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Who are you talking to?

January 30, 2012

After reading numerous financial news articles telling me repeatedly how we are experiencing the long awaited recovery of our economy, I entered into one of those typical conversations I have with myself that goes something like this: 

Self: What do you think you are doing? 

Me: What do you mean?

Self: You think you know so much, but just look at all the experts, they are saying just the opposite of what you opine.  

Me: Oh yeah, well maybe I’m a maverick!

Self: A clueless “maverick” I would say. 

Me: That’s not true, the experts really don’t know what they are talking about; they are not taking a long-term view!

Self: Face it, you are wrong. Do you really want me to believe you know more than all those economist and finance professionals who graduated from Ivy League schools and have worked in this field for their entire life? Do you really want me to believe you are smarter than everyone who sees that our economy is mending? 

Me: Well no I’m not claiming to be smarter, I just think they may not be looking at the long-term affects of what we have done to our own economy.

Self: So what is all your special training, where did you get your degree in economics and finance? Where did you do your master’s work and what top school did you get your Ph.D from?  

Me: (inaudible mumble)

Self: What was that? 

Me: I had a minor in economics at Sac State.

Self: Ha ha ha ha ha ha!!!! You’re kidding right?!? Do you really expect anyone to take you seriously?!?!  

Me: Well I guess you’re right, but doesn’t the problems I cite seem right from a common sense point of view?

Self: Are you serious? Our economy and the world of finance is way too complicated for some B student in economics from… where did you say you went to college?  

Me: Sac State.

Self: Was that a degree you got online? Listen, you need to stop talking and start listening to the experts. You are a pessimistic permabear and you are starting to depress people! And now with employment numbers, housing sales and the stock market strength, you are obviously wrong.  

Me: Yeah, I guess you’re right… who am I fooling?

Self: Finally! I’m glad you’ve seen the light!

It is a humbling conversation I have with “self.” But the problem I have at the end of the day is that all the concerns I have raised about our economic policy over the past decade still remain and in some cases I think have only been further compromised by the very fixes we have put in place to stimulate our economy. Debts are increasing, wrong behavior and inept business practices are being bailed out and rewarded, the contagion seems to be spreading to other countries and we have not reduced the complexity of investment instruments.

I had to laugh at recent financial news that reported that Greece’s inevitable default wasn’t going to be all that bad of a thing for the economy after all. Have we forgotten that it was just a couple of months ago that the whole world watched with bated breath as Europe’s highest elected officials held emergency meetings to make sure Greece was saved from default. It was quite the drama that had world financial markets teetering on the edge. Even our own President and Treasury Secretary sent stern warnings that Europe needed to deal with this problem or it could be 2008 all over again. We were assured that these top-level leaders were on the job and dealing with Greece and various other debt problems. There would be no repeat of the Lehman Brothers’ bankruptcy that triggered the 2008 disaster!

They came up with their own bailout plan; when that wasn’t enough they leveraged up. They demanded austerity measures from Greece and others. They suppressed riots as a result of these measures. They required Greek bondholders to take a 50 percent “voluntary haircut” on their bonds. They declare the 50 percent loss not to be a default (amazingly) so that credit default swaps would not be triggered. They assured all that the Euro would survive it all. And now that it seems Greece will default anyway, we are told that it is no big deal. Now that is hysterical! All those poor European leaders burning the midnight oil and beating themselves up over a non-issue!

Self: You’re at it again.

Me: Oops. Sorry.

Self: No you’re not.

Me: You’re right.

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