Melt-down, Implosion, Call It What You Will

As the economy “implodes in show motions,” as a number of analysts believe is happening, we’re still plagued by the “permabulls” and those who simply believe that it’s always turned around quickly, so it will do the same this time, too.

How naive. One of the design flaws we humans seem stuck with, is a short memory. Sure, we remember bits and pieces from our childhoods, good and bad, and we even remember certain things from almost every phase in our development as adults. What we don’t seem to have, is a very sharp collective memory. I got out of the late 90s Mutual Fund fiasco before it happened, because of an annual report I got from my particular fund. It was essentially a catalog bragging about the smart people they had managing the funds. All I saw were a collection of people who had been going to Jr. High sock hops when the 1987 crash happened. I realized that the people managing my money had no experience in any kind of market, other than one of the bull variety. So I pulled my money, shortly before the wheels came off the market. I moved money to metals (Gold was in the $200 range) and never looked back.

Everywhere today, the evidence of the wheels coming off the bus is present. Whether in complicated matters like the subprime and derivatives disasters-in-the-making, or in simple things like the fact that corporate budgets are demanding zero-expense-growth in the face of significant increases in the cost of doing business (meaning layoffs to hold the budget), the story is clear. We’ve got some economic hurt coming. But yet, there are those who say “it’s always gone up, and it will, this time, too.” Well, the economic tide will rise again, but the questions are these:

1. When? Certainly not in a couple months. Too much voodoo has been used to keep the balloon inflating. It will therefore, take a lot longer to reinflate.

2. Will our economy, nation, even society look the same when it does start back up? No guarantee of that. Make no mistake, the status quo has put us in a serious, serious situation that it won’t survive. The longer the correction is delayed with artifice and voodoo, the more substantive change will be required to start upward again. It may even take a reboot.

Posted in Economy, Housing Bubble, Peak Oil, Society