This is what I heard throughout the market declines of yesterday, as many blamed the slide on the worries that perhaps Greece, Portugal or Spain may be at risk of default. The parade of pundits on television tried their best to assess the situation and how important, or unimportant, a credit crisis in one of these countries would actually be to the global economy. As I listened I was at first amazed at how dismissive many of these talking heads were of the situation. The comments were fairly striking:
“It’s only Greece.”
“The Greek economy is about the same size as Mississippi.”
“Portugal represents only about 6% of the Euro zone.”
“It’s really unlikely we’ll actually see any defaults from these countries.”
These sorts of comments continued throughout the day and slowly but surely I began to think that I had watched this movie before. As Yogi Berra would say, it was “deja vu all over again”.
Maybe you remember some of the commentary about the looming subprime crisis from about two years ago and how unimportant it would be to the overall economy:
“The subprime market represents an extremely small component of the mortgage market.”
“The likelihood of a substantial decline in real estate prices is very small.”
“Lehman Brothers is just one company.”
“There is little chance that foreclosures will increase in the prime mortgage markets. The subprime situation is contained.”
I wrote an entire newsletter a couple of years ago titled “And The Band Played On”, referencing the Titantic and my attempted association was how so many people at the time were dismissing ominous economic warning signs about an oncoming crisis. I think Greece, Portugal and Spain will all prove to be pretty important. When California begins to teter on the verge of default, I think that will be important too.
My argument is that they’re doing it again. Dismissing important signs that there may very well be serious trouble brewing in the global economy. No less of a moron than Jim Cramer was on the Today Show this morning claiming that this whole situation is no big deal and that everything will be fine so we should be plowing our money into the stock market with both hands. I (and common sense) would argue that this might be a moment in history that might be better watched with your money on the sidelines.
Sort of in the same vein, I had a wonderful email from a faculty member from Emory University the other day in response to my recent newsletter. It displayed an elegantly efficient use of words:
“i don’t need mail from nutcases.”
You also have to appreciate the text message feel of the email also. But nonetheless, although I’ve developed a fairly thick skin by now, I still felt compelled to inquire about the harshness of the “nutcase” comment, so I replied back to ask.
Nutcases?? Somewhat harsh, no? And spoken by someone obviously associated with the wonderful business school at Emory University. One might have thought you would have considered my somewhat carefully laid out case for the three possible outcomes.
Nonetheless, this nutcase will see to it personally that you’re removed.
Best of luck on the feedback you receive on your published works.
As I expected, I received a response that I found somewhat more disconcerting than the original 6 word email:
hey mike, sorry you are offended. the “nutcase” comment was a result of my googling your name and reading about your views and activities, and not solely based on the specific message you sent me that espouses fringe political views. surely you understand that thinking people won’t necessarily agree with you about the source of the problem or the best solution. i could perhaps have been more circumspect.
still, i do appreciate being removed from your list.
At least the lack of capitalization remained consistent, but I was taken aback at the comment about my “fringe political veiws” and how “thinking people” won’t necessarily agree with me. It made me wonder if this is the sort of attitude that had infected Washington D.C. in recent years. This disconnect between an agenda they believe in and the undeniable numbers that clearly show the agenda will be fiscal suicide. Truthfully, I have seldom espoused any political views whatsoever and I have made my general disdain for politicians of all ilk extremely clear for many years.
So even with this professor’s clear dislike of me I pushed on with one more email to see if they could explain what the “thinking people” were thinking:
Well, since you’ve now engaged me XYZ, and I will assume you consider yourself amongst the “thinking people” you reference, I would be very curious to hear where you think the source of the problem is and what the solution might be.
My degree in economics and Masters in Finance are now nearly 30 years old and I have spent my entire adult lifetime working in the finance industry, but I never claim to have a monopoly on ideas. And quite frankly, I’m pretty sure I didn’t make a single political comment in the newsletter that began this dialogue between us.
If you suspect me of being a fringe political “nutcase”, I encourage you to read my newsletter of September 2008, which predated President Obama’s election by several months. It will quickly show I’ve been fairly dissatisfied with the workings of our elected officials for quite a long time in matters regarding the direction of the economy.
Here’s the link to it if you’d like:
You are correct that I do have plenty of opinions, but I also try to bring my facts with me to explain my view and don’t just resort to abrupt name calling.
I’d love to hear what the “thinking people” thing will right our economic trajectory and the reasons that make you think these ideas have more merit.
Thanks again for writing. Always good to hear from my friends at Emory.
Silence. Fade to black…..