Sunday, January 4, 2009

Musings: Myth Making

It’s been so delightful during this long holiday weekend to loiter mornings in my warm bed as the rain pounds outside or, as is the case today, the trade winds gust and howl. I can just imagine how delightful it must be aboard the Superferry.

An occasional patch of blue showed itself when Koko and I went walking this morning along streets lined in mud, with puddles standing in the grass. I don’t mind the wet, gray weather, but some of the farmers I know say their crops have been damaged or are growing very slowly, underscoring yet another of the trials and tribulations associated with raising food. You never know what the weather has up its sleeve.

Several people have also said they feel sorry for the tourists, who surely are expecting sunshine. One friend said she’d witnessed a couple at Princeville gazing in wonder at the ocean during a brief break in the rain. They told her they’d been there a week and it was the first time they’d seen the water in the sun, and gee, wasn’t it pretty then. Yup, a whole passel of tourists passed through Kauai recently and never saw the mountains or the sun sparkling on the sea.

The encounter prompted her to wonder if the travel agents and visitor’s bureau warn folks that rain and clouds are likely in Hawaii this time of year. Ummm, I doubt it. In this market, nobody’s gonna do anything that might squelch a sale.

I happened to be at the Hyatt last night, doing a restaurant review, and my dinner companion commented that many of the guest rooms were dark. Were they out eating, he wondered, or were occupancy rates down at the hotel that has long been the flagship of Kauai’s visitor industry?

Another friend who works in the trades said his boss keeps talking layoffs, but each week manages to scrape up enough work to keep his crew busy. And another friend said that she was talking with a friend who works for the Transportation department in California, where they’ve already experienced substantial pay cuts and are now being asked to drop down to three- or four-day work-weeks. So how are they gonna pay those big mortgages with reduced salaries?

But it seems, at least from reading the New Yorker, and most recently, an article from Crain’s new york business.com circulated by Ken Taylor, that the Big Apple is the place that’s really feeling it right now. And as America’s flagship city, it seems likely its woes will spread like a stain across the rest of the nation:

A palpable fear has descended on the city as New Yorkers face the prospect of the worst economic decline since the Great Depression. On therapists' couches and the subway, at school drop-off and the gym, and even on Facebook, anxiety reigns. With layoffs mounting, bonuses shrinking and the city and state facing severe budget gaps, angst over what the future might bring is commonplace. New Yorkers are popping sleeping pills and making nightly calculations about how long their money will last.

Their apprehension blurs into fear for the future of the city, whose hard-won progress over 25 years suddenly feels terribly fragile. The dark, crime-ridden, near-bankrupt days of the 1970s loom large in the city's collective memory. Experts disagree over whether New York is poised to turn back the clock, but no one really knows how bad things will get.

“The city is at hope's edge right now,” says Marian Salzman, trend spotter and partner at Porter Novelli Worldwide. “People are very, very anxious.”


It seems that people are gripped more by the fear of what might happen, than what actually has:

Jonathan Alpert, a psychotherapist in midtown, has seen a 10% rise in patients since Lehman's collapse, mostly due to increased traffic from Wall Street executives. “People are coming in and mentioning wild scenarios, like they need to pull their kids out of private school, sell their condo and move in with their in-laws in the Midwest, and they haven't even lost their jobs yet,” Mr. Alpert says. “There's just acute panic.”

Alan Hilfer, chief psychologist at Maimonides Medical Center in Brooklyn, says a patient who works in finance comes in each week and gives him a thumbs-up, indicating that he's survived another week with a job.

“There's a tremendous amount of anticipatory anxiety that something is going to happen,” Mr. Hilfer says. “People are waiting for the other shoe to drop.”

Many people are starting to fear for their personal safety, even though experts say there's no definitive link between crime and a down economy. In a shocking sign of panic, a few New Yorkers say they know people who are going so far as to consider buying guns to protect themselves from an anticipated crime wave.


All this raises the question of just what kind of “recovery” can be expected for an economy whose most recent boom, like all the ones preceding it, was based on the belief that bigger is better and more is our due and we can keep growing indefinitely — or at least long enough for folks to get an even bigger piece of the pie.

In other words, if people no longer believe the myth, will it fade, be transformed, disappear? Or can it be resurrected, given new life? Isn't that what the $700 billion bailout was supposed to do?

And if this myth is finally and fully debunked, what new myth will take its place, and when?

29 comments:

Anonymous said...

the US is still very productive relative to the rest of the world, and our high end RnD pretty darn good. and arguably two (2) good things will happen in the near term: a better appreciation for black swan events, and a move to increase white collar crime penalties and better monitor / regulate / and enforce various financial industries (or 100 patrick fitzgerald types in the SEC should do the trick)

Anonymous said...

The myth is that we can't grow indefinitely. Of course we can. What's to stop us?

Andy Parx said...

Those who see things clearly often ask “who could be against sustainability”? But while we take a ecologic, holistic approach to life many see themselves as the center of the universe and their own avaricious, self-centered goals as all that matters.

Can these people be “educated” by recent circumstances? Maybe a few. But not the worst of the worst- those in the “none so blind” category. And unfortunately they are the ones with enough cash t pay off those who could regulate their greed. For all the talk of change there’s little on the new congressional table to reign in the most blatant of the abuses much less take care of those devilish details.

Maybe they will “jump” like the stockbrokers in ’29 in a solution to the “problem that takes care of itself”. But since self-preservation is everything for the self-absorbed I wouldn’t count on it. Too bad we can’t we round them up and put them in re-education camps Mao style.

I know people who knew the guy who jumped off Wailua falls- they say he owned a jewelry store and was a real money grubbing a-hole who abused his employees (and everyone else) and lived for cash. They say he was distraught over the economic outlook. somehow it’s hard to feel sorry for him..

It’s funny but sustainable economies and ecologies seemed more attainable before current back swing of the pendulum. Maybe it’s because as things get worse, the worst get even worse.

Anonymous said...

> Those who see things clearly often ask “who could be against sustainability”? But while we take a ecologic, holistic approach to life many see themselves as the center of the universe and their own avaricious, self-centered goals as all that matters.

Can these people be “educated” by recent circumstances? Maybe a few. But not the worst of the worst- those in the “none so blind” category. And unfortunately they are the ones with enough cash t pay off those who could regulate their greed. For all the talk of change there’s little on the new congressional table to reign in the most blatant of the abuses much less take care of those devilish details.

Maybe they will “jump” like the stockbrokers in ’29 in a solution to the “problem that takes care of itself”. But since self-preservation is everything for the self-absorbed I wouldn’t count on it. Too bad we can’t we round them up and put them in re-education camps Mao style.<


Bingo.

I don't see them changing. But I do see them becoming social pariahs. The excesses of our elites have spectacularly exploded in everyone's faces. From Bush to Congress, from Wall Street con artists to greedy corporations, we are at the beginning of a mass tarring and feathering of our institutions and leaders.

Re-education? Unlikely.

A cultural shift forced by blame, shame and pain? Inevitable.

Anonymous said...

what are the examples of the "sustainable economies and ecologies" please?

im trying to think of examples of "modern" societies which score high RE sustainability...

...sections of japan?
...aspects of holland?

Anonymous said...

"The myth is that we can't grow indefinitely. Of course we can. What's to stop us?"

Only clean air, clean water, energy and other finite resources.

Anonymous said...

happy new year joan!
excellent post. i guess when we are over extended and see the writing on the wall the anxiety level ratchets up a notch or two. the FDR quote of 'we have nothing to fear but fear itself' seems a little cliche and a bit dated.

before moving to kauai i use to climb crags and peaks when time allowed. putting in pieces of protection to prevent from falling far was always a good practice. sometimes the gear would go in easy and seem secure, sometimes it was a struggle and did not seem so solid. when your gear is solid you move w/ confidence; when your gear was dicey you looked for another placement asap. there's a fine line in allowing the fear to affect your head space, your decisions, your performance on the climb. it was easy to get spooked, and easy to get in over your head.

the same thing is happening now to some degree; society has been running it out( climber lingo for ascending w/o putting much protective gear in) and now the climb gets harder and the ability to put in gear is harder too.
from the climatic change crisis, to the economic meltdown, factors are causing once seemingly reliable or secure institutions and systems to falter or breakdown. there are many examples of how we have over extended ourselves and how we are setting ourselves up for a perilous fall.

to think we can carry on like we have and eventually find a ledge to rest on or get in one last solid piece of protection before the summit is wishful thinking.
we have some serious issues to contend with. the last thing a climber wants to see is his or her last piece of gear wiggle free from the crag before confronting the crux of the climb.

the choice to move on is not really a choice but how to delicately maneuver through the difficult section of the crux pitch with questionable gear is one we will soon be facing.

hoping 2009 brings you peace, prosperity and abundance in your garden. malama pono,.....jimmy t

Jaded said...

Re: "...New Yorkers are popping sleeping pills and making nightly calculations about how long their money will last...

[almost humorous to visualize]

It seems that people are gripped more by the fear of what might happen, than what actually has...

[Joan, in NYC almost all of the investment banks are now defunct, it has actually happened there. Plus these people had access to good information and knowledge of where the economy is really at.]

All this raises the question of just what kind of “recovery” can be expected...In other words, if people no longer believe the myth, will it fade, be transformed, disappear?...

[This long decline will be in stages...it will ebb and flow, but the trend will be a long decline. Those New Yorkers know this.]

Or can it be resurrected, given new life? Isn't that what the $700 billion bailout was supposed to do?

[No it cannot and no the $700 billion TARP bailout was not for that. TARP was a short-term delay only. The problem of bad debts and non-performable derivatives is many trillions of dollars. Mortgage industry foreclosures alone will be 1.5 times what they were in 2008, and those New Yorkers know it. That's why some of them have to sell their condo now while they still can.]

And if this myth is finally and fully debunked, what new myth will take its place, and when?"

Joan, who says it has to be a 'myth' to replace a myth? Are the people not capable of handling the truth rather than a myth?

Larry said...

New York has a strange economy. The state's tax base has depended on the ability to extract money from the huge bonuses and salaries that many New Yorkers make in the financial businesses and the professions, even though those folks are taxed at very favorable rates compared to the laboring classes. That tax base has just crashed, and so goes the state.

For someone who has not lived there or has no connection to New York, it's hard to imagine that world. I rode Amtrack a couple of years ago from Wash DC to NYC. Next to me was a women wearing pretty expensive threads, reading the Economist, and speaking on a cell phone as small as a pack of gum, looked like it was finished in silver. Of course, she had one of those fashionable briefcases that cost more than most of us here make in a year. Matched her shoes. Not to begrudge it to her, only to set the contrast. That's not uncommon there. We have rubber slippas.

My eye doctor acquaintance in NYC has a wood-paneled office with the latest electronics. Something detects when you are in his waiting room and puts up the colored lights outside. He took us to dinner at one of those restaurants we could never walk into and don't even dream about, it belonged to another world. I don't know, but I image that among his clients were many Wall Streeters, given the office location.

Another friend is an attorney. A half hour with her would be a month's salary for someone here. She lives in a condo overlooking the East River.

They, there, are as afraid of losing their income as anyone here, but it's perhaps a bigger impact. Maybe some will jump, if they have to cancel their exclusive country club membership, or give up their second home on the island (not Long Island! Hilton Head Island of course).

New York will cut services for the non-elite and preserve what it can for the elites. They want the elites to bring back prosperity. Joe the Plumber can't do that, but anyone on Wall Street can, they are in the right clubs. So we bail them out, and throw Joe into the gutter. Joe can't do anything for us, he's a problem, in fact, because he might get together with others of his ilk and make a lot of noise.

If that happens, well, we have the Northern Command ready, and they could well shoot to kill, it doesn't matter much if Joe lives or not.

The bonuses are still flowing, of course, for the elitest of the elite. They'll simply buy up the homes of those who have to move away from Hilton Head, and at fire sale rates, to boot.

Why would the government, our government, send troops to quell our unease? Because it's not our government at all, is it? That's the Myth.

Anonymous said...

you know how some people have a "jesus complex" and always want to be a martyr? i see some of that here, but "island breath" style...it is almost like you want to bring bad news, and relish in it. the sky is always falling according to some people

so i call you either disingenuous, a coward, possibly stupid, misinformed, etc...things along those lines. well i call you overly gloomy and pessimistic at the least

but please tell, what state is about to overtake the US economically? is silicon valley about to loose its global go-to status? is RnD in green tech not happening fast enough for you?

it will be a tough year for some, there will be more chapter 11/13s, credit will be tight, the weak operations will be thinned out, and one would hope the personal savings rate will increase and overseas expensive military fiascoes will decrease

we are still in good shape relative to most of the world.

Jaded said...

You tell 'em Larry!

Anonymous said...

I can't help it - this has been bugging me for a while:

Why does it seem like everybody misspells the word "lose" these days?

Anonymous said...

Because educational standards have greatly declined. "The system" moves people through.

Like my AR friend said, the worst 3 years of his life was the 5th grade.

I'm afraid (really!) that we simply don't expect enough of our citizens (including children) and force them to toe the line.

Not like when I was a kid. Born in '49...Catholic school...Nuns...scars on knuckles from metal-edged rulers to prove it...nothing like corporal punishment to motivate a person!

Anonymous said...

Why does it seem like everybody misspells the word "lose" these days?

I'm at a loss to explain it.

Other than the fact that our educational system seems to be turning out more and more loosers these days.

Joan said...

we are still in good shape relative to most of the world.

Interesting, as Fareed Zakaria’s book, "The Post American World," has as its premise that America isn't declining, it just seems like it because the rest of the world is improving.

Anonymous said...

I can accomodate the thought that the rest of the world is improving. It couldn't get much worse.

Anonymous said...

loose, lose ok. guilty.

anyways, ya that would be great if more people would take note of what fareed zakaria says, hes pretty smart and im glad it looks like he will be around for a while

this guy wrote a pretty interesting item as well:

http://www.the-american-interest.com/ai2/article.cfm?Id=533&MId=23

Larry said...

Whether we have it better or not is clearly a subject for debate.

Our lifespan is declining, we stand out among industrialized countries for our lack of universal health care, we work longer hours and get very little vacation. We have a growing income gap and rising poverty. We have more people (2.5 million?) behind bars than others, we lock up people (even children) without charges or trial, we torture. We execute. We evict. Our current president may be illiterate. And there is the educational system that turns out either losers or loosers, neither particularly helpful for a better future. Yes, our research and development is top-notch, funded to a large extent by the military. After the research is complete, we make the stuff in China and provide customer service for it from India.

Anonymous said...

someone wrote:
"it will be a tough year for some, there will be more chapter 11/13s, credit will be tight, the weak operations will be thinned out, and one would hope the personal savings rate will increase and overseas expensive military fiascoes will decrease

we are still in good shape relative to most of the world."

January 4, 2009 11:03 PM

Please read Katy Rose's excellent post Saturday, January 3, 2009
Entering A New Year, Full Of Doubt and Love- http://towardfreedom.blogspot.com/
and one by Eric deCarbonnel on 2 January 2009 in Market Skeptics
http://www.marketskeptics.com/
posted on Island Breath

these subjects will be discussed frequently in the coming months. lots of room for improvement for all concerned

Anonymous said...

"Whether we have it better or not is clearly a subject for debate"...then pls list the places better positioned; should be easy

the rest of your post seems more driven by politics than facts (save for notes on (a) incarceration, (b) health care, and (c) income gap; and if you say you've seen the numbers showing US ave lifespan is decreasing...i doubt it but ok; on the poverty thing, best to fold that into the income gap)

but i appreciate the thoughtful response and time

otherwise, thanks for the http://towardfreedom.blogspot.com/ cite tho personally i did not see too much there

as to island breath, i know that guy wants to help, but too much cry wolf for me

this is interesting tho -
"these subjects will be discussed frequently in the coming months. lots of room for improvement for all concerned"

all the subject matter in this post page is valid, yes. the issues important, sure. but you are telling me if you were in charge these would be your primary items?

what you need to do, as to kauai, is focus on getting more 200-300k homes, protecting women and young girls (planned parenthood, assaults, education etc), looking to get some better jobs on island, and making local gov more efficient / effective generally (nepotism). none of these issues are sexy, but they will impact the lives of people for the better a hell of a lot more than spending time trying to convince people that gmos are bad or that the latter part of larrys post is valid

humor me and respond to the above (and not just note my creative punctuation)

Anonymous said...

FOOLS! Market corrections are an opportunity to upgrade the quality of a portfolio on the cheap. In panics, everything gets whacked. Only later, as they sift through the carnage, do investors discover that plenty of good stuff has been thrown out with the bad. The truly bad, meanwhile, gets worse.

If you've been prudent, you've built up some cash to take advantage of a correction that has been widely predicted. If not, the time to act is now. You don't need to take drastic action: A correction is short-lived by its nature, and stocks remain the likeliest assets to perform well in the next few years.

Or, continue to hope for The End Times. You've got a long wait.

Anonymous said...

That's some correction. The U.S. stock market lost almost $7 trillion last year. Real estate has yet to bottom out, the construction industry has slowed to a crawl, automakers are looking for a bailout, the financial sector is still reeling from all the bad debt, the mortgage crisis has yet to begin its next phase, etc. It may not be the end of the world, but the times they are a changin'.

Anonymous said...

And the rich keep getting richer. I'll count myself among that group, thank you.

Anonymous said...

You're an executive for one of the bailed out financial institutions?

Anonymous said...

Some of the rich aren't getting richer:

German billionaire Adolf Merckle committed suicide by throwing himself under a train, “broken” as his business empire crumbled under a growing burden of debt, his family said.

Rene-Thierry Magon de la Villehuchet and his business partner Patrick Littaye were "totally ruined," Bertrand Magon de la Villehuchet said in a telephone interview from his home on Paris' chic Place des Vosges.
The French financier who killed himself after losing more than $1 billion of his clients' investments to Bernard Madoff's alleged fraud also saw his own family's money disappear, his older brother told The Associated Press on Friday.

Anonymous said...

On www.cnbc.com today 1/6/09:

The U.S. Congress convened Tuesday to deal with what many are calling the worst global economic crisis since the 1930s. ***Meanwhile, pending home sales slid to a 7-year low; and even Manhattan apartment prices***...read more

Yeah, those New Yorkers know what to worry about.

Anonymous said...

Larry said:

"Yes, our research and development is top-notch, funded to a large extent by the military. After the research is complete, we make the stuff in China and provide customer service for it from India."...All to extract maximum short-term profit.

Frickin' pegged it Larry.

Anonymous said...

Yes, our research and development is top-notch, funded to a large extent by the military. After the research is complete, we make the stuff in China and provide customer service for it from India.

Bingo.

Anonymous said...

"Yes, our research and development is top-notch, funded to a large extent by the military."

-- aside from the original comment being a more broad "high end RnD, are you seriously of the view that, say, over half the US "high-tech" RnD in the US is, say, 50% military funded and/or is intended for at least 50% of the resulting technology to be in military applications? i suspect when you carefully reflect on it the answer is "no" (as much as you seem to want it to be "yes")

'"After the research is complete, we make the stuff in China and provide customer service for it from India."...All to extract maximum short-term profit.'"

-- ya some things are made overseas...india, china, mexico, vietnam, etc. so what

-- does the above quoted item somehow tie-in with that believe that the world's "smart kids" are not still clamoring to get into US institutions of higher learning?