Tuesday, February 24, 2009

Don't know about you, but I'm ready for some fear itself.

If you've been paying attention at all, you know that Barack Obama, your president, who will talk to you again tonight about the state of your union, is under great pressure to lie to you. The sentiment is fairly ubiquitous, though its most overt expression came recently from Bill Clinton, who I think believes he's at least 25-percent president again, maybe even the unofficial president, now that Hillary is secretary of state. Anyway, Bill said, in an open plea to Obama, "You have to give the people hope." I assume Clinton reasons that, since Obama ran on a campaign of hope, he'll have defaulted on some emotional debt if he slacks off on that message. (Do you see the degree to which SHAM-based thinking has penetrated public life? It's remarkable: We now hold politicians accountable for their ability to inspire us. And we don't just want it; we expect it. We've created emotional entitlements at the federal level.)

In reality, if you look closely enough
something many of us are disinclined to dothere are indications that the American economy is not far from collapse. It really wouldn't take much to do us in, and I don't think that's alarmism talking. Consider that in roughly one month in office, our new CEO has spent almost $1 trillion that we don't have*, yet it doesn't appear that the colossal sum has shored up, or can shore up, a damned thing. Knowledgeable observers, if they agree on nothing else, seem to agree that the $1 trillion (a) isn't enough and/or (b) won't actually filter down to the places where the funds are needed and/or (c) won't end up being used for the purposes for which it was allocated. Speaking of (c), the major American banks who last year extorted $700 billion out of Washington**, supposedly to free up credit markets, haven't freed up the credit markets, remain insolvent anyway, and are on the verge of being nationalized as we speak. (And won't that be fun to watch, if it happensWashington running the entire banking system!given the political quagmire that is the Beltway, with its inchoate philosophies and incompatible agendas?) Bill Maher, in his season-premiere show, joked that he went to his ATM to withdraw $60 and got back a note that said he'd have to wait till the bank "moved some money around..." The stock market, meanwhile, having found nothing to like in what Obama has done so far, is tanking, closing yesterday at a dozen-year low. Major companieshell, major industriesare facing bankruptcy (and would, in fact, already be bankrupt and perhaps out of business altogether had not Washington stepped in).

But what the people need is hope?

How about a solution? And an honest, unflinching assessment of where we stand.

Maybe I'm the only one who thinks this way, but if we are indeed at the precipice of a Mad Maxian implosion, I would like to know it, so I can make provisions to weather the storm. I would like to know The Truth, as best as anyone can tell it to me.

As for this idea that hope itself is what's going to pull us through... People: Hope is what got us into this mess.

"I hope we can pay for this mortgage."

"I hope we have the money for the credit-card bills we're piling up when they come due."

"I hope our house appreciates enough in value to offset the home-equity credit line we keep tapping."

"I hope I don't lose this job, because I need to have some way of paying for all these frilly things I keep buying in order to look more successful than I really am."

"I hope my union's demands for another $5/hr. wage hike and better benefits don't put my employer in the position where it's no longer cost-effective for him to try to compete with foreign manufacturers."
And on and on.

I've said it a thousand times and I'll say it again: Hopestripped of a plan of action—is worse than cynicism. At least cynicism tends to help people prepare for the worst. Hope, when it's blind (and deaf, and dumb, and mute), leaves people terribly vulnerable to an unforgiving environment that doesn't give a flying fark about them and their hope. What I find especially galling, as a thinking person, is this notion that the government, my government, which I helped elect, feels that it needs to lie to me in order to protect me from myself as I continue to fulfill my responsibilities as a consuming American.

I voted for Barack Obama in part, yes, because of hope, but not just because I wanted him to keep giving me nothing but hope. I voted for him because his message of hope, taken together with his obvious intellect and grasp of the subtlest esoterica of governance, made me think he could actually do something once he got in office.***
If you bring in several contractors to give you bids on some major upgrades in your home, you may end up hiring the person you hire because he inspires confidence...but then once the work starts, you want more than mere confidence. Now you want the competence. And you want to know just how bad the problem is so you can make appropriate decisions. You don't want him to give you some blue-sky appraisal at the outset and then spoonfeed you the bad news bit by bit as he continues to work. In fact, you'd be furious if he did that.

Well, that's pretty much where we are nationally.

The time for hope in its pure state is past. You're in office now, Mr. President. Tell us what we need, and deserve, to know.

* and that somebody's going to have to repay, eventually, which is another whole can of worms that we don't even want to open here. How many future generations of Americans must we burden with overwhelming debt in order to implement emergency measures that may fail regardless?
Remember that one? And those funds, of course, have nothing to do with the current $1 trillion.
*** And let's be clear: By no means am I saying that I've already given up on him, for crissake, just one month later. I'm simply saying that his job is not to b.s. me. His job is to do his job.


jape said...

Nice comments Steve. It does seem, however, that hope has a lot to do with our financial markets, inasmuch as the value of stock is usually based on a perception and not a reality. In this way I think hope and optimism are viewed as tools to drive the dow back up.

Steve Salerno said...

Jape, thanks for joining us.

To play devil's advocate: Did the market belong at 13,000 to begin with? Or was it "unrealistic optimism" (or Greenspan's famous "irrational exuberance") that bid the Dow up where it never belonged? When you have stocks trading at absurd P/E ratios, that tells you that people's "perceptions," as you put it, have become totally detached from fact. Clearly these banks and financial institutions whose stocks were trading at surreal multiples of earnings had no business being at such lofty heights in the first place; they were insolvent then (when the stocks were trading at $100 or more) and they're insolvent now (when the stocks are trading for just dollars, or pennies in some cases). The "now price" is much closer to the truth, of course.

What I'm saying is, we'd all be better off--life (and the economy) would be much more stable--if we got our heads out of the clouds (or another bodily area) and dealt in fact. Good, bad or neutral.

jape said...

I actually couldn't agree more. And hopefully we as Americans have the guts to take our lumps the right way without ruining things for our kids.

Anonymous said...

Steve, here is an example of HOPE! over reason:

Bernanke: Recession may end in '09; Stocks climb

AP Business Writer

NEW YORK – Federal Reserve Chairman Ben Bernanke has steadied Wall Street by telling Congress the recession could end this year.

In his semiannual report to the Senate Banking Committee, Bernanke predicts the economy is likely to keep contracting in the first six months of 2009. But he also says "there is a reasonable prospect" the recession will end this year. He warns that a recovery will require getting credit and financial markets to operate normally.

Recession will end in '09? Really? According to most economists, we have seen nothing yet. And it is a now rapidly developing global crisis of unknown proportions. So where does Bernanke get his hope, er, data from? His hat? I dunno, but methinks this method has not worked all that well in his other major decisions.

And dontcha just love his leaps of hope: He warns that a recovery will require getting credit and financial markets to operate normally.

But he assures us that this will happen, of course, in '09. The crisis, which has taken decades to produce and which has turned global credit and financial markets upside down, will just reverse itself within the next eight months or so. Just like that, because Bernanke says so.

I want what he is drinking.

More to the point, though, shouldn't we replace these people with somebody who has a clue? (Just askin'.)

Cosmic Connie said...

Another very good post, Steve, and good for you for pointing out how political B.S. plays into the SHAM mindset.

Meanwhile, as Obama is being encouraged in subtle and not-so-subtle ways to sugar-coat reality or outright lie to us, the New-Wage hustlers are busily vilifying the "mainstream media" for creating or at least worsening the economic crisis.

Their motives are only too obvious. But you'd expect such things from selfish-help gurus, whose livelihood depends upon motivating struggling people to trade good money for slickly packaged platitudes.

We should expect something better from our elected leaders. I certainly haven't given up on Obama yet either. But I'm having serious doubts about these stimulus packages...

Anonymous said...

"I hope my union's demands for another $5/hr. wage hike and better benefits don't put my employer in the position where it's no longer cost-effective for him to try to compete with foreign manufacturers."

How about:

I hope our CEOs exorbitant salaries and bonuses contribute to the growth of our company. Oh, and I hope the huge piles of monies they make are in just proportion to their work on behalf of our company and its employees.

I hope the insurance companies indeed have our well-being on their minds, otherwise those increasing premiums and deductibles will drive us over the financial edge.

I hope free market capitalism works and that we do indeed live in the best economic and political system in the world, as they tell us. Otherwise, hm...

Etc., etc. Hope springs eternal.

Anonymous said...

Have you noticed how many people work for the government? Everyone wants government jobs either on federal or state levels. I see Russia 1980 everywhere.

Steve Salerno said...

Connie: As it happens, I'm working up a Journal essay (belatedly) on Proctor's "11 Forgotten Laws," and I like your Whirled Musings point about those who exhort their followers to "refuse to participate in the recession." In fact, I like it so much I'll probably steal it in some form. ;)

Seriously, though, the gonads on some of these people...I never cease to be amazed anew. If ever we needed an object lesson in the parasitic nature of much of this New Wage crap, I think the gurus' current campaign to continue to extract cash from people who can ill afford it--now more (less?) than ever--surely qualifies.

Anonymous said...

"If you've been paying attention at all, you know that Barack Obama, your president, who will talk to you again tonight about the state of your union, is under great pressure to lie to you."

Isn't Obama your president too, Steve?

Steve Salerno said...

Anon 2:11: That is a very good point, I think. One of the most daunting aspects of the endeavor to cut bloat is the endemic size of government from a sheer personnel standpoint--and those are jobs that, in many cases, simply cannot be eliminated unless you eliminate whole departments. Even then, the gov't usually makes an attempt to relocate those workers elsewhere in gov't. And, of course, "currently displaced" federal workers gain several extra points in the rating scale during the application process for other gov't vacancies. In fact, not a few positions state forthrightly that only displaced federal workers will be considered. For better or worse, you're not gonna find a sweet deal like that in the private sector. ("Only former Mack Truck employees will be considered...")

Anon 2:14: ?

I'm addressing the readers. I voted for the dude, too, yanno.

Steve Salerno said...

And Eliz: Your point about the excesses of the ruling class is well taken. That strikes me as a separate argument, though. As I see it, one of the main problems with America in recent years is that the bourgeoisie expected to be able to live on a rough par with the aristocracy, and that simply isn't attainable here. Like it or not, we live in a free-market, capitalist society. Now if you want to argue for another kind of society, that's fine...but that's a different topic, I think. The point here is that if you're making $22,000 a year and you think you can buy (and sustain) a $210,000 house, you are inhabiting a pipe dream. Similarly, if you're employed at $11 an hour, you probably have no business stocking your closet with Manolo Blahniks that you slapped on your (24.9% APR) Visa.

At least the millionaire pays for his yacht. We may not like how he accumulated the funds, but that has nothing to do with the climate of entitlement and "false hope" that we have so assiduously stoked in this culture over the past generation or so. We are not equally entitled to everything, yet many of us tried to live like it.

Anonymous said...

We may not like how he accumulated the funds, but that has nothing to do with the climate of entitlement and "false hope" that we have so assiduously stoked in this culture over the past generation or so.

I disagree, Steve. The way our CEO accumulated his funds is both directly related to and responsible for the climate of entitlement and false hope. And, in fact, that sense of entitlement is what made it possible for our CEO to grab as much for himself as it was humanely possible, damn the consequences.

The numbers may be different -- $24,000 a year vs. $240,000,000 -- but the mentality is the same, and, I would argue, the damage done at the top is of far greater consequences than that coming from the bottom, if simply because it affects a far greater number of people as it trickles down (and trickle down it does, doesn't it -- if we have learned anything from the "trickle-down economics" it is that the misery does trickle down, but prosperity not so much).

Now if you want to argue for another kind of society, that's fine...but that's a different topic, I think.

But is it really, Steve? I would say that the arguments for a different kind of a society stare us directly in our collective face in the form of the current crisis and our desperate efforts to avert it; only perhaps we are too blinded by that hope you discuss here that we are not (yet?) able to see them clearly.

Because it is the dumb, blind and deaf hope (aka denial) that keeps churning up these half-baked solutions (TARP, etc.) to the problem which is much larger and evading make-shift rescue efforts. (The problem, if that's not clear enough, is called unfettered free market capitalism. There. I said it.)

It's sort of like slapping band-aids all over a patient who is in a multisystem organ failure.

Cosmic Connie said...

Well, Steve, I can't claim to have invented that term "refuse to participate in the recession." Follow that link in my blog post (or just Google the phrase) and you'll see what I mean.

You wrote:
"If ever we needed an object lesson in the parasitic nature of much of this New Wage crap, I think the gurus' current campaign to continue to extract cash from people who can ill afford it--now more (less?) than ever--surely qualifies."

Of course, the hustledorks and their followers would just say that an attitude like that means you're part of the problem.

Oh, and if you need some inspiration and encouragement when writing about "Scientist Bob" and those 11 "forgotten" laws, that's on my Whirled too:

Verification word: porbuc

Steve Salerno said...

Eliz: I'm trying to reference a specific problem that, again, I see as being different from the problem you want to address. Most simply stated: If I have a million bucks, I am entitled to own a yacht. (How I got that million bucks is irrelevant, for the purposes of this narrow discussion. We're past that.) If you have $9.28, you are not entitled to own a yacht--yet lots of us, over the past few decades, came to feel that we were entitled to enjoy more of the fruits of wealth. This goes back, too, to what I pointed out in my chapter on self-esteem-based education in my book. Somewhere along the line, the educational system got the idea that even dumb kids, or poorly motivated kids, were entitled to get decent grades. And in scholastic sports, administrators also got the idea that there were suddenly "no losers" in life. (Thus, the demise of games like dodgeball and even "tag.") To me, this is all part of that same SHAM-based mentality, and is a more nuanced argument than where you want to take this discussion, which is--if I get your drift--(a) whether capitalism, with its extremes of wealth and privilege, remains a valid system of government for the new millennium, and (b) whether the leaders of capitalism can sometimes (if not often) be greedy scumbags.

Anonymous said...

Yes, Steve, I get your more nuanced perspective here, especially as it relates to SHAM, but this is precisely what I think needs to be amended to get the realistic (as I see it) grasp of the problem: it's a systemic failure we are dealing with, and not just a relatively narrow social/behavioral phenomenon that arises independently of the economic pressures and the social climate those pressures create.

Big picture: American economy and American culture (and social mores) go hand in hand. Unregulated free market capitalism and the peculiar demands it places on the society and individuals are, by and large, responsible for the rise of the culture of entitlement as well as SHAM in its many manifestations.

The SHAM-related phenomena (the myths of self-made man, unlimited material success, happyism, can-doism, individualistic success as means to elevate the society, etc.) are the off-spring of this economic system, which encourages them and in turn benefits from them, despite the mounting evidence of their ineffectiveness, if not toxicity. And it is no accident that SHAMscape has taken root in the US in ways that are not seen anywhere else in the world. The false hope is what has sustained and fueled the unregulated free market in the US, and those unsavory social trends* along with it -- until now.

OK, hope (yeah) this makes sense, even if you disagree (and I think you will :).

*That includes the compulsive predilection for anointing winners and losers and then trying to sweeten the reality, at least for children, by denying it, or, for adults, by coming up with "The Secret", The Power of NOW, or other such delusional band-aids for those who cannot make it to the exclusive winners' circle in the viciously competitive society. It's all part of the whole.

Anonymous said...

The U.S. has been living in La La Land for so long, how is anyone going to be able to tell us the truth? Remember when we were urged to spend when we didn't have any money? Consumers using plastic fueled this economy for a pretty long time and no one wants a downer president.

Steve, I totally agree with you, but let's face it, we are in the minority in the U.S. Remember the great line from "A Few Good Men," utterd by Jack Nicholson? "You can't handle the truth."

Rational Thinking said...

It's not just the US which has been living in La La Land. The UK has also been on a spend now, pay later path for years. The truth is painful, but it needs to be faced. The problem is, electorally, that this is bad news, and no political party wants to be seen as the bad guys for telling it like it is, certainly in the UK. People may want good news, but we need to know the facts - daunting or not - so that we can make the best decisions for the future. I think it's time to take the blinkers off and see what's really going on - unpleasant it may be, but at least we're not fooling ourselves any longer.

Anonymous said...

Alistair Darling looks like a sheep surrounded by werewolves every time he is on TV. The stammering, the panicked eyes...

John said...

Hmm, Mad Max.

Mr Salerno, what do you think about the peak oil thing?
Seems to me something to factor in to estimates of when economic recovery takes place, but you have to do it without governments because they aren't saying much about it that I can hear.

Steve Salerno said...

John: But peak oil is so speculative. Some people say we're there already. So how do you factor in something that can't even be pinned down?

John said...

True, but terrorism is pretty speculative, and our strings get yanked in all directions for that, on god knows what chance.

Oil depletion is a certainty, and more than a little bit of a potential problem, even if the peak date is hard to pin down.

Can you even say what your government has to say on it?
Or any government?
What precautions have been taken?
It seems like the lack of commentary from governments is taken as a reassurance that nothing is wrong.
Let's hope that isn't the kind of schtum the Mayor of Amity kept when there was a big shark chewing up the swimmers.

I have dug a couple of things up, and I have avoided doomer/lefty/tofu muncher sources and gone to what the establishment says.

Lengthy 1 hr video (I watched it all):

Concise summary:

Looking the graphs (some of which I don't understand yet), the problematic aspect is shown by the light blue area on the 'Oil Production by Source' chart, which shows how much oil needs to be found in order to keep up with demand, it seems to me.
Some of this capacity will no doubt be met, but all of it?
I think it also shows that, for the currently exploited fields, we have reached peak already.

Correct me if I'm wrong, I'm still learning.

Steve Salerno said...

John: I wish I could set aside time right now to watch this material--I'm sure I'll get to the summaries in short order--but I still think the geopolitical realities here are more the operatives ones than the petrochemical or geological realities. Shameless prediction: The U.S. is not going to let itself get to the point where it runs out of oil. Not in our lifetime. Either we are going to (finally) develop the alternative fuels that we should've had in motion decades ago, or we're going to simply take the oil we need from the folks who have it, using the Malcolm X approach: by whatever means necessary. And we'll find a reason to justify what we do, just as we found a reason to justify torture in Gitmo and elsewhere. I'm not making a value judgment here. (For example, I still don't know how I feel about torture.) I'm simply stating fact.

John said...

For sure more resource wars are on the cards. I've no doubt every military in the world is busy wargaming it all. Which also would imply they have a good idea about who has what oil and where. That would be a pretty safe bet, wouldn't it?

I did have a go at your man Brzezinski's Grand Chessboard, before nodding off over it. I may have another go, but I get the general idea.

John said...

The only reason I raise it is in relation to the general impression that the Obama administration will cut down on the war and suffering of the last few years, and that may be overselling his capabilities, though he may be back out of office before it starts in earnest.
The projections have been made, and Asian countries are going to gobble up ever increasing amounts of oil, so there are your rivals right there. They know this.
If resource war starts to kick off, when and how will it end, and what is it going to do to us?
What do you think?

Steve Salerno said...

John: I'm not trying to be contentious, but how can I answer that? I do see an exchange of nuclear weapons somewhere in our future. No idea precisely how and why it will happen, but it seems inevitable. With or without war, I certainly do not see Manhattan continuing to exist (a casualty of nuclear terrorism) past, say, 2015, which will sadden me greatly, since the holocaust will take at least one of my children, and probably all three of my granddaughters, with it. So I try not to think about it.

John said...

Phew, Steve, I thought I was a pessimist.
A glimmer of good news...

Toyota guy says,
"Last summer's $4-a-gallon gasoline was no anomaly," said Irv Miller, vice president of Toyota Motor Sales USA. "It was a brief glimpse of our future. We must address the inevitability of peak oil by developing vehicles powered by alternatives to liquid-oil fuel."

That's a move in the right direction, no?

If you are so unhappy about it all, that's the last thing I will say about it.

Going to keep checking into your blog, though to look see.