Monday, May 19, 2008
Bad News Alert: Steer Clear of 'Things Aren't So Bad Stories'
More and more reporters are going to try to talk up everything from the economy to politics, to everything else. I'd like to believe in Father Christmas, the Easter Bunny, fairies, pixies and life after death, but I live in the real world, and so should you. Once again, this isn't about being gloomy, or raining on our own parade, it is time we grow up and start to face up to what is happening. We've been living, let's face it, in a fantasy land of movies and moviestars, listening to music, living the good life. That's what we're used to, but if we're honest, we always knew there was something wrong we how much each of us was getting... When you're eighteen years old and you first start driving around a car, you get that funny tingly feeling that you're too young to be given somuch power to around the world, to exercise your whims, but hey, if you have the license you're going to use it right? Somehow it was never righht on the rest of the world that so few of us consumed so much...it wasn't right that a person got to consume all this stuff so cheaply and easily.
But we'd like to believe it's just going to magically carry on. I'd also like to believe that, but intelligence, and being practical says technology isn't going to save us.
Technology isn't energy, and unfortunately, people haven't turned out to be quite as smart as we all thought we were. We became very arrogant, as all great civilisations do before they implode. This is just history repeating itself, and it's completely normal to go: "No. Won't happen to us. We're smarter and more sophisticated."
The sort of news stories that inculcate these delusional thoughts, that perpetuate wishing thinking, sound like this:
Global economy faring better than widely feared, but dark clouds remain
British Court Rules Al Gore Film Exaggerated Climate Claims
Of course, if you're looking for information that confirms what you believe you'll find it, and oddly enough, Google does exactly this. This is why it is important to be critical, to begin to examine both possibilities. Could it be happening? Could it not be happening?
And then we see:
How Bad Can the World Economy Get?
Grim Climate Predictions Not Exaggerated, Analysis Says
Here's what you're going to see in the media a lot:
Last week, a survey of U.S home builders found their confidence slipped in May and was near the all-time low notched in December. However, a separate report showed housing starts up a surprisingly strong 8.2 percent in April and applications for new building permits turned up for the first time in five months.
What's happening here is the writer is reflecting public sentiment and uncertainty. He's not going out on a limb, he's going, well, things could be bad, but they might not be. It's actually easy to assess if something is half full or half empty. Measure it. Have a look at the long term trend. And here the fundamentals are obvious: much higher oil prices means you are a fucking moron when you start to pontificate about 'well perhaps on the other hands things might not be so bad.' Catch a fucking wake up. They are bad, they're getting worse. Accept that, and now begin to determine your response, how you can adapt your investments, your lifestyle, your family. That's the grim, humbling, hard news. Can you handle it?
Other economic sore spots are also showing signs of improvement. Not only have financial markets bounced back, but several of the Federal Reserve's auctions have been undersubscribed, suggesting that banks are less desperate for cash.
The Baltic Exchange's sea freight index, which tracks global trade of raw materials, hit an all-time high on Friday, and is now 11 times higher than the lows seen during the last U.S. recession in 2001. That points to strong global demand.
Actually, in the context here strong global demand isn't a good thing. We need weaker demand to bring food and fuel prices down, and that means people like you and I using and consuming less compared to our 'normal' lifestyles. Unfortunately, even if we are all good citizens, in China and India they're just starting to enjoy a motoring way of life, so do you think these benefits of us living modesty are going to impact on the world economy? Hmmm?
U.S. consumer confidence tumbled to its lowest level in 28 years this month, according to the Reuters/University of Michigan Surveys of Consumers. Steep food and fuel prices in particular darkened the mood.
"Any blue skies you see are likely to be short-lived," said Paul Kasriel, director of economic research at Northern Trust in Chicago. "The economy is in the relative calm of the eye of the business-cycle hurricane. The mortgage credit problems are not over. And credit problems in other sectors are just beginning as the housing recession spreads to the rest of the economy."
Let me set a benchmark for you and let's see if you can handle it: we're moving towards a Great depression scenario of stagflation - a period of inflation combined with stagnation (that is, higher prices, slow economic growth and rising unemployment - and just to be clear, this Depression will make the 1929 Depression look like a honeymoon. That's a fair and reasonable assessment. This is going to happen on a global scale, it will affect you, me and everyone. Things are going to slow down. Things are going to change. We're going to not really know what normal is, the term 'business as usual' will make no sense. Commerce will become less and less, and probably, social disorder will rise by an order of magnitude that we haven't seen since 1939. It's been 63 years since the last World War, and it's difficult to believe given the immense stresses and strains many countries will face, that we will go into the night on our best behaviour. We are entering a prolonged period of austerity, and you can take your pick which catastrophe will be worse? War (probably nuclear), starvation, disease pandemics, tribal violence around the world, and then the impact of crime, racism etc on ruining, raping and pillaging those few systems that remain functional.
We may be able to organise ourselves into functional communities. We may. But the amount of people who accept the above as a certainty is a tiny fraction, and it is very late in the day to start collecting firewood. We can however, try to start being discerning now in how we deal with information. Think critically, begin to steel yourself mentally for the long, hard night that is to come.