I am no longer interested in the consensus critical view of the coming collapse of our financial system.
“ 'The going is the goal,' a pragmatic philosopher said; past and future had both been swallowed in the void of a meaningless now. Such are still the pious beliefs of the futurologist, whose inflated expectations, like the inflated values of our dubious financial-credit system, are based on the supposition that the day for casting up a balance between assets and liabilities can be indefinitely postponed. Are not the losses in fact gains, he asks, like his predecessors, since only through constant waste and war can the mega-machine keep on expanding.” 1. I'm Finished
Dubious financial-credit system, indefinite postponement of balancing assets and liabilities, constant waste and war to continue expanding the mega machine; man, that really cuts to the quick, no? It wrestles with the very beast of the thing. Yeah, the very beast of the thing. Except the historian and literary critic Lewis Mumford wrote that in The New Yorker 36 years ago. Thirty-six years. That was a long time ago.
There are quite a few ways to look at this, of course. I don’t know which is right. But having for so long read, written, edited, and published sentences that were nearly identical to Mumford’s, only updated expressions of the same critical view, even if unwitting in their adherence to it — a meaningless present, peppered with inflated expectations, emergent from the sham of our broken and corrupt financial system, which, incidentally, we are told, exists solely by fiat, a precarious and dubious faith only half-granted to our credit-based, debt-stricken system and its looming, forever looming, day of reckoning, postponed only by and perpetuated only through never-ending waste and war — I’m finished.
It's not that I disagree with any of that. I have little doubt that all of the following will inevitably happen, possibly even within our own lifetimes: war, terrorism, wholesale currency change, inflation, deflation, stagflation, collapse, border shifts and national realignments, the list goes on. What I disagree with is preparing for a termination point that will never arrive. History does not, in fact, end. That point on the horizon, the vanishing point, does not arrive as a singular destination, but marches forward with interminable parallelism, the pull of an illimitable and mythic convergence.
Make no mistake, there are times to prepare for the worst, typically when everyone around you is enjoying the best. One evening in 2006 Scott Reamer and I were riding to dinner downtown in New York City on a sparkling new subway car. It was as if the car had been unwrapped moments before we stepped on. At the time, 2006, Scott and I were both writing articles on Minyanville about the coming housing collapse, the looming debt crisis, how the intensity of that coming deflationary leg down would necessitate, at least for the vast majority of investors and traders, a survival posture, as opposed to a speculative posture. The trick to surviving, we believed, was not to win, but to avoid losing. At any rate, in 2006 at least, our gloom was misplaced in this city. Sitting in this pristine subway car on our way to dinner, Scott looked at me at one point and laughed and said, "You know, this is the best this subway car will ever look. This is the best this city will ever look."
It's been five years since that conversation. It's been 11 years since the dot-com crash. Our 2006 gloom no longer feels misplaced; it feels comfortable, safe. Yes, there are times to prepare for the worst. Then there are times to prepare for something else. But look, I may be wrong. Perhaps the worst will happen. What is the worst? In your mind, what is the worst? I'm finished with the worst. I figure worst case, even if I'm wrong and the Mumfordian viewpoint prevails, I'll be happier as its happening than the many who successfully predicted it.
2. The Worst of All Possible Times
These are the worst of all possible times. Just ask any cab driver. The US default and inevitable currency collapse is only the tip of the iceberg. Hyperinflation, or deflation, or stagnation, take your pick. There will be no winners this time; we will all be impoverished by the banking system, slaves to the global elite. Government has never been more corrupt. Businessmen and bankers, never more villainous. Our schools are failing. College is a scam. The environment is being polluted, our children's future traded away in a maze of carbon credits and energy derivatives. Or, on the other side of the coin, environmentalism itself is little more than a clever ploy by cynical capitalists to wring out the last dollar from a foolish public only too eager to trade cash for recycled plastic plates and over-priced vinegar-based solutions branded with little green pine trees. And we are obsessed with distraction, pop culture, celebrity, bread and circuses facilitated by technology and rapid-fire communication, if one can even call it that, rewiring our brains to crave the Pavlovian immediacy of the virtual call and response, Twitter, Facebook, a vast ocean of meaninglessness which crowds out the significant, narrative broken by unbound connectivity and emergent complexity. Nothing makes sense anymore. That's one way to look at it.
Perhaps it is the only way.
From 1975, Mumford again, "We had begun, whether we liked it or not, to live in a porous, permeable, increasingly translucent world, whose walls and boundaries, if not altogether illusions, existed mostly in the mind."
Reading that -- the struggle with the evaporation of prior walls and boundaries, the increasingly translucent world, the illusion of control and linearity evaporating before our very eyes -- makes me despair of ever having an original idea in my lifetime. It's exactly what I felt I had described in a number of earlier pieces on how technology is exposing the non-linearity of life, The Crisis of Non-Linearity I called it. How foolish. The idea is as old as the first scratch on a cave wall. The stakes are no different, only magnified by our lack of humility and the arrogance of assuming the worst.
3. Preparing for the Next Black Swan
See, here's the thing, when I see banner ads like this one running on Bloomberg...
"Preparing for the Next Black Swans"
Bloomberg Money Managers Conference
When 14-Jun-2011 (Tue) 07:45 - 13:00 Where State Room, 60 State St., 33rd Floor Boston, MA, United States Entry Fee USD 695.00
I have to believe that perhaps the notion of a black swan has not been fully explained? Or if it was, then the concept itself not wholly grasped?
The event description:
"Preparing for the Next Black Swans": The year 2011 will most certainly be remembered for its Black Swan events, including the spreading unrest in the Middle East and the earthquake in Japan. Money Managers need to be prepared for unexpected events as they position their investments across asset classes. The Bloomberg Money Managers conference will bring together mutual fund, hedge fund and private equity investors to consider events that could rock the markets, portfolio strategies for managing the unforseen and the future of actively-managed investing."
Can you see the shift that has occurred? If you have not participated in or observed the financial services and money management industry throughout the 1990s and before, perhaps not. Prior to 2000, the very concept of a black swan -- an unexpected event that has an outsized impact and which endures post-impact rationalization as wholly expected (a la dot-com crash, subprime collapse, debt crisis, etc.) -- was anathema. The models accounted for all possibilities. Math and science, financial engineering had permanently eliminated tail risk. This is not overstating things. Fast-forward a full decade, black swans are everywhere, their ubiquity serving as a sort of psychic balm. Today, every unpredicted event is black swan-worthy.
I would like to attend an event on how to prepare for a white swan, an unexpected positive event that carries with it an outsized impact, rationalized in hindsight as an inevitability given our desire for progress etc., etc. No such thing exists, of course. I don't know if I would fork over $695 to go. Times are tight.
4. Naturally, There are Problems That Still Must Be Battled
Preparing for white swans, moving past collapse, it all sounds so good... in theory. It's a happier existence, to be sure. But there remain problems, serious problems, that must be fought. Take, for instance, the debtor prison. Debt has always been about morality, and the intensity of the moral conviction that you must pay what you owe is nowhere as fierce as it is in America. Despite forgiving, literally forgiving, banks and hundreds of other companies in all industries for owing more than they can pay, for the average citizen in America, forgiveness comes hard, if at all.
More than a third of all US states allow borrowers of money who find themselves unable to repay their debts in harsh economic times to be jailed, and US judges have signed off on more than 5,000 warrants since the beginning of 2010 in nine US counties, according to the Wall Street Journal.
Philosophically, it is an ill logic that presents itself. You must repay what you owe. You borrowed it, after all. We are sorry your circumstances may have changed, but a contract is a contract. See, you signed this contract. And you owe this. You must repay it. This papers over, literally, the lending side. In this logic, lending is an economic activity without risk. What, then, is the rate of interest, the cost of the money that one borrows? A fee perhaps, or gratuity. After all, you borrowed the money and agreed to the rate of interest, the fee. Why are we not in the lending business? You and me? It is risk-free. The person we loan our money to has signed a contract, after all. They must repay us. They must. Risk-free economics. Our bankers and lenders may be evil, but woe be to the individual who refuses to pay his debt.
5. When Brand-Verbing Fails
Have you Googled anything today? Google (GOOG). Now that's a brand-verb! Not all verb-branding works as planned, however. From 1975, below, an Old Forrester whiskey print advertisement. "Drinking is one thing. Forestering is something else." Forestering? You asked. "Yes," the ad man insisted as he removed his red leisure suit jacket and unrolled on the conference room table a giant print of a man's hand holding an Old Forester bottle. "We can have the whole country saying they're getting Forestered!" I don't know, you said, the whole idea made you feel a bit uneasy. It doesn't exactly roll off the tongue, you pointed out. "Neither does Smirnoff," the ad man pointed out, "Smirnoff's made in Russia, for Christ's sake. We're basically at war with the Soviet Union while they sell us vodka? Doesn't make sense. Go Forestering! It's American. It's whiskey. I'm Forestered right now!"
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