Nick Paumgarten's dour outlook
Catching up on reading, Nick Paumgarten's article or essay, "The Death of Kings", in this week's New Yorker, soon to be last week's, is wonderfully written but intensely pessimistic. That the talented and networked Paumgarten would write this way is indicative of market gloom despite recent glimmers of hope.
Business as usual does not figure in this analysis. Catharsis has not arrived. More to come is accepted. That we stand in a moment of history in which we have no perspective of the whole is more or less the thesis here, and it's rather frightening. Could what we have experienced in financial markets over the last year and a half simply be a beginning, the start of a long term slog of diminished prospects.
Paumgarten hedges his bet in the final paragraphs, allowing that it is possible that we could tenuosly paper over this crisis and move on. Life goes on, and the optics on the street suggest normalcy, not a Depression. The alpha is horrible but the beta is not that bad, I mean almost everyone took a substantial hit so the playing field is still for the most part level. Other countries have it worse and the U.S. aura of safety is still intact. That the inherent American optimism is still at work is not trivial.
Responsibility for this debacle is really not the issue. The delusion was widespread. The enlightenment comes with getting back to the basics, a struggle that is not so easy for those hit with job loss or foreclosure. It is possible, however, that a resiliance not seen by Paumgarten may be at hand. Just as "inside the beltway" is the catch phrase for insular D.C. thinking, "inside Manhattan" could be a characterization of his well styled perspective.
That's not to say that there is some easy way out of our financial dilemma. It will take time and it's almost certain that job losses and consumer credit stress have some way to go. Those not caught up in these troubles, the majority of Americans, are saving more and adjusting to a more modest lifestyle and while that hits the consumer spending numbers, it's not all bad. Back to the basics could in fact good.
Near term whether on the cusp of the next step down or up is a coin toss. This is not a short term event. An adjustment up, but not dramatic, in equity markets over time remains likely.
Business as usual does not figure in this analysis. Catharsis has not arrived. More to come is accepted. That we stand in a moment of history in which we have no perspective of the whole is more or less the thesis here, and it's rather frightening. Could what we have experienced in financial markets over the last year and a half simply be a beginning, the start of a long term slog of diminished prospects.
Paumgarten hedges his bet in the final paragraphs, allowing that it is possible that we could tenuosly paper over this crisis and move on. Life goes on, and the optics on the street suggest normalcy, not a Depression. The alpha is horrible but the beta is not that bad, I mean almost everyone took a substantial hit so the playing field is still for the most part level. Other countries have it worse and the U.S. aura of safety is still intact. That the inherent American optimism is still at work is not trivial.
Responsibility for this debacle is really not the issue. The delusion was widespread. The enlightenment comes with getting back to the basics, a struggle that is not so easy for those hit with job loss or foreclosure. It is possible, however, that a resiliance not seen by Paumgarten may be at hand. Just as "inside the beltway" is the catch phrase for insular D.C. thinking, "inside Manhattan" could be a characterization of his well styled perspective.
That's not to say that there is some easy way out of our financial dilemma. It will take time and it's almost certain that job losses and consumer credit stress have some way to go. Those not caught up in these troubles, the majority of Americans, are saving more and adjusting to a more modest lifestyle and while that hits the consumer spending numbers, it's not all bad. Back to the basics could in fact good.
Near term whether on the cusp of the next step down or up is a coin toss. This is not a short term event. An adjustment up, but not dramatic, in equity markets over time remains likely.
posted by John Borden at 3:38 PM
1 Comments:
One of the PIMCO analysts has coined a new phrase "The New Normal" and says (in part) we are headed for a new normal in America that will make our middle class look a lot more like the middle class in BRIC countries with a reduction of about 30% in average lifestyle. I know this is happening and am trying to figure out a course of action for myself and kids.
Perhaps as the pain gets greater we do a better job of repressing our need for instant gratification.
"Let's consider our world not as inherited from our parents, but as borrowed from our children...."
-- Kenyan Proverb
Lance Newton www.unsustainabubble.com
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