Enough already

Cross-posted at River Twice Research.

The financial markets are again getting pummeled, both domestically and globally; the nearly $800 billion stimulus package signed with fanfare by President Obama has done little to alter the mood. In fact, if you read through financial websites and assorted blogs on politics, economics, or anything related to those, you will find a nearly endless sea of misery. The level of anger, pessimism, despair, and sheer hopelessness seems to reach new peaks every week, in inverse relation to the movement of global equity prices and the size of individual retirement accounts.

It's been said but bears repeating: global economic activity fell off a cliff after October last year, and has remained there. The implosion of the credit system, built as it was on the flimsiest of foundations, layered as it was onto a few million sub-prime mortgages of homes predominantly in Arizona, Nevada, Florida, and California, led to a near halt of buying, spending, and investing.

But bad fundamentals are only one aspect of what is going on. What makes the present that much worse is a complete meltdown of confidence about the very possibility of a more balanced future. And it's not just an erosion of confidence. It's the flourishing of our destructive instincts, the opposite of the "better angels of our nature," the demons, the whispers in the night that all is about to go up in flames.

We all have our fears, whether we admit them or not. But this has gone too far. In the financial world, there is a game of one-upmanship to find more dire adjectives, and any who dissent and suggest that yes, there will be a tomorrow and yes, there will be a future of growth, moderate and different, but still motion forward and movement upward, they are treated with contempt, not barely disguised, no: contempt on the order of those made to walk the streets during the Cultural Revolution with dunce caps and signs of shame around their necks.

Those who bet that the market will go down until there's nothing left to lose, who are convinced that value will be permanently wiped out - the shorts and the traders - they are enjoying their moment in the sun, and some are undoubtedly profiting from the collective misery. There's nothing wrong with that in small doses, and almost everyone can benefit from hedging their bets in the market. But you can't be short forever, and you can't ultimately profit from everything going down. A few can make money for a while, and if you believe that it's all survival of the fittest, then you probably don't care if 99% suffer as long as you're part of the 1% that prosper. The sheer delight in "burn, baby, burn" is hardly unique to our age. We've been there before, and it leads nowhere, except to a whole world in flames.

So yes, millions are losing their jobs and their homes and we are struggling to figure out what is real and what was fueled by debt dreams. And yet, there isn't mass starvation, mass homelessness, imminent physical danger, certainly not in those parts of the world that are suffering the most from this credit crisis - the United States, Europe, Japan. The fears and hysteria are based on more intangible issues, though the fear of total loss of home and livelihood and health is just as intense.

While we need to respect that this is a pivotal moment for us all, we also need to halt this pernicious slide into unrelenting negativism. We need to say "enough already," and recognize that we are hardly the first generation to face challenges, and that a dysfunctional financial system is not of the same order as war, pestilence, and social chaos. The economy contracting by 4% or 5% for a few months is a shock, but it is not an excuse for announcing our collective obituary, unless, of course, we want to dance on the abyss and court disaster.

So, enough already. Our problems are real; but we are pulling ourselves into a vortex of gloom as powerful and destructive as our one-time belief in our endless capacity for reinvention was powerful and constructive. We can make this better, or we can make it worse. It's a choice, not a destiny.

For a look at additional blogs and other writings of mine, feel free to visit River Twice Research.

Tags: economic crisis, fear, obama, Psychology, stimulus bill, stock market, Wall Street (all tags)

Comments

4 Comments

Re: Enough already

Zeke--The negative news is bad enough, and I think your comments are spot on: the pessimism has been overdone. But I think what's unnerving people more at this point is the uncertainty factor; we are not getting a coherent economic policy out of Washington...and here are just two examples:

1) Obama promising--in his first prime time news conference--that he wouldn't comment on a bank rescue plan, since his Treasury Secretary would be offering up a detailed plan the following day. When Geithner didn't deliver the goods as promised, people imagined the worst, understandably. At this point, it seems like the man has gone into hiding, and markets are freaking out. Consumers--and markets--don't cope well with uncertainty.
2) Only last week, team Obama sent out Donna Edwards (D-MD) to defend the proposed Housing/Foreclosure Relief Bill. In an interview with CNBC's Mark Haines, she admitted under intense questioning that she didn't understand all the details, as the "guidelines" hadn't really come out yet. Bottom line, this is a very poorly crafted proposal, that was angering people even before Rick Santelli's meltdown.

Given that these are two components of Obama's "three-legged stool", I think people are right to be apprehensive, and anxious to get more details. Until we do, markets will continue to deteriorate, and people will be pretty negative about the economy.

by BJJ Fighter 2009-02-23 07:02PM | 0 recs
Sorry, but this all filler, no meat.

What planet are you talking about?


So yes, millions are losing their jobs and their homes and we are struggling to figure out what is real and what was fueled by debt dreams. And yet, there isn't mass starvation, mass homelessness, imminent physical danger, certainly not in those parts of the world that are suffering the most from this credit crisis - the United States, Europe, Japan. The fears and hysteria are based on more intangible issues, though the fear of total loss of home and livelihood and health is just as intense.

There isn't mass starvation? Mass homelessness? Imminent physical danger? Certainly not in those parts of the world that are suffering the most?

You'll just have to take my word for it, because I'm not going to bother providing links since the diarist surely does not.

But, intangible?

1.) 1 out of ever 2 people is finding it difficult to put food on their table in New York City right now. I would imagine the same holds true in many other areas of the country. (And, NYC is not California, Nevada, Florida or Arizona.)

2.) The countries affected most by this are not the U.S., Europe or Japan...try scores of third world countries...eastern European countries...etc. Food riots are grossly underreported throughout the world these days.

3.) Fears and hysteria? 50% of the American population is afraid of losing their job right now according to a recent poll. 1 out of every 9 homes in the U.S. is vacant. Real unemployment hasn't been this high since the 1930's.

4.) Imminent physical danger? Upwards of 50 million Americans have no healthcare, whatsoever. Tens of millions of others better pray they don't get too sick, since those on shitty healthcare plans will have the rug pulled out from under them by their insurers when it comes time to seek treatment.


While we need to respect that this is a pivotal moment for us all, we also need to halt this pernicious slide into unrelenting negativism. We need to say "enough already," and recognize that we are hardly the first generation to face challenges, and that a dysfunctional financial system is not of the same order as war, pestilence, and social chaos. The economy contracting by 4% or 5% for a few months is a shock, but it is not an excuse for announcing our collective obituary, unless, of course, we want to dance on the abyss and court disaster.

5.) A dysfunctional world economy does more to foment war, pestilence and social chaos than just about anything else. The CIA has come out with studies saying that the world's economic distress--now and projected--is the biggest single threat to our national security. Forget about Al Qaeda...

6.) Nobody's announcing our collective obituary. But, it's precisely bloviations like this to which I'm responding now--where we fail to call this a Depression...where we deny reality...until we're runover by a freight train full of truth as we follow the MSM off a cliff of misinformation...which all contributes more to our national downturn than anything else. Read Frank Rich from yesterday's NY Times...it's all about DENIAL being one of the main reasons why we fail to address our nation's problems...


So, enough already. Our problems are real; but we are pulling ourselves into a vortex of gloom as powerful and destructive as our one-time belief in our endless capacity for reinvention was powerful and constructive. We can make this better, or we can make it worse. It's a choice, not a destiny.

We will make this better. But...like...what's the point of this diary?

Why am I commenting in response now?

Oh, now I remember...because people are in denial about reality...

They say that "knowing the problem is half the solution."

Get it? Knowing the problem?

by bobswern 2009-02-23 09:19PM | 0 recs
Re: Enough already

The fact is that the spiral is so fast at the moment that even shorting will become untenable.  A short sale requires a sale.  Who is going to buy certain securities at all (e.g. banks)?  Eventually it will peter out.

by AZphilosopher 2009-02-23 09:55PM | 0 recs
Re: Enough already

There are multiple facets to the current situation that tie together to the honesty strategy Obama appears to be pursuing:

1. The misery is real and everybody is feeling it.  The rich have lost a ton as stocks have tumbled, so they are freaking out.  Many in the middle class have lost their jobs and homes, are now facing an unsure and unstable future.  The poor are hit very hard, as local funds are drying up around them and generosity is in short supply with people usually giving often tightening their purse strings, as people now more afraid for their own and their family's future.

2. Politically the dire situation has made it easier for the Obama administration and Democrats in Congress to make drastic changes to the system with the stamp of approval from the public. These changes were needed for several decades now, but a largely content public resisted for the most part.  There is talk that Obama should be more cheery or positive about the state of the economy because the markets will react positively while other say that he needs to be more direct and honest about the dire circumstances the country is in.  Truth is that the crisis is making it easier to make the changes that should have been made a long time ago, fast and at low political cost at the moment.  It is not in our best political interest to whitewash the crisis and pretend that things aren't as bad as they look to many.

3. We are at a point at which people need to be confronted with the facts loud and clear. Only then are we going to see wholesale changes in behavior that last beyond the latest recession. Enough with the denials already.

4. The stock market was clearly overvalued at 14,000. The same was true with the housing market, as home and condo prices had gone through the roof for almost a decade prior to the bubble burst. The markets will come back, as will the housing sector, since we are now in an undervalued phase.  Those two "comebacks" will fuel a resurgent economy over the next 3 years, but more robust and realistic than before IF we can resist the temptation to sugarcoat the extent of the current situation we are finding ourselves in.

by devilrays 2009-02-24 06:37AM | 0 recs

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