The Winter of Our Discontent

Sorry for that little delay. I got back from Vegas a couple of days ago and am just now getting back to normal. Since the cliched rule of Vegas is you don't talk about what happens there, I'll have to focus on other things. I'll only say that it was a bit quieter there in terms of population than I've experienced in the past. That Las Vegas has been hit pretty hard by the recession is no surprise given that most people prefer to spend their money on rent and food than gamble it away at the blackjack table. We stayed at the Bellagio, and it was far from empty, but I can't say that it was as filled and boisterous as I've seen in the past. Many tables were empty and it easy to get around.

A quiet Vegas, however, is symbolic of how bad things have gotten in this country, as the U.S. economy limps along like a wounded coyote on a parched desert road. Two days ago, the Dow traipsed below 7000 for the first time since 1997. How far it's fallen. People are walking around scared and a bit shellshocked. Everyone's nervous. We all want to know where the bottom is. How bad this is going to get. The ranks at my law firm have quietly thinned. For many of the survivors, salaries have been frozen and cut. It's the same or worse at other firms. And you know it's bad when lawyers, the plankton of the economy, are disappearing like deer during hunting season. Last month 2000 lawyers were laid off. And today, I heard one firm alone is going to cut 300 by itself.

Now, I know no one feels bad for lawyers, but I only bring this up because I am one and for me, it's personal and raises a larger issue about the negative mass psychology driving everything right now. If you believe as I do that to a large extent our thoughts and beliefs drive our reality -- literally -- then we are in a world of doo-doo and it's not going to end any time soon. In the late 90s, when the market was going gangbusters and everyone was talking about a "New Economy" like we were entering a new age, with fresh opportunities to generate huge wealth not seen since the mid-1800s, the mass mentality was, in Alan Greenspan's words, one of "irrational exuberance." People were happy because everyone was making money. All you needed to do was invest in something other than pork bellies and chances are you were going to earn a profit in a short amount of time. The Dow broke 10,000; NASDAQ broke 5,000. Retirees and pseudo-retirees were investing in tech stocks, sometimes at the urging of pushy brokers, but often, more often in my book, at the urging of their friends, family, and their own egos. Ten percent returns? Why am I ONLY getting 10% when my neighbor, brother, rabbi, nephew, son-in-law, and shoe-shine guy are getting 20 or 30%? Put it all in AOL and ENRON! NOW MOTHERFUCKER!

It was insane. It was momentum investing. It was ignorance. And when the bubble burst in March 2000 people were genuinely surprised that the good times were over. Actually, people didn't become fully aware that the good times were over until late 2000 to early 2001, and by then it was too late to get out. It was as if no one saw it coming. Because no one did. Well, a few people did. But no one listened to them, because an irrational, optimistic psychology was driving everything. A mass psychology. Back then it was the opposite of now: everyone was bullish, everyone thought things would just keep going up and up and they'd get out at the right time. People were chasing the rabbit and the rabbit was fast. And when the party ended, as all bull markets do, the fall was a long one.

It's interesting to look back and consider that time because now, after the bursting of yet another bubble -- the housing market -- it seems as if the collective psychology has swung waaaaaay over, to the opposite pole. Now, instead of irrational exuberance, it seems that everyone is suffering from irrational pessimism. The negativity floating around is palpable. To be sure, it's hard not to feel pessimistic when friends and family are getting laid off and jobs are disappearing faster than an African lake. The market is tanking on a daily basis and nobody knows where the bottom is. You turn on the television and it's fear, fear, fear 24/7. The media is doing what the media does. When the times are good, it pushes people to throw their money at the stock market or into real estate investing. And now that the economy's in the shitter, all you see on television is this self-righteous analysis of what capitalist, overextended pigs Americans were for so long and how it's good that we're all forced to save now. As if the media -- magazines, newspapers, and television -- weren't pushing materialism on us like a bunch of heroin dealers for the past 30 years. Now all they have is special reports about saving pennies, clipping coupons and surviving on Ramen Noodles and Spam. Yes, Spam is back. Finally.

That's when they're not trying to scare the piss out of us. As maniacally loud as the Jim Cramers of the world were back in 1999, urging people to invest and ride the wave, now it's a funeral dirge, all wailing and gnashing of teeth. The media would have us believe that The Economy is this living, breathing manic-depressive, up one day, down the next, and we're all fucked if it goes down, the world will end. It's absurd. People are freaking out and it's all because a bunch of politicians and economists have told us, repeat after me, This is the WORST economy since the GREAT DEPRESSION.

HOLY POOP ON A STICK, BATMAN! GET THE BUNKER READY BILLY BOB, IT'S THE END TIMES!

Time Magazine's cover this week shows a hand gripping a thick rope that's frayed and about to snap. The title? "Holding on for Dear Life." That about covers it. Hmmmm, do you think maybe that the corporate beast, weakened though he is, is trying to PROFIT off of this fear by building it up? Do you think that maybe there's something in that big fucking stimulus bill that's benefiting someone? This is America. Even when times are shitty, you can bet that there's some asshole who's profiting off of it. Ask Halliburton. Ask Blackwater. Ask all those Bush cronies who revolved in and out of positions of regulatory power and are now back heading the corporate boards and lobby firms of companies they once regulated. Wait, let me put that word in quotes: "Regulated." There.

I say, fear not, oh Blog Reader. For though yea, this is the winter of our discontent, verily, things are not as bad as they seem. They can't be. For all the people who have been laid off, there are millions more who are still working. For all those whose homes are being foreclosed on, there are far more people who still have their homes and are in no danger of losing them. This isn't to discount people's suffering, because many people are suffering. This is a bad recession, to be sure. My only point is, the sky is not falling. The world is not ending. So let's all get a grip, shall we? Just as it was easy to get caught up in the insanity of a climbing economy built on mirrors, balsa wood and paper clips, it's even easier to look around now, see the shitstorm smacking at the windows, and feel afraid.

But that self-fulling prophecy isn't going to help anyone, not me, not you. The worse we think things are, the worse they'll get. And right now, everyone's funereal mood is contributing to the problem. We need to remember that the market was due for a correction. It was only a matter of time before things went the other way and a bunch of greedy motherfuckers screwed things up for everyone. That's capitalism. That's the risk we take when we decide we don't want a communist economy where a bunch of government bureaucrats dictate who buys and sells what and at what price. If communism's downside is lack of innovation and motivation, then capitalism's downside is human greed. Regulatory oversight is supposed to prevent what's happening now, but it didn't work this time. Too many important people were making too much money to put the brakes on. No one wanted to be the bad guy and turn on the lights.

Mark my words: the economy is going to turn around within the next year or two. You'll see. I'll even go out on a limb and say the market will jump 1000 points the first day that Obama unveils a coherent plan on how to handle those troubled bank assets that are preventing banks from lending money right now. I'll go out on another limb and say that the smart people are investing right now. Buying stocks at bargain basement prices. The smart people are long term investors and they are not selling into a diving market. They are not panicking.

Not an easy task, keeping a cool head in this, the winter of our discontent. But someone's gotta do it because the alternative is far, far worse.