Five Things You Need to Know: The Lingering Stealth Depression
Our declining standards of living pass by virtually unnoticed.
Our present social mood views our microwave bread lines and foreclosed Hooverville Netflix entertainment shelters as a horror. When social mood resets, that view will instead see the relative standard of living compared to the depressions in the 1900s as an achievement. But we're not ready for that. Not yet. Even so, and perhaps because of the fact I can sense what an achievement our base standard of living is in this country, I am not in the camp that refers to the United States with popular derogatory phrases, such as Banana Republic. There are doubtless harsh, impoverished living conditions for many in America, but this is not even close to what is referred to as the Third World. Not even close. It's inarguable. I was reminded of this when I read a piece in the Financial Times on Saturday by Simon Kuper in which he writes about real examples of societies plunging from the middle class into the "third world."
"In 2002 I visited Argentina during its freefall. The country had just devalued and defaulted, and the latest president, instead of merely resigning, had fled in a helicopter. Yet Buenos Aires – like Athens today – still looked like a middle-class city. People lived in apartment blocks with doormen and drove to restaurants in imported cars. At dinner one night, a photographer told me that just that day he had realised he'd dropped into the third world. When had it dawned? "When Amazon refused my credit card," he said."
4. Marc Andreesen on the '99 Bubble's Psychological Scars
From the New York Times Magazine, Andrew Goldman's interview with Marc Andreesen, a former Netscape founder: "If you compare how big industrial companies like G.E. (GE) are valued compared with big tech companies like Microsoft (MSFT), Cisco (CSCO), Google (GOOG) and Apple (AAPL), tech stocks have never been valued more poorly in comparison. So not only is there no bubble - these prices are reflective of the fact that the market still hates tech. This bubble talk is about everybody being unbelievably psychologically scarred from 10 years ago."
If you find yourself struggling with the intensity of our asymmetric economy and this stealth depression, give the Andreesen interview a quick read. Near the end, pressed by Goldman to be more specific in how technological improvements rooted in the prior tech bubble are only now beginning to emerge, Andreesen makes the following prediction: "Ten to 20 years out, driving your car will be viewed as equivalently immoral as smoking cigarettes around other people is today." There is so much packed into that statement.
5. This Is What a Bubble Looks Like
Speaking of bubbles, this 1985 advertisement from Lamar Financial Group proudly proclaims its status as the first American financial institution to apply for a lunar branch. The ad appeared in TexasMonthly magazine (via Liberty Street Economics blog of the New York Fed).
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