Tuesday, March 3, 2009

“How Far Must the Dow Plunge Before Confidence Is Restored?

Spending too much time "ducking" the old things? Spending not enough time dreaming about the new things?

These days hold only cold comfort for the timid.

The newspaper headline titling this post betrays what may be an unexamined paradox. The sensation of "confidence" is an allegedly rational one which may be insinuated by past history, but probably not the past history being cited in the discussions of this moment. Likewise, the "restore" idea is visiting every area of pain in the present economy. There are the dreamy desires of those who would like the declining value (market price?) of their real estate "restored" to the figures of a year or two ago. There are those who feel that economic recovery implies that the stocks they purchased in the past might be "restored" not only to their previous trading values, but also in their vivacity and mobility with respect to potential profits or losses demarcated in the "numbers and the systems of the past."

Folks who are entertaining this expectation for the "recovery" are not founding their ideas on circumstances which enjoy much of a chance to materialize in reality.

The less lofty have ambitions for a stable floor to the decline where, although the numerical "prices" of monetary assets would be defined by lower numerical values, the relative values would become, once more, as promising as they had been before. Perhaps even the wage earners are gradually becoming adjusted to the idea that their "restored" wages, although not bearing the same figures as on the old paychecks, might have a "restored" purchasing power or offer an investment opportunity equivalent to the ones on those old stubs.

The economic pedestrian has only a slightly more realistic view of the possibilities at hand. He, at least, has the common sense necessary to envision an economic solution which is not the "restoration" of his previous conditions, but something of a hybrid, located between full "recovery" or "restoration" and some intermediate state where his comfort level is comparable to what it was before.

Likewise, the critics and cynics (uh, that would be the hillbillies, Senate bigots and other free market criminals) seize on the predictable, codependent opportunity of establishing that true "recovery" or "restoration" can be nothing less than a sterile return to the artificial successes previously derived from the avarice of the recent past. They would, foolishly, like to establish that vision as the only possible outcome which might legitimatize Obama's desperate efforts ideologically. The public opinion attraction to that insistent approach is waning rapidly, most likely, as was the tragic case with "confidence," another victim of “common sense” on the main street.

My advice? Quit dreaming of the past. Quit trying to measure the possibilities and challenges of the near future by the currency of the past. All those “restorations” require more than a duplicated economic flow of factors and equations. Frankly, they all depend on more than a resurgence of familiar numbers on the Wall Street trading boards. They also, in a way as subtle as the “elephant in the living room,” also depend upon the resurrection of all sorts of imaginary asset values, labor rates, real estate ambitions and even international trade relations. There is no part of the economic stimulus plan which can re-materialize these old, opium dreams. They cannot be “restored,” because they were never material in the first place.

We can join the wailing of the Wall Streeters and the bankers and the quiet, arrogant ultra-rich with their effected accents if we like, but all the old deceptions of this crowd have evaporated just as concretely as the sale price of the duplex next door. All the illicit advantages they promoted as “sharp business practices” for the last dozen decades have been exposed now. Worse, their dreams of the precise value of such deceptions have also been smashed. They sold them to us once, and that worked out well for them. But now, those balloons have popped -- perhaps largely in the very faces of these “pretend Captains of Industry.”

No one can still reasonably hope that those “balloons” of theirs can be “restored.” Further, citizens of both the United States and the rest of the world where their extractive schemes have reached, seem to have a new, much more informed style of awareness of exactly what had been done before. The hordes of what had previously been “easy marks” have now entered a period of renewed understanding of what the responsibility of “self-interest” actually means. An understanding which excludes the necessity of supporting these parasites in the style and luxury of the past.

Obama gets this. One wonders how many familiars of the old White House have appeared once again with “offers he can’t refuse.” One wonders what was on their deflated faces when he did, in fact, refuse.

Without the hordes of the sleeping, the mistaken certainties of the past are beginning to rot on the vine. Mistaken certainties? The sanctity of the free market as the ultimate director of the economy. The acceptability of the well (and not so well) disguised, noncompetitive subterfuge, whether a no bid contract for billions or some doo-dad added to a House bill at the last minute making new profits an automatic reality for some crony.

But wait. No matter how refreshing it might be, a modern correction of these sorts of things amounts to little more than a tweeking to the system. Such a development might turn out to be the final result of this economic melt-down, but there are others -- developments which can hardly be defined as a “tweeking.” In any event, it looks constantly less likely to be a mere “restoration.”

The economy is not experiencing a little difficulty, it is evaporating before our very eyes. We have heard fifteen thousand reasons why this is happening, but what seems the most logical conclusion at this point is that no one has either any complete or rational explanation of precisely why this is happening or how far down it will go. All the old reasons are approaching a region of logical discontinuity far too similar to what might be encountered on a classic Riemann Equation’s first surface. We have probably left explanations or their possible comfort somewhere behind us.

The classical parameters which used to drive everything have ceased functioning. What was successful “tweeking” in the past system no longer produces any effect at all.

So, where does it go?

It “goes” through the discontinuity, and we go with it. The hilarious threats of creeping Socialism or nationalization or Fascism or vacant promises of capitalism or free marketism or a “restored” hegemony are all now parked in the "used car lot" history of the past, in our memories, in our dreams. That old currency fills the entire stage, constructs all the sets and writes all the play. We can make no new play which requires parts other than those old familiar ones. Our imagination has beached itself on the remnants of our fears.

The choices for the face of the future system will not be variations of the faces of the past. What has begun as an economic aberration has become an ideological meat grinder, and its product may well arrive without so much as a reasoned hint or even a wild speculation from the past.

The “new thing” approaches.

It won’t be all bad, either, but these last few months before its arrival will be terrifying -- especially for those who were able to prosper in the false world of the false values of the past. Still, we must prepare ourselves for a new system. It arrives just as the widower's new wife. The recipes and the bedroom, although quite satisfying, can never "restore" what has passed before. We have no firm ideas about what the new system will require of us or what new opportunities it may present, of course, but we do know one thing. We prepare ourselves by watching for its arrival with hope, not dread.

Adjusting our ideas of “necessity” and “comfort” might help a little. Experimenting with values which have evolved beyond imposed scarcity and insatiable greed and impossible security is probably a good idea, even if such a discipline hasn’t ever been reasonable in the past. We must clear our road weary slate of ancient false priorities, thrash out the cobwebs and steel ourselves for a new day.

As humans, we are now stranded with the frightening necessity of charting our way forward. We find the press of events has cast us not as survivors, but as designers.

The “new thing” approaches.

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