http://www.clusterstock.com/2008/8/dr-doom…y-prices-by-30-
I’ve been hearing whisperings of something really bad happening in September. Now I’m really anxious.
Every generation thinks theirs is the last. Doomsday is near, we’re running out of oil, the economy will collapse, people will riot in the streets and die. I’ve heard it all the past few months from some of our more emotional financial planning clients… This is worse than the Great Depression… I saw on Foxnews… I saw on CNN… I saw on MSNBC… I read in the newspaper… and so on.
The economy is nowhere even close to Great Depression status (and the country survived that anyway.) It’s important to stay rational, not let your emotions (and the news) get the better of you, keep everything in perspective and use historical data as your guide.
Every generation thinks theirs is the last.
By most measures of wealth and freedom, most centuries end up better off than the previous one; yet, the anxiety persists.
Anyhow, even Roubini (quoted in the article) thinks that things won’t get worse than the 70’s. Using “the 70’s” as one’s standard of the apocalypse tells one how high one’s standards actually are today.
Ye gods, the 70s. Big hair, ties wide enough to put a highway stripe on, disco…
Oh. <_<
I remember in 1992 Bill Clinton and his suckups in the media (back then, pretty much all of them) repeatedly stating and assuming that this was the worst economy in 50 years. As it was, it was a mild recession. What I don’t understand is why my own father bought into that line of bullshit; he remembered the late 70s even better than I do.
The economy is nowhere even close to Great Depression status (_ and the country survived that anyway. _)
Did we? The Great Depression signaled the earnest adoption of socialist ideology in Washington: the end of the gold standard, the birth of social security, massive public works, an alliance with the Soviet Union, an explosion of statism, the completion of the enslavement of our banking system to the federal government and a general acceptance of altruistic premises; all of which (on edit: except the alliance with Soviets) we still endure to this day, with ever worsening degrees. The current situation is not comparable to the Depression, it is a direct consequence of it. The collapse of the U.S. economy was predicted by Ayn Rand, who knew first hand the consequences of unchecked political altruism. We are closer to the point she warned of, than when she wrote of it four decades ago. Our national debt (the money stolen from us by the kleptocrat inflationists in DC) is more than 2/3 the GDP and growing quickly, possibly inexorably. Whether we’ve reached the point of no return, or will squirm our way from the precipice with a violent spasm of temporary reason, is unknowable. If we are too far gone to escape the edge, though, the outcome will be anyone’s guess, but probably a stark choice of freedom or slavery.
Atlas hasn’t shrugged, he’s been chained and beaten and starved into submission.
Agrippa, Do you think the per capita real wealth has declined from decade to decade over the last (say) 7 decades?
By most measures of wealth and freedom, most centuries end up better off than the previous one; yet, the anxiety persists.
Anyhow, even Roubini (quoted in the article) thinks that things won’t get worse than the 70’s. Using “the 70’s” as one’s standard of the apocalypse tells one how high one’s standards actually are today.
Speaking of the 1970s, I recall Ayn Rand writing in the 1970s (in the Ayn Rand Letter, I don’t remember the name of the article), bluntly, “The United States is broke.” She went on to say something to the effect that even if we sold the country’s collective assets, it wouldn’t cover the country’s debts. I’ve always wondered how, if things were that bad then, we seem to be doing relatively OK three decades later. If I had been living then, I would have assumed that, barring a philosophical revolution, the country wouldn’t survive another three decades.
Every generation thinks theirs is the last. Doomsday is near, we’re running out of oil, the economy will collapse, people will riot in the streets and die. I’ve heard it all the past few months from some of our more emotional financial planning clients… This is worse than the Great Depression… I saw on Foxnews… I saw on CNN… I saw on MSNBC… I read in the newspaper… and so on.
The economy is nowhere even close to Great Depression status (and the country survived that anyway.) It’s important to stay rational, not let your emotions (and the news) get the better of you, keep everything in perspective and use historical data as your guide.
I wonder to what extent the 24/7 news media, the internet, and cable TV promote alarmism about issues that range from the economy to the weather. 50 years ago, most people got their news once or maybe twice a day from either a newspaper or an evening broadcast. Now, you can immerse yourself in this stuff all day long. Moreover, since the media monster has to be fed, there seems to be a greater tendency to hype stories and push the limits. Everything is a crisis. The world is coming to an end. If these trends continue, we’re all going to die.
Most of the time, this stuff borders on the ridiculous.
Speaking of the 1970s, I recall Ayn Rand writing in the 1970s (in the Ayn Rand Letter, I don’t remember the name of the article), bluntly, “The United States is broke.” She went on to say something to the effect that even if we sold the country’s collective assets, it wouldn’t cover the country’s debts.
Tough to say what she was referring to, without a reference. The U.S. government is broke, in the sense that it owes more than it owns…but that’s because it knows it can simply tax its citizens to pay its debts. As an aggregate, U.S. citizens are not broke: if one takes all their assets and liabilities, they are solidly solvent.
What do you mean by “real wealth”?
By real wealth I mean stuff: homes, cars, gadgets, farms, mines, cows, and everything else that is owned. “Nominal” per capita wealth (i.e. wealth expressed in dollars) today would definitely be higher than in the 1930s – but a lot of that is because teverything simply costs more dollars. By “real” I mean, the wealth after adjusting away the effects of the falling dollar.
Did we?
Yes.
I wonder to what extent the 24/7 news media, the internet, and cable TV promote alarmism about issues that range from the economy to the weather.
The media has a lot of power, of course, in shaping and even determinig people’s perceptions. So naturally it has something to do with it. But quality is more important than quantity. So it isn’t so much the extent of time devoted to the news, but rather the kind of sensationalized way by which the news are reported.
Moreover, since the media monster has to be fed, there seems to be a greater tendency to hype stories and push the limits. Everything is a crisis. The world is coming to an end. If these trends continue, we’re all going to die.
My point exactly. Have you noticed when things are bad the media overtly say “get used to it, because that’s how it will always be from now on”? If the 2005 hurricane season was particularly bad, well, that’s our fault and get used to it because it will only get worse (meanwhile 2006 and 2007 came and went without major hurricane disasters, and 2008 looks mild so far). If the economy goes down a little, why that’s the son of the Great Depression, and we’ll all better get used to bread lines and soup lines, because that’s how bad it will be from now on.
That’s not all, either. The media is so hungry for bad news it will manufacture them. Not that they will make stuff up, not at all, but they “spin” things to make them look worse than they are. Or, before somethign actually happens, they will make it appear impossible. For example, back in 1991 the media were saying nothing short of a million man army willing to sustain 100,000 casualties would succeed in evicting Saddam from Kuwait. In 2001 we were told there were no targets at all in Afghanistan, and that if the British and the Soviets couldn’t win there, naturally America had no hope (interesting how a place without any worthwhile targets can defeat a stronger nation, eh?)
Back to the economy, there’s a joke I heard somewhere “The media have successfully predicted ten of the last three recessions.”
The media has a lot of power, of course, in shaping and even determinig people’s perceptions. So naturally it has something to do with it. But quality is more important than quantity. So it isn’t so much the extent of time devoted to the news, but rather the kind of sensationalized way by which the news are reported.
That’s a good point. I remember Clinton’s 92 election strategy. “It’s the economy, stupid.” The last 8 months of bush seniors reign we had a recession, allegedly. (I don’t recall it being that bad.) Almost the day after Clinton took office, the recession was over and I didn’t hear another negative word from him or the media about the state of the economy.
That’s a good point. I remember Clinton’s 92 election strategy. “It’s the economy, stupid.” The last 8 months of bush seniors reign we had a recession, allegedly. (I don’t recall it being that bad.) Almost the day after Clinton took office, the recession was over and I didn’t hear another negative word from him or the media about the state of the economy.
There was a recession following the first Gulf War in 91. By the time the 92 election got around, the recovery had already begun. In fairness, recoveries and recessiosn are recognized only after they’ve started, not at the time they start. Still Clinton did try to deliver on some promises, so there was his infamous stimulous package early in his first term. The GOP filibustered it and it died, and that’s the last we heard of that recession.
BTW since Reagan came to power recessions have been milder and shorter than they used to be. Partly that’s due to low inflation (vs around an over 10% inflation rate in Carter’s last year), and partly to lower taxes. But one big factor is that technological advances keep enhancing productivity continoulsy.
So it isn’t so much the extent of time devoted to the news, but rather the kind of sensationalized way by which the news are reported.
Yes, TV producers have figured out that drama draws interest. So, they create drama. For instance, if one listens to the same business news item on PBS, Bloomberg and CNBC, and if the contents are not being slanted, one can still see a difference simply in tone of voice and the way it is presented. Of these three, CNBC is the worst: everything is urgent!
I wonder if this reflects an increased focus on the short term that is broader than just the media.
A nice thing I think to remember is that 100% of all apocalypse predictions have been wrong up to date, and it’s a damn nice rebuttal too. Surprisingly, however, I have been asked how I knew this was so.
Yes, TV producers have figured out that drama draws interest. So, they create drama. For instance, if one listens to the same business news item on PBS, Bloomberg and CNBC, and if the contents are not being slanted, one can still see a difference simply in tone of voice and the way it is presented. Of these three, CNBC is the worst: everything is urgent!
I wonder if this reflects an increased focus on the short term that is broader than just the media.
Can you imagine how 24 hour news would look if it was down to earth and accurate? The news crawler along the bottom would simply read:
“Everything’s normal - Everything’s normal - Everything’s normal - Everything’s normal - Everything’s normal”
Can you imagine how 24 hour news would look if it was down to earth and accurate? The news crawler along the bottom would simply read: “Everything’s normal - Everything’s normal - Everything’s normal - Everything’s normal - Everything’s normal”
Actually, I can easily imagine a 24-hour current affairs program that is interesting to me. The first thing to do would be to broaden the scope of the news. U.S. news programs have a very narrow focus, even compared to channels like BBC, leave alone some good Asian networks. The second would be to make the coverage deeper. There’s enough happening in the world to support a 24 hour news show that is interesting and useful to me (not sure about the majority of viewers, etc.).
Still, I was speaking of the short-term focus and the urgency implied in the delivery. I find both aspects disintegrative, and these actually m ake me switch off the news. If I listen to radio, for instance, it will usually be NPR, because the chance of the programming being broader in scope, deeper in details, and slower paced far outweighs any slanting of the message.
I’m a bit split here.
This certainly isn’t the Great Depression (yet), but it’s cause it government-made, and our government has not yet in anyway caught on that it is so. It could easily be made into the great Depression. The direct cause and effect is known and has not been reversed.
In addition, every crisis in the last century resulted in more, not less govt control. Look at the crap regulation that BOTH Paulson and Bernake are proposing. The only reason we came out of late 70’s stagflation the way we did was because Volker was FED chairman and Reagan got economics. Bernanke is an idiot, and neither Presidential hopeful gets it. Don’t think this naturally going to resolve itself simply because we say it’s going to be alright. Its only if enough people say, oh my god, this FED and this administration is idiotic (and the next) that something might change.
Don’t get me wrong…I’m not saying the government, the economy or the country in general are headed in the right direction, but I don’t think the end of the world is near either. There’s time to fix what’s broken.
Now what about the speculation that China will abandon its support of the U.S. dollar after the Olympics? Wouldn’t this cause a collapse of the dollar and plunge us into a depression?