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November 19, 2010

Is Ignorance Bliss?

Recession fatigue has definitely set in.  I hear "I'm so bored with all this negative news!" almost every day.  People whose stock portfolios have recovered and who have no need to sell their real estate are sick of hearing about the plight of the poor, the retired, the disabled, the unemployed.  Now that it looks like we might have gridlock in Washington, they don't even care about politics.   

We are a strange society.  We like to put the unattractive aspects of our lives out of sight and out of mind rather than deal with them.  I have a saying I use all the time - conflict avoided results in crisis.

But we prefer to be ignorant and blissful.  And because we don't feel we need to balance our budgets either individually or as a nation, we have been able to stay that way - so far. 

Conceptually we understand that there is such a thing as sustainable growth and such a thing as unsustainable growth.  If you said you needed 100 homes to be built in 10 years, sustainable growth would predict that you'd build them 10 homes per year for 10 years, not 100 homes in year one and none after that.  But we've gotten so used to the rapidity of profits and advancements that can be made on an unsustainable trajectory that we can't accept that the unsustainable growth has come at a cost. 

Now that our own people have maxed out their acquisitive capabilities, we expect to export our way out of our problems.  But emerging nations have no intention of buying our exports long term.  We have no internationally enforceable protections on our creativity.  Our technologies are being wealth shifted with impunity by other countries.  We are fooling ourselves if we think China is going to continue to import our planes and our cars for much longer.  They are busy dissecting them as we speak.  While we are all standing around feeling superior, other countries are becoming self-sufficient.  Self-sufficient on American technological advancements they cannot be made to pay for because they hold too much of our national debt.

We think we are fatigued now?  Real fatigue happens when you stop talking about how fatigued you are and start actually experiencing the exhaustion that comes from working your way through your problems.

But for now we'd just as soon not know that the US Treasury, the banks, the FDIC, Fannie Mae, Freddie Mac, and the vast majority of Americans are insolvent.  Or that there are 2 billion people in other countries living on less than $5 day who would love to trade places with any one of us.  Or that we have politicians who don't understand that protecting our international intellectual property rights is not the same thing as being protectionistic.

We'd rather eat turkey, watch football, and shop. 



November 02, 2010

Rally to Restore Sanity

I was at the Rally to Restore Sanity over the weekend and I have to say that many of the interviews I have seen on Fox News have been patently absurd.  Neither I nor the majority of the people I met there were drunk and/or stoned.  Shame on you, Fox, for poor reporting.  It erodes your credibility.

I went to the Rally to promote this site.  (A big "Hello!" to everyone I met while I was there.)

While I was handing out promo materials I noticed something interesting about how people think.  I noticed that if several people took cards, asked a question or generally seemed interested, many others flocked to see what all the fuss was about.  Conversely, if one or two people snubbed me, the crowd parted like the Red Sea in their attempt to avoid contact.

Mulling this phenomenon as I was returning home yesterday, I realized that this mentality forms the essence of asset bubbles.  If a noticeable interest is taken in a particular asset, then you can bet others will start piling on.  You like housing?  I like housing!  Jim Cramer likes the CANDIES (Apple, Netflix, etc)?  I like the CANDIES!  You think US treasuries are the safest investment?  I think so, too!

All of which makes people who can think for themselves a very valuable commodity, indeed.