The natural thing to do – when they rally and cut the decline in half (this is all in a single day, mind you) is to rationalize “Gee, that wasn’t so bad, was it?”
The sad truth is that it is very bad – and a drop below the 1,740 level on the S&P is when we should all be under the bed sniffing the dust bunnies.
The reason is the vicious cycle problem. When things begin to go great, there is a “pile-on” effect that economists call the virtuous cycle. But when something begins to go wrong, as it is right now, we have to look at all the data and begin worrying in all earnestness about flipping from “virtuous” into “Vicious.”
A recent-experience example was the Housing Bubble. It began as an attempt by the government to kick-start our way out of the first starting point for the Greater Depression. That window happened in 2001 and was actioned by Osama bin Laden, who we seriously believe had the cooperation of at least some governmental elements, including quite possibly some shadow government types who have never been brought to justice.
Depressions are power progress-killers. And, if I were a member of a shadow government, I would have to admit that the events of 9/11 actually did some good.
The major good?
By fall of 2001, it was apparent that the tech bubble was finished. Depending on which estimates would believe, the total cost of the Tech Wreck was on the order of $5-trillion dollars, although some accounts mention half this amount.
9/11 did several key things, in terms of pulling economic levers.
First, it took the blame which should have been placed on the backs of greedy venture capital types and shifted it onto the persona of a “terrorist.”
Secondly, it gave the United States a “cause” to immediately wage a war…any war…and that took a lot of job-age males and kept them out of the labor force.
Third, it set up a massive new industry (the security state) which has taken on a life of its own. Well past the hiring of what is now estimated at 56,000+ direct jobs, but when we use the economic multiplier effect (all these people eat, for example, and some fraction will use daycare) an easy argument could be made that TSA alone is responsible for 134,000 jobs – and has been, come this fall, for 15-years.
Four, it provided for the evolution of the security state and Gen-4 warfare. Battlefield robotics are coming. There’s a million square feet up at Provo for sampling your data. And we even learned recently that the CIA spied on members of the U.S. Congress in the process of surveilling foreign political visitors.
Five, it continued to “de-focus” public attention from the definite replay elements of the previous economic collapse. You will recall that in the depths of the Great Depression, the government embarked on several wide-spread job creation programs. The most notable were the Works Progress Administration (WPA) and the Civilian Conservation Corps (CCC).
I found it extremely interesting that the country laid the groundwork for massive civilian employment of young people with the Volunteers In Service To America (VISTA) program. The first batch of 20 VISTA workers were turned out in 1965.
That program was something the country “got right.” It had been a kind of article of faith that this Kondratieff fellow might be right about economic super-cycles, and an ideal 56-year harmonic off the Great Depression collapse was seen in 1987.
Good news on this front: The Fed managed to “paper-it-over.”
The bad news was that it was only a first-blush encounter with widespread collapse. It was a state-change event, as well. You will remember that long-term interest rates had peaked some six years earlier.
Despite the interventions, the systemic problems persisted and a major period of decline ensued in 1990-1991. The U.S. did what it does best – and off to war we went on this pretext of that.
Behind the war follies, however, president Bush (the elder) was ramping up the AmeriCorps program. From the government website, we read how the make-work programs of the 1930’s period were being repackaged as national service:
“The 1990s saw a resurgence of national service. In 1990, President George H.W. Bush developed the Commission on National and Community Service. With the signing of the National Community Service Trust Act in 1993, President William Clinton expanded national service to create AmeriCorps, and VISTA became part of AmeriCorps.
Throughout the 1990s, AmeriCorps VISTA continued the long tradition of starting new and innovative programs. VISTA members helped develop low-income housing cooperatives, created programs to help people transition from welfare to work, expanded Individual Development Accounts to help people save money, and provided constructive out-of-school activities for disadvantaged youth.”
The WPA was to VISTA and the Civilian Conservation Corps is echoed in today’s AmeriCorps.
Events post 9/11 have provided for a continuing programmatic use of un/under-employed youth and for thousands upon thousands, this has been the critical first, or second, resume item that has transitioned people into other jobs.
Returning to 9/11, all of these elements were present. This is not to claim that 9/11 was directly perpetrated by our own government for the purposes of expanding the economy and increasing social control (yet it has worked that way). Instead, a failure to anticipate and prevent extreme Wahhabi (Saudi) backed terrorism resulted in the events of that day.
We often hear the terms LIHOP and MIHOP (let it happen on purpose, or made it happen on purpose) but, as we roll forward into the next financial crisis, the sins of the past will be buried by the dust of history.
An appreciation of the larger “gearing” of American policy is not found in Common Core, or any other widespread curricula. It is there to be discovered by those willing to read a few books and appreciate, as noted in Ecclesiastes 1:4-11:
4 One generation passeth away, and another generation cometh: but the earth abideth for ever.
5 The sun also ariseth, and the sun goeth down, and hasteth to his place where he arose.
6 The wind goeth toward the south, and turneth about unto the north; it whirleth about continually, and the wind returneth again according to his circuits.
7 All the rivers run into the sea; yet the sea is not full; unto the place from whence the rivers come, thither they return again.
8 All things are full of labour; man cannot utter it: the eye is not satisfied with seeing, nor the ear filled with hearing.
9 The thing that hath been, it is that which shall be; and that which is done is that which shall be done: and there is no new thing under the sun.
10 Is there any thing whereof it may be said, See, this is new? it hath been already of old time, which was before us.
11 There is no remembrance of former things; neither shall there be any remembrance of things that are to come with those that shall come after.
No, this is not to “go religious on you.” It does illustrate what is commonly reduced to “there’s nothing new under the Sun…” The only thing that changes are the particular clockworks. Sometimes the gearing of certain events is ahead, other times, it is behind. But geared, it is, so you may be certain.
The point this morning is to share a few books to read, books that have outlined some of the key ideas behind how I’ve navigated the second half of Life. I’m thinking you’ll find at least one, or two of them, of interest.
- Hard Times: The Way In And The Way Out
- The Labor Movement in America
- Peak Everything: Waking Up to the Century of Declines
- The Party’s Over: Oil, War and the Fate of Industrial Societies
- Afterburn: Society Beyond Fossil Fuels
- Essays on the Great Depression
- The Debt-Deflation Theory of Great Depressions
- Monetary Central Planning and the State
- A Spontaneous Order: The Capitalist Case For A Stateless Society
- The Only Game in Town: Central Banks, Instability, and Avoiding the Next Collapse (new this week, Kindle pre-order for Jan 26th)
- Report from Iron Mountain
This is by no means an exhaustive list. But, if you are finding it difficult to wrap your head around what’s going on, there are only so many approaches that make sense.
For me, personally?
I discovered a tremendous secret about “education” years ago – and one of these days I will release the book. It’s working title is “Victims of Process: Unwritten Recipes that Run Your Life”.
The core concept of the book is simple: In all fields of human endeavor, we are but little more than simple tool-makers. To be sure, there are some animals in nature that make tools, as well.
But what makes us “special” as a species is that we are capable of sequencing.
What this means is crystal clear in only a moment’s thought. All you need to do to understand any aspect of human behavior, high or low, is to look for the damn recipe. In fact, in the book, I explain how to learn ANY skill in about an hour. Mastery (take piano, for example) requires practice to perfect. But the basic recipe is simple as hell in almost every aspect of life.
That’s why I believe (deep down in my heart of hearts) that I can do ANYTHING under the Sun.
It is not that I am particularly smart, only that I have figured out to look for the sequence of tools…and after that? A rich life is easily attained.
The secret? Realize that there is a recipe for everything you do from the moment you rise until the moment tonight when sleep will overtake you. Driving is a collection of recipes. Flying is a collection of recipes. Airplane crashes are avoidable if you understand the special class of recipes called accident chains.
When a news story wanders by which worries the hell out of you, what is the cure? Go look up the recipes. Take nuclear power plant meltdowns, for example. You can not only become a local junior-expert, but you might be able to contribute something to your community by simply taking a course. In this example, a good course would be? 21st Century FEMA Radiological Emergency Response Independent Study Course (IS-301), Nuclear Power Plant and Reactor Accidents, Radiation Monitoring, Incident Command System, Biological Effects .
Once you empower yourself to learn the recipes behind everything, you can evolve an almost encyclopedic knowledge of any field you want. It’s all about finding who is using what tools and the order those tools are being applied in.
Can I teach you celestial navigation in an hour? Oh, easy-peasy. EXCEPT I would have to review in order to brush up on the recipe because I haven’t used it since we sold our sailboat in 2001, sorry. But you weren’t venturing offshore today, I’d wager.
This core concept is hugely useful. It’s why you have a job, when you think about it. With rare exceptions, people are not paid for what they know, but what they can DO.,
At the moment, I’m an economic information processor. I gather pertinent ideas, try to distill down the recipe, and give you possible applications of the ordered use of tools. When you think about it, that’s what my buddy Gaye does with www.backdoorsurvival.com does, only she does it in the “prepping” space.
But really, the recipe approach to life is far, far bigger than prepping, learning to fly, or learning how “music works.”
It’s the whole concept, internalized, powered by an even passable brain; just one looking for the RIGHT RECIPES…and when comes to economic Depressions, that reading list above is a fine collection.
If you wonder why I have a hell of a time keeping weight off? I have an almost encyclopedic recall of a different recipe book: Joy of Cooking.
Out in the shop, another recipe book rules my life: Thomas Glover’s Desk Ref. Need to know the formula for electrical trouble-shooting? It’s in there. Along with the working load for 16-inch floor joist spacing of 2-by-8’s on a 12-foot span.
Now, stop feeling like a victim to the frigging market and go learn some recipes. Or, subscribe to Peoplenomics because it is highly recipe-oriented.
Of, if you really are the kind of exceptional person who reads this website on a regular basis, do both.
Write when you break-even,