Enough Already

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 till there's little 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.

Cross-posted at: www.rivertwice.com

Comments

[PocketWatch]

Ok, here's some optimism...

I am the Business Manager of a small ($10M is revenue this year) custom machine manufacturing business in the Houston area. This year, through a massive effort to get things right, have gone from less than a 1% net profit margin to double digits, have paid off over $600K in our line of credit (we have always used local banks, who are not a part of this financial mess), raised our Net Worth from near zero to over $1M, given almost $100K in preformance incentive bonuses to our shop and office staffs, cost of goods is still falling in relation to dollars sold, and overhead is falling in absolute dollars. Our average shop worker is paid nearly $25/hr, and everyone has access to health insurance (company costs are about $250K/yr). We are currently in discussions with capital investors offering up to $1B (yes, billion) to develop and build equipment for green technology. Our outlook is to expand to probably 10x over the next 5 years.

How did we do it? By being smart, competitve, and conservative in our management techniques regarding fiscal matters. I imagine there are a LOT of companies out there that are doing just fine because they did not enter into risky behavior. I would suggest that we seek those businesses out and tell THEIR story.

[Dynamohum]

40,000 homeless in Washington DC
100,000+ homeless in NYC NY
75,000 Los Angeles CA
These are just three cities, now multiply that by all the other large cities. These numbers DO NOT INCLUDE the current foreclosure victims. So please DO NOT say there isn't massive homelessness. It may not be mass homelessness yet, but it is no small thing either.

[Jane]

It seems like those doing the trading and the selling are spoiled brats, just the way they have been for the last fifteen years or so. If they can't be really really rich, well, then why be anything seems to be their mantra. No courage, no enterprise. THat's what happens when you fix the market to do what you want it to (when you cheat, in other words). Cheaters never prosper because they don't ever learn anything, and so when the cheating fails them, they have nothing to fall back on.

[Buddy McCue]

I'd like to believe that. It sounds like the end of some morality play. The moral: "Be sure your sins will find you out."

Unfortunately, I suspect that few of these market-fixing scoundrels will suffer any consequences for what they've done. The world isn't really fair, you know.

[tcagle]

Autoschadenfreude.