Enough already
02.17.09
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.
Tags: economic crisis, fear, Obama, psychology, stimulus bill, stock market, Wall Street
February 17th, 2009 at 6:13 pm
This period reminds me very much of the months immediately after September 11th, when suburban mothers were genuinely worried about waves of terrorist attacks on their local elementary schools, Tom Ridge was telling everybody to stock up on duct tape, and the ridiculous color-code system was flashing red alert on our TV screens every day, and all of it stoked by an irresponsible and clueless media. Couple this kind of hysteria with a narcissism that demands a world-historical crisis commensurate with our grandiose self-regard, and you have the makings for the situation you describe so well. This kind of self-indulgent wallowing in our own fears was disgusting then and it’s disgusting now.
February 18th, 2009 at 8:10 am
I agree. Enough already. It is time for leaders at every level to move in action and message towards the sort of solution orientation and optimism that has pulled this country through countless other crises.
February 18th, 2009 at 8:36 am
[...] Zachary Karabell, the President of River Twice Research, has written just such a piece on his blog – Enough Already. [...]
February 20th, 2009 at 9:27 pm
Dear Mr. Karabell:
Thank you for your (always) telling it as it should be told. You bring acute wisdom, preternatural perspective & uncommon sense to the droning discussion. Keep up the excellent journal and T.V. appearances.
Thanks,
Lou
March 9th, 2009 at 7:32 am
Well spoken! I concur and it is exactly the reason that January 2008 I started my site dedicated to balancing the negative news with nothing but http://www.positiveeconomicnews.com
Not contrived but scraped from sources around the globe to present the “other side of the story.”
In addition to what’s being reported by mainstream, it is also “how” they report the negative in our economy. Words like dismal, nosedive, and plummet are all adjectives that do not described what it going on, but are so frequently used in reporting.
Thank you for taking up the spear.
March 15th, 2009 at 12:38 pm
I have noticed your reaction to the “taken out back and beaten” talk on Fast Money. Reducing the rhetoric (enough already) is a good idea, however.
Americans have endured $11 trillion of wealth destruction — the last seven years of their work wasted. Today we hear that AIG will continue to pay bonuses and that “they hope to reduce them 30% in 2010.”
Baby boomers retirement hopes are gone. Government’ s failure to control AIG’s multi-billion dollar fraud and the arrogance of Wall Street could lead to political unrest at worst, and a generation of investors wildly cynical about SEC oversight and distrustful of the markets. Going forward, investors and the American people will also be saying “enough already.”
April 29th, 2009 at 4:27 am
It will be a cold day in hell before washington ever puts a real stop to wall streets theft of our hard earned money! Just fact it’s just the way it is they get paid huge money to legally steal our money.
Then again there is always then jewel, Zachary, every time he recommends a stock on fast money I make money on it he is one amazing guy (TC) hey I have already tripled my money how can one complain after all…my so called broker money manager what have almost wiped out 23yrs of hard work now how does a working man make that all of that up? against that law to to whoop his butt like he deserves instead of being safe with my money like I told him to be as I am getting to old to be playing risky games.
May 26th, 2009 at 10:46 pm
This period reminds me very much of the months immediately after September 11th, when suburban mothers were genuinely worried about waves of terrorist attacks on their local elementary schools, Tom Ridge was telling everybody to stock up on duct tape, and the ridiculous color-code system was flashing red alert on our TV screens every day, and all of it stoked by an irresponsible and clueless media. Couple this kind of hysteria with a narcissism that demands a world-historical crisis commensurate with our grandiose self-regard, and you have the makings for the situation you describe so well. This kind of self-indulgent wallowing in our own fears was disgusting then and it’s disgusting now.