness" of the recession.  And we sacrifice our money to our new gods hoping they will wave their omnipotent hands and whisk away the darkness of a recession.

And of course these gods play their faithful like harps from hell.  They promise light and new life!  And all for the mere pittance of your undying devotion to them.  They promise to renew the earth, much as the Sun renewed the earth for our pagan ancestors.

And how do they do this?  Simple, they are the educated literati.  They know what the great masses of humanity do not (or at least their advisors do - but a god cannot let on that THEY do not know).  That like the sun of old, a boom time will chase away the darkness of the recession soon enough.

So they play on the ignorant fears of the populace.  Promising Manna and a land of milk and Honey.  Where no darkness will ever dare rear its ugly recessionist head.  They know they can deliver.  How?  By not mucking things up so bad as to prolong the recession.  So they promise, hope for the homage, and wait.  Wait for the inevitable recovery.  That will come.  As long as they do not make it worse.

We have come a long way as a people in the last 1000 years. We have shed much of the ignorance of the dark ages to an era of enlightenment, where we know that the earth is round, the seasons will come and go, and The sun will rise, sacrifices or no sacrifices.

But we are still like ignorant children.  Cowering before the god of Economics.  Because we do not understand it, and therefore must look for new gods to save us from it.  Just as the old gods saved our ancestors from the darkness.

The older I get, the more I marvel at the sheer ignorance and gullibility of man.  And how they never learn.  Learned men showed us our ignorance about the sun, and seasons.  Yet instead of using that as a model to try to understand new complexities of life, we invent new gods and new sacrifices to deal with what we do not know.  Instead of admitting we do not know, and attempting to learn and understand, we revert to our paganistic origins.

And we are no better than the cave man who did not understand that night was just a part of day.  And not some titanic struggle of the gods.


Comments
on Mar 18, 2008
Interesting perspective. A recession in this century is most likely the result of a crisis of confidence, right? With the international economy basing the value of currencies on their holdings of other currencies it's a bit of a shell game, so all Americans should need to do is persuade themselves and others there's no problem and things will fall into place again.
on Mar 18, 2008
that night was just a part of day.


So true. The sun WILL come up eventually just like sooner or later the drought will be broken and it will rain -or at least I'm hoping so bein' as I bought 152 shares of AT&T last Friday, lol.

Good article, Doc. Well written and well done!   
on Mar 18, 2008
There's that saying that "things will get worse before they get better". But people only believe it and are OK with it when it is not them the ones with the problems.
on Mar 18, 2008
With the international economy basing the value of currencies on their holdings of other currencies it's a bit of a shell game, so all Americans should need to do is persuade themselves and others there's no problem and things will fall into place again.


I see the same thing as you Cacto.

on Mar 18, 2008
A recession in this century is most likely the result of a crisis of confidence, right?


No, the causes are many and varied. I think Artysim hit upon it (while being a bit over dramatic with it as well). 8 years ago, the dot come bubble burst, and we had a recession.

Last year (or maybe 2 depending upon who you believe) the Housing bubble burst, and we will have a recession. Over speculation for both of them, just in different areas.

But over speculation is not always the cause. A real crises of confidence (I am not talking ma and pa citizen, but of the money movers) could cause one as well. I am not seeing that yet. We are in a global economy, and the American economy has been riding high now for 20 years, and is due for an adjustment (which is really all a recession is from a macro perspective).

I guess it is just the ostriches I hear too much that caused me to write this. I am so tired of the "doomsday sayers" that every time the economy goes into a recession, they see the world ending. As if we have never had one before.

or ever will again.
on Mar 18, 2008
I bought 152 shares of AT&T last Friday, lol.


I would say that is one safe investment! You may not make a fortune, but you are not going to go broke in the near future with that kind of investment either.
on Mar 18, 2008
There's that saying that "things will get worse before they get better". But people only believe it and are OK with it when it is not them the ones with the problems.


The "part 2" of this is the way they look to the politicians to save them. Like all the people in OZ looked to the wizard. When it was themselves who solved the problems, not the wizard. I dont know who is going to win, but I do know one thing. None will make it better. They may make it worse, but that is all they can do.
on Mar 18, 2008
I see the same thing as you Cacto.


I dont even see them convincing themselves. Unless we do something stupid (a distinct possibility) it will fall back into place. Even without anyone convincing themselves. After all, for the last 8 years, they have been told the economy was in the crapper. And the economy still boomed. They just dont need to panic (something I am seeing from the politicians and the talking heads). As long as the people go about making a living, the economy will rebound.
on Mar 18, 2008

No, the causes are many and varied. I think Artysim hit upon it (while being a bit over dramatic with it as well). 8 years ago, the dot come bubble burst, and we had a recession.

Drama is a good thing every now and then, no?

I think everyone is in agreement that the U.S economy is due for a "correction" the question is, how much of a correction will it be, who will be affected negatively (who will stand to profit the most from it) and what will the landscape be afterwards.

No one is saying that the world is coming to a grinding halt, but this may indeed change the lives of many folks profoundly, just as the great depression did. Nor am I saying that this is going to be another depression, but there are a lot of similarities.

I agree that everything is cyclical and we are just seeing the "down side" of the cycle, but with a few caveats-

1) In any system (natural or manmade) if the rules are adhered to then the system operates normally and predictably. ~if~ the basic underpinnings of economic theory were being followed here, then yes, this would just be a normal market correction. However, in any system, natural or manmade, if you try to break the rules, you end up breaking the system (or it becomes wildly unpredictable and then it's anybody's game as to what will happen next, good or bad).

Part of the reason that a lot of folks are saying this correction could indeed to be much different and far worse than many previous corrections is the assertion that the banks and the fed reserve have broken the rules, or gotten involved in such convoluted, complicated transactions (to effectively bend around the rules) that the very banks who started it can't effectively state their own available assets or worth (or massive debt as it's turning out in a lot of cases) becuase it's all tied up in off-sheet derivatives and securitizations that were sliced and diced and then re-sold again and again. It's a crazy tangle of unkown variables, intentionally created by the banks in a quest for pure, maximum profits.

This is part of the reason why the Carlyle fund, Bear Stearns, Countrywide (and probably soon Lehman brothers too) have all gone under, and part of the reason why liquidity in the system is grinding to a halt. None of the banks want to lend each other anything, because no one really knows what the other has (or even what they have)

With the repeal of the last provisions in glass steagall a few years ago (remember that act that was passed after the great depression to ensure something like that didn't happen again) the protectionary divide between commercial and investment banks is gone, a BIG oversight once again made in the mad drive for profit. 

The idea that a bank can be self-regulating is another big reason why things are so haywire right now. Telling a bank it can regulate itself is like telling a fox to guard the henhouse. But alas that is precisely what has hapenned in recent years in the name of "unhindered free markets". Saddly, a true free-market is anything but self-regulating, as we are soon to see!

We've broken or ignored the basic rules of the system, and what happens next is anybody's guess. Best case scenario it's just another down cycle like you state.

2) The federal reserve!

The fed is supposed to be an independent, autonomous body overseeing the central banking system. Yes, it is there to be a lender of last resort to big business that falls on hard times, but it is not meant to be beholden to those banks. Now it is, and this has been illustrated over the last few years by the fed reserves inability to acknowledge reality and let the system act how it's supposed to. The fed should be allowing the big banks to fail. Instead they are bailing them out with billions of dollars of taxpayer money (yes, I know they're not actually diverting billions of tax dollars but it's the same end effect).

With the fed no longer a neutral, impartial party that's supposed to keep the good of the overall economy in mind, it's now firmly acting as the pet of the banks. This will have a disastrous effect on foreign investment, (and investment in general) as foreigners especially see that instead of playing by the rules the fed is concerned only in serving their masters. The reason why foreign investment is particularly important is because foreigners hold more than 6 trillion dollars of U.S treasury notes that if they so choose they can dump on your shores. If this happens, say hello to the Weimar days of inflation, Circa post WW1 Germany!

3) The world has changed since 1929. In fact, it's changed since the 70's big time, too. Population is much greater, and other nations have significantly more demand for natural resources than in the past. At the end of WW2 the U.S was the world biggest lender- now it is the world's biggest debtor. There are a whole host of factors that could exacerbate this market correction in ways much worse and unforeseen than in the past.

Long story short, I agree that the sky is indeed, not falling. However the ground is rumbling and we're due for a bit of an earthquake

on Mar 18, 2008
No one is saying that the world is coming to a grinding halt,


Maybe not up north, but down here the cacophony is getting deafening. We have too many chicken littles running around promising it - especially if they are not elected.

Long story short, I agree that the sky is indeed, not falling. However the ground is rumbling and we're due for a bit of an earthquake


very true. As I said, I agree with most of what you say, but not the magnitude. The Housing market is going to create a shake out. But you may not remember the S&L crises of the late 80s. That was another "end of the world" scenario much like this one, that failed to come to pass. The checks are there. And I dont believe weakened to such an extent as this one will be that bad.

As for the Fed, I disagree with you on means, not the ends. They are screwing up big time, but not because they are beholding to banks, but because they think they can stop a recession with monetary policy. That was never the case. They can only moderate the ups and downs. Their open money policy of the early century got us into the Housing boom, and then bust. Now it is going to shorten this recession, only to plunge us into another "crises" in a few short years.

To the economy, swings of 3-4% in the lending rate give rise to the boom and then bust. They reduced rates too far before, then raised them too fast. Now they are doing the same thing again.

Oh, for the days of Paul Volcker!
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