Concerns that Transcend our Differences

One thing that has surprised me since I wrote Financial Armageddon and began publishing this blog is the extent to which concerns about where we are as a nation, and where we are headed in future, seem to transcend class, political persuasion, education, age, and other differences that often color our perceptions.

Rich or poor, young or old, conservative or liberal, citizen or foreigner, it seems that growing numbers of individuals who may have little else in common believe there is much that is wrong with our world nowadays. Yesterday, in "From Somewhere in Middle America," I published the contents of an email from a Midwestern housewife (with her permission) who eloquently expressed her thoughts on the subject.

Today, I have taken the liberty of reprinting a comment posted in response to what she said from someone with similar worries, but with a decidedly different background.

Your lady from Middle America is spot on. Her sixth sense is well grounded. The system is rotten and it is almost as bad in Britain. I am a retired U.K. fund manager and if I had gone to sleep when starting in finance in 1960 and woken up today I would not have believed what I now saw about me.

In those days it was illegal for a company to buy its own shares, strong company balance sheets with lots of cash were seen as a good thing, debts were incurred when necessary, not voluntarily, and accounts were honest. Stability was prized. Banks did not set about to circumvent the rules. Even politicians only lied about 15% of the time.

It is all gone and much of what is talked about on Financial Armageddon will surely come to pass. It may develop in Britain too. Indeed it has already started with the recent run on our Northern Rock mortgage company. The much despised continental countries may not suffer the same financial (as distinct from economic) troubles as the U.S./G.B. because they have been better regulated and are not so gorged on debt.

Americans may soon discover something with which older Brits are all too familiar. A weak currency reaches a certain point when something snaps and it can spiral down, almost out of control. Then interest rates have to be raised, dramatically, to save the currency. Domestic considerations go out of the window.

America has been so almighty for so long, until recently, that it's leaders have little idea what might be coming, although the public, as evidenced by the lady poster from Middle America, has a sixth sense.

If the dollar collapses the effects will be horrendous. We Brits have learned the hard way, starting with the Suez Crisis in 1956, yet we may have to learn it again because our recent politicians and bankers have been so negligent. For America, it would be the financial equivalent of September 11th.

Comments

[WASS (WeAreSoScrewed)]

I hope that you are wrong.

I fear that you are right.

I very much fear you are right Michael, what I find so difficult to fathom is that here in the UK , unlike your "Your lady from Middle America" the people I see and talk to here (including members of my own family, especially the younger members, who do not know any other way than to borrow on credit and spend)do not have that sixth sense and have no idea what is coming.

[DB]

The US Dollar is collapsing....make no mistake about it.

[Concerns4Retirement.com]

I wrote a 20 page of Sustainable Asset Management citing notable sources including your book, Fortune, NY Times, Korea Times, etc to show that all we've driving the economy now is "pleasant surprises", as Jeremy Grantham coins in Fortune's CNNMoney.com. My husband is a senior and he has filed bankruptcy due to the real estate crash in 1980's. He tells me I'm just listening to the doomssayer. Not only do we've biz practices that're based on nothing but phantom numbers to sell momentum and generate profits, but I'm also seeing policies moving towards immunizing large corporations and their individual funds. This while exposing the masses to mass loses which include their lives, God forbid they're injured in an armed conflict during a protest that turns into an "arms conflict". That's an exclusion in most health insurance policies. The sad thing is that w/ an awareness individuals can also shield their assets from loses, but they're kept unaware to keep the momentum 'profitble'.

[Boom2Bust.com]

It would be great if more members of Main Street weighed in on our country's economic shortcomings. Unfortunately, it is my experience that the prevailing attitude is still, "I don't want to hear about it." The truth of the matter is, you might not have a choice should economic conditions continue to deteriorate...

[Unscripted Thoughts]

After stepping back and looking at the current situation, it has become clear to me that a collapse into depression may be beneficial. Here me out.....I do not advocate the extreme pain (physical, psychological & financial) that such an event would surely bring at least in the short term. Nevertheless, it is apparent to me (at least) that America and its inhabitants have drifted far from what one might call 'fiscal sanity'. Why such a claim, you ask? One of the main reasons for our current Alice-in-Wonderland attitude that has been ingrained in multiple generations of Americans is the idea that "I need to buy crap I don't need with money I don't have so I can (fill in your own rationalization)". Additional major factors are the various financial/economic manipulations that have been foisted upon us all by a host of bad actors (e.g., the Fed, Wall Street, politicians, World Bank, etc.)

So how does all this relate to my previous comment? Throughout history, wars and financial turmoil (in particular depressions) have served to 'refresh the tidal pool' by readjusting economic & financial assumptions (most of which have become irrational and unrealistic) across the board and ground the average person, once again, to the notion that "I have to take care of myself because no one else is going to do it." In other words, when enough people feel the pain they will demand a return to fiscal sanity. What we do after that is up to us.

[Leon W. Fainstadt]

As I drive my streets in America I wonder what it will look like? What it will feel like when the downward spriral begins to spin? America appears so strong. One town after another with shopping malls galore. Dinner and drinks $60 to $100 dollars and thats after a play that costs as much as dinner. Give me a break something is way off in this environment.
Then my thoughts are on the Federal Reserve Chairman that is being walked around by the stock marketeers like a prized bull. Does anyone really believe he can stop the pending decline? Then you have the mortgage brokers still huckstering their mortgages to anyone that still will listen. C'mon America wake up. All this while one young American after another is blown up by IED's so we can all go shopping. Man that really hurts! Is there not a surreal air to the clouds we are floating on? Walter Reed and Bloomingdales hey now thats the ticket for the twenty first century. Oh yes and then there is that small thing called Karma. Karma is nothing more than cause and effect. We have made so many bad causes there must follow that the effects will not be enjoyable. I just hope there are no mortgage payments in heaven.

[Retired British Fund Manager]

The level of comment following my submission to this blog is remarkable. I am only a retired limey fund manager who, as a friend of America, wanted to add a little (plus a modicum of recent history) to the "Lady from Middle America".
Yet the worries and angst have poured forth. This is not just a sixth sense being displayed but real open concern.
I doubt that the powers will take any notice or, if they do, it will be the wrong medicine such as reducing interest rates in a panic. Let us hope that, if this occurs, it will not be one of the little straws that broke the dollar's back.
Meanwhile there is more work for Mr. Panzner and his brilliant pen. The latest news is that is of a government rescue of U.S. mortgages going through the Federal Home Loan Banks. All these rescues but who will rescue the dollar if it breaks? Hundreds, thousands of financial analysts, politicians and global friends of America have issued warnings but to no avail.
America and ourselves, together with friends, once saved the world. Now we cannot live within our means.

[dagrunge]

I'm from the Netherlands, we seem to suffer the same financial disaster as much of the rest of the western world. Problems growing through mismanagement, self-interest and plain fraud are happening in all sectors of our society. In the financial/business sectors and private/government sectors. Joe sixpack (jan met de pet as we Dutch call 'em) is increasingly unable to meet his financial needs because of high inflation after the Euro came about and sky high costs of Housing and health care. Politicians do not seem to care, bankers for sure do not care, and an increasing number of people need to get their food at local voedselbanken(=foodbank, which is a private!! organisation dispensing left over or past selling date supermarket food for free). And on top of that social problems between second-generation migrants and native Dutch are increasing, much like France a couple of years ago.
This financial crisis, which will probably give my country yet another problem to deal with, but with all ongoing problems it seems a (hopefully not) knock out punch.
Goodnight.

[Bruce]

Whatever course of action that good ole Ben(cut the rate)Bernanke decides to do take is irrelevant. It will serve to do NOTHING except to temporarily excite the bulls on Wall Street. Meanwhile, the economic news unfolding around the globe continues to be more dire, despite what the world's economic leaders and central bankers would like us to believe. When you take into consideration the amount of money flowing through international markets, verses all the combined debt out there, then you have no other option but to accept the fact that our entire planet in general is essentially bankrupt(in more ways than one). There's simply nothing left. The trough has gone dry and the rivers of wealth have all but evaporated and turned rancid...

An article on CNN today states that Americans now owe $916 BILLION in credit card debt alone. Home sales have dropped to a 16yr low, and western society continues to sink ever deeper in its own doo-doo.

Tick Tock... Tick Tock... Tick Tock....

[Flat Screen Fred]

In the for what its worth column: I was in an large retail electronics store about 3 blocks from Wall St today at lunch. In the basement of this store they sell flat screen TVs. They run from $600 up to about $10,000 per set. Today salespeople outnumbered shoppers about 2 to 1. I have never seen it so empty.

Maybe it was a fluke, but i dont think so. Could the American consumer finally be pulling back?...

[Juan]

I have been reading your blog for some time now (I found it through FT Alphaville). I cannot but echo the comments of the latest post. Things in Britain are not looking very rosy at all. However I am well and truly astounded that the majority of the markets seems oblivious to the (In My Humble Opinion) oblivion which is 'round the corner. I have personally already taken defensive steps, but it seems to me that rationality or the capacity for independent thinking is in short supply 'round here, particularly in the financial sector.

Some time ago there where documentaries on TV about people getting "self-cert" mortgages (otherwise known as fraud) and fiddling of values on the market, but nobody took any notice. The housing market in the UK is spoilt rotten and the day of reckoning could be around the corner. What really bother me is that the people who will be most affected is "Joe Public," particularly those who are poor or vulnerable, whilst the "rocket scientists" who invented this fiasco will only see their bonuses slightly reduced…

Thanks for your blog!