Comments

Two thoughts from a complete non-economist and quasi-intellectual:

Globalization maybe, in fact, part and parcel the reason for the collapse, as our current system may not be able to handle such risks. Perhaps what we need to look at are the risks taken by banks in general. Taleb asserts that hedge funds, not banks, should assume such risks. He sees banks as gambling with money from the general public and hedge funds with that of investors. This he considers a better risk and one that does not create an agency problem.

When have we not valued intelligence? Because one is intelligent does not necessarily mean that one is oblivious to their surroundings. This reminds me of my nephew who at the age of 10 was recruited by an Ivy League to spend the summer. He had done exceptionally well on a few tests and this university was interested in him.

He did not want to go by any means. He did not want to spend his summer with "nerds," preferring rather to be around "real" kids. But he was as real as any other kid, adjusting when necessary and negotiating relationships. I might also say that it is because of his intelligence that he was more sensitive and more aware of others. Why not the brilliant Obama team?

By the way, the edict to go spend reminds me of what President Bush declared after 911. This may have been helpful for the short-term, but how has it affected the long-term economy of debt? Maybe this is exactly what's needed. I'm not sure.

Posted by Judith Ellis at November 25, 2008 1:58 PM

Tom, loved your post. Agree 100%.

As for the bear shit, it actually looks like a (frozen) chocolate macaroon to me, but thanks for setting me straight...

Posted by Craig Postons at November 25, 2008 2:12 PM

great spiritual manifesto
thanks
Jamshid

Posted by Jamshid at November 25, 2008 2:54 PM

Great post, Tom.

I am not an economist, nor a quasi-intellectual. I'm just a hard working every guy who feels a bit helpless/hopeless about the current fiscal crisis. As a psychology major in college, I understand the financial markets to be at least based equally on psychology as they are on financial policy. It floors me that the leadership in the US - both government and "private" -- is not stepping up to play a much more active, visible role in the psychology of our current crisis. "The only thing we have to fear is fear itself." Where have all our leaders gone?

Posted by Mike at November 25, 2008 3:25 PM

Consumption rules!
You've got to be kidding. Basing an economy on consumption is what got us here.

Posted by zed at November 25, 2008 4:43 PM

Perfectly incorrect & about as spiritual as what you have nailed to the wall - nail ISOE right next to it & reflect on that.

Bail & Spend are what one expects from the ancient out of touch crowd. Now it is mainly about Investment & Thrift & accountabliity & transparency.

Posted by Paras at November 25, 2008 5:16 PM

Spend first, thrift second Paras. (Hoover tried it your way.) (Sorry you're having a bad day.) (Sorry you disagree, but if you want to pin something to the wall, I'd suggest a little sheet of paper that says, "Rude always sucks." "Flaming" is not cute, it's infantile. This is a particularly bad time for infantile.)

Posted by tom peters at November 25, 2008 5:21 PM

Tom - your bear scat is as infantile as it gets. And bail & spend is old technology & a perverse out of date business "model". These are not Hoover times by any measure.

Posted by Paras at November 25, 2008 5:42 PM

The US is 20%+ financials in GDP - or was - & 16 health "care". 72% consumption based. The US must get back to making things - real products to real services that add value - Peter Schiff has some insights. So much waste of limited tax dollars as is - need to rush to the "to be" of back to the future as an investor nation & world financial leader.

Yes government should now take calculated stakes to keep business & careers going - but must remedy the likes of $73/hour UAW Big 3 $15M in Viagra/year workers against $48/hour Toyota associates that do it right in the US.

The 99% math tells career people to invest invest & create savings now because the career may be gone in '09.

Posted by Paras at November 25, 2008 6:14 PM

Tom...

Your big idea is that America continues to do what caused the problems in the first place. Bush said go shopping after 9/11... Now Tom Peters suggests a little bit more spending is the way out of this mess.... Duh?

Here is an alternative plan....

Encourage the American auto industry to go into a government backed and structured Chapter 11 bankruptcy process.... This would apply to the whole industry including Honda, Toyota, BMW, etc if they need it...

Americans should support The Salvation Army - that is where you get the best bang for your donation buck. Unless or until you have enough set aside to form your own charitable foundation - then you get to choose the projects you support. Another charity I would urge you to support is the one laptop per child program.

Americans should review all their old spending habits and make cuts - just as President Elect Obama announced yesterday that he is planning to do with the Federal Budget and its needless, habitual, and wasteful spending. Making deep cuts is the go... not shallow across the board cuts. Personally I hope that Obama and his team will get out of Iraq ASAP and also pull out of the Afghanistan/Pakistan War in 2009 (the Obama White House needs a new anti terror strategy and advisory process - Clinton apparently had the makings of it but failed to use it). Let the pruning reflect your new priorities for 2009 and beyond.

American households can and will reduce their dependence on oil, coal, and other carbon-based energy sources. Consume less gas in the car, less electricity at home and at work, buy fewer things that contribute to landfill waste, etc. Instead invest in solar energy if that is appropriate, capture your own rainwater for use at home and work, use natural gas in preference to gasoline or oil, invest in wind farms (build one in your own backyard if you can), etc.

This Christmas make as many gifts as you can rather than buy them. Bake a cake. Make the greeting cards, Build a billy cart for your kid. Buy books or buy a kindle for the family. Read a lot this Christmas. Read aloud in family groups.
Hug your kids and your family a lot this Christmas. Those of you who believe in Jesus as our saviour will find great comfort in attending Church Services as a family. Other religions too find peace through prayers.

Take special care to exercise and not to over eat during this festive season. Be conscious of your new preventative health measures. Be healthy into 2009.

Most important... Beyond anything above... Prepare for the great opportunities to build new careers, businesses, and wealth that are coming your way in 2009. These times come along rarely - once in several generations! Be wide awake to new and exciting times and opportunities that are heading straight at you...

Good luck to you all...

Richard.

Posted by Richard Lipscombe at November 25, 2008 6:50 PM

People are talking on here like it’s the end of the world. Can we have some perspective PLEASE?

There's almost hysteria in some of the comments on this Blog in the last few days.

A few comments from ‘Mr Naivety’ over the pond:

*Has anyone died yet?
*People may not be able to have two or three holidays next year.
*People might not get yet another new ‘latest version’ all singing, whistles and flutes computer and cell phone.
*Maybe the second new car in the family may just have to be put off another twelve months.
*Eating out might have to become a rare luxury for a few months.

Is anyone seriously trying to tell me that in the US or in the UK that ANYONE is actually in danger of dying as a result of this supposed crisis? Let’s get real please.

I am not stupid and I am not complacent either but come on folks. Why don't we try and imagine what it’s like to be REALLY poor - like wondering whether we will be alive tomorrow because we have no food or drink. Yes, yes, yes, I know I will hear from the usual regulars here who will pat me on the head and tell me that I just don’t understand the complexity of it all. (Well tough! – I feel like saying it again – if it bores you sorry – actually no, I’m not sorry at all.)

Why can’t we just get our heads down and work our way out of this stuff instead of looking for people to blame?

Im a finance dumbo and now I see our UK government is trying to help us by borrowing its way out of trouble (hang on a minute says Trevor ... isn’t that how we got into this s**t in the first place? – but then what do I know?)

Part of me says why should we expect a ‘bail out’ when we got ourselves into this mess?

And please tell me - why the hysteria?

Phew! - That feels better.

Posted by Trevor Gay at November 25, 2008 7:22 PM

Trevor - this is why we love you. Thanks for an injection of some perspective and sense. I nominate you to be CEO of an American auto company of your choice.

Posted by The Dan Ward at November 25, 2008 7:53 PM

Cheers Dan - I couldn't afford the pay cut my friend :-)

Posted by Trevor Gay at November 25, 2008 7:57 PM

I immediately recognized the source and diet of the "duece like" substance found in the photo. Had an immediate flashback to the Air Force Basic Survival Course at Fairchild AFB Washington where I found an identical substance deposited directly on the spot of the where the food cache WAS that we had buried the night before!

Funny how we now have a crisis...welcome to the daily existence of the low wage working poor. Zero benefits, zero insurance, zero retirement income...the folks who don't really need a bailout, just access to the same benefits and services their tax dollars pay for. The ones who will pay for the mismanagement with the loss of their jobs, benefits,and pensions.

Trevor...most excellent my friend! Captures it perfectly!

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Posted by Dave Wheeler at November 25, 2008 11:37 PM

I'm not sure that the readers of this blog are in a position to pronounce that no-one has died. In times of financial hardship/recession, many countries experience increased suicide rates.

As a counter to that, I certainly do agree that optimism is part of the defence against the despairing mindset that brings on suicide. But for those of us in more privileged life positions to pronounce 'no problem' I think trivialises the situation of many who are less fortunate than us.

Posted by Madeleine at November 26, 2008 5:36 AM

I don't think this couple had 3 holidays a year, 2 cars to run or a meal out every week to start with.......So what happens when prices go up and less money comes in........?
http://www.dailyrecord.co.uk/news/uk-world-news/2008/09/08/pensioners-forced-to-do-housework-at-night-because-of-energy-price-worry-86908-20728509/
Is it OK for us to see our pensioners having to result to this?

Posted by Vicki at November 26, 2008 6:02 AM

Hi Madeleine - As always your comments are measured and helpful. Let me clarify my position. My point is the tone of conversations on this Blog in the last week or two has become almost hysterical and all I was asking was for some perspective. For your information I suffered acute mental health problems that necessitated in-patient care in hospital almost 10 years ago. I also worked in mental health services for over 10 years. In the teams I worked in we regularly had to deal with the issue of suicide. I assure you I would never wish to ‘trivialise’ anyone in less fortunate circumstances than me. I accept your reprimand but I hope anyone that knows me would also know I am not a person to ‘trivialise’ anything to do with the mental health of people less fortunate than me.

Posted by Trevor Gay at November 26, 2008 6:08 AM

As I read Trevor's comment yesterday evening and those which followed, I wondered why I didn't feel particularly ebullient by these words. “Weeping may endure for a night but joy comes in the morning.” Our night will be extended; our initial response perhaps elongated. We did not get here in one day and it will not take one night. Yes, we most certainly want to remain optimistic. But reality is that we are all in pretty deep dodo, not the making of mere birds. The bear scat was apropos, for sure.

Regarding the comments here, they are to be most expected for sure in such a crisis. I did not find the comments here unduly pessimistic or way over the top. (We are grateful for the forum.) Sunny thoughts and words are needed for momentary relief and release. They are also important for creativity. (The same, however, may also be said of their opposites. Both can be motivators.) But in moving forward we will need the biggest doses of the hardest reality. We are all pondering what got us here and wondering what will get us over there. This is good.

During the night of the election, my reaction surprised even me. I did not leap for joy, nor did I weep. (I would have thought that I would have done both. This was a really really big surprise to my very self.) Instead, I immediately began to think of how we would move forward considering the gravity of our present situation. I immediately began to feel the burden that lay before us. A few days later, however, I wept without ceasing for the joy of that moment and for the beauty which is America.

Now, we are in a period of night. But we can most certainly see day. Allow us both realities.

Posted by Judith Ellis at November 26, 2008 7:55 AM

Bloomberg reports that the bailout promises so far total $25,000 for every man, woman and child in America. Another estimate was that every taxpayer unit (if you and your spouse file jointly, that's one unit)is on the hook for $250,000. I'm not an economist, but I do stay at the Holiday Inn Express, so I have a better idea than sending cash to AIG for more parties - show ME the money.

Send my tax paying unit of 2 adults a check for $200,000 and you immediately save yourself $50,000. I'll invest it in the economy. I pay off my mortgage, thus giving the bank a shot in the arm and no risk of foreclosure. The real estate market will immediately correct itself and my house that was bought for $210,000 and is now worth $158,000 can be sold for $158,000. The banks will have money to lend, and perhaps this time they won't screw it up. I doubt that.

What else? I might buy a new car. Let me decide if I think GM or Ford deserves my business. If no one buys GM, then let them fold. Lost your savings, or your 401K is in the tank? Here's $200K to being it back to where it belongs. And pay off the credit cards, also freeing up more dollars for credit.

I'm sure there are many reasons why this will never work, but AIG has shown us that corporations are generally incompetent at changing their evil ways. GM and their 2 cousins would also blow whatever they get from the Feds. Put the money in the hands of the people and let the people decide how they want the economy stimulated. Let the corporations get their money from their customers.

Tom, I envy you there on your farm. Here's hoping you and your readers have a great Thanksgiving. Even Paras, who seems to be a little off his feed.

Posted by Brian Tingley at November 26, 2008 9:35 AM

Brain - Thank you for your words, much appreciated. Your last sentence literally made me laugh out loud, though I disagree with it. Paras, in my view, made some very solid points, including the necessity of production. I also appreciated his mention of Peter Schiff who was an astute critic. He was literally laughed off of media outlets when he spoke of the ensuing bust. It looks like he was right. We were spending more than we could have ever made. If we do not change our massive system of debt, it looks like we will never save. Schiff appears to be against bailouts of any kind. Is there a distinction between the macro and the micro?

Posted by Judith Ellis at November 26, 2008 10:25 AM

Vicki - I agree with you. Bill and Gladys are certainly not the people I was getting at. The people who have the multi car family, multi holidays per year, multi PC’s in their houses, multi cell phone lifestyle CAN afford to deal with this recession. Bill and Gladys can’t. I'm on their side - perhaps I should have made that clearer in my comment. My position is very clear – take from those who can afford it. We should definitely not take from those who ‘have not’ like Bill and Gladys – they are merely innocent victims of the rest of us - including me - being too greedy and now looking for others to blame. Too many of us pretend to be surprised we are in the state we are in – it was apparently predictable. Sorry to be a party pooper but it seems to me there are far too many crocodile tears being shed and blame shifting/responsibility avoidance going on. Many business people in the UK and I’m sure in the US can EASILY afford a very significant drop in their standard of living and still be mega miles above the poverty line that Bill and Gladys struggle to keep their heads above. It’s pathetic quite frankly that anyone should worry because they will not get their usual million pound plus bonuses this year.

Posted by Trevor Gay at November 26, 2008 12:18 PM

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There is a stream of daring inflection points. I see a fruitful brainstorming here. All postings add up to the positive side. I find quite interesting Madeleine, Vicky, and Richard’s POVs. They offered words of wisdom. Earth must solve quite a few problems at the same time. Those that are unsolvable must be reduced as to their dangers.

If a debate in the West is serious and differentiated from the old-fashioned UN and other summits, hope can be audacious and real. One reason why is optimal to dissect problems and to document them is that allows you to see with fresh-thinking eyes the problem, seizing some solutions.

If one sees all the challenges and can take it, without doubt there will be a wealth of good and positive opportunities. Bottomline: Review the grave challenges and assimilate them without getting stressed out. Secondly, start working with your community and wiki-groups towards getting solutions.

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Thirdly, start capturing the benefits that are always underlying the problems.

A group of determined people can offset greatly the ill aspects of the planet without a doubt. To that, it is necessary to instill a larger sense of urgency without spiking one's anxiety. Though and as of now, this is an unprecedented ball game (approach). Must get everyone on the boat. All are important, unique, and valuable. Total diversity make the UNITED EFFORT endlessly better.

For the consideration of the readers, Bertrand Russell has some words that are indeed true, “Many people I know prefer to die THAN THINK.” At all times, we must find this seemingly fact with the greatest determination the soonest.

Posted by Andres Agostini (Andy) at December 1, 2008 1:17 AM