Musings 26 7-2-11
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July 4th Cognitive Dissonance
With Musings 26, the Musings have reached the half-year mark. As with the rest of oftwominds.com, the Musings are constantly evolving (or perhaps mutating might be more accurate). As always, my hope is the Musings spark new appraisals and insights.
As the second half of the year begins, I sense extreme cognitive dissonance between what we're presented as reality by our financial media and government--that the "soft patch" is over and the "recovery" is once again full steam ahead--and what the data says.
All available evidence suggests that credit is tightening as fear awakens in the credit markets. To mention just one such point: as the excellent "Acting Man" financial blog noted recently, the yield on short-term Treasury bills is now negative, meaning that investors buying these bonds are paying for the privilege of having the U.S. Treasury as the counterparty.
This strongly suggests they care only for security, that is, getting their principal returned to them, and not at all for yield (interest on their cash). If the global credit markets were healthy, why would anyone choose a negative yield?
This disconnect between what we're told is happening and what is actually happening reminds me of 2007, when the subprime mortgage meltdown was clearly undermining the entire global credit market, yet we were constantly reassured by financial authorities that it was all safely "contained," i.e. move along, there's nothing to see here.
In Survival+, I used the word derealization to describe the disconnect between what we experience and what the propaganda/marketing complex we live in tells us we should be experiencing.
The Status Quo managed to stave off reality for a full year in 2007, but eventually reality overwhelmed their "fix", which was basically resolving leverage and overindebtedness by adding leverage and more debt.
Now the Status Quo--in the U.S., in China, and in Europe--has staved off reality for a full three years since the 2008 global financial meltdown via "extend and pretend" and adding debt to solve the problems of overindebtedness and malinvestment. This "fix" is failing, but the EU has bought a few months more illusion with the latest bailout of Greece's Kleptocracy.
Note that the time bought by new "fixes" is diminishing with every fix. This is significant. I have likened this process to the onset of diabetes, where the body's sensitivity to insulin declines even as the body produces more and more insulin.
Relatively modest interventions bought a year of phony "recovery" in 2007-08. Massive, unprecedented interventions bought 3 years of bogus "recovery" 2008-11, but that level of intervention--roughly $100 billion a month in Federal Reserve "stimulus" and $130 billion in Federal borrow-and-spend stimulus a month--cannot continue, as it is destabilizing the entire system.
Following the same pattern of reduced effect from greater applications of borrowed money, the EU bought a year of "recovery" with last May's bailout of Greece. Now the latest bailout, which exceeds the previous bailout in size and complexity, is buying perhaps two months before the crisis reappears, like a 1950s movie monster, even stronger and more destructive.
This systemic decline in sensitivity to central-bank/State interevention suggests the end-state of "extend and pretend" is nor more than a year away, as each round of stimulus, quantititative easing, bailouts, etc. buys considerably less time than the last fix.
I anticipate a time within the next year when the announcement of a new bailout or Fed stimulus program boosts spirits and markets for a few days rather than a few months. At the very end of this process, probably in the 2014-15 timeframe, the announcement of yet another "fix" crashes the credit and stock markets because participants finally understand that the fixes are acts of last-ditch desperation which have no hope of actually working.
Settled Work
We have a copy of "A Pattern Language" by Christopher Alexander, Sara Ishikawa and Murray Silverstein around the house, and I referred to it extensively when designing a complicated and costly redwood fence we built a few years ago.
But I missed Pattern 156, which captures a wonderful series of insights into work and aging. I am indebted to Tommy K. (proprietor of the Freedom Guerrilla blog) for this excerpt:
"Hybrid work" is my conception of future work, and while it shares many characteristics of 'settled work," this description gave me deep insights into the nature of work as we age, and into the influence of the built environment on our concept of work.
"The experience of settled work is a prerequisite for peace of mind in old age. Yet our society undermines this experience by making a rift between working life and retirement, and between workplace and home.
The problem is that very many people never achieve the experience of settled work. This is essentially because a person, during his working life, has neither the time nor the space to develop it. In today’s marketplace most people are forced to adapt their work to the rules of the office, the factory, or the institution. And generally this work is all-consuming – when the weekends come people do not have the energy to start a new, demanding kind of work. Even in the self-governing workshops and offices, where working procedures are created ad hoc by the workers as they go, the work itself is generally geared to the marketplace. It does not allow time for the slow growth of “settled work” – which comes from within and may not always carry its weight in the marketplace.
First of all, what do we mean by “settled work”? It is the work which unites all the threads of a person’s life into one activity: the activity becomes a complete and wholehearted extension of the person behind it. It is kind of work that one cannot come to overnight; but only by gradual development. And it is a kind of work that is so thoroughly a part of one’s way of life it most naturally occurs within or very near the home when it is free to develop; the workplace and the home gradually fuse and become one thing.
The crisis of old age, life integrity versus despair and cynicism, can only be solved by a person engaged in some form of settled work."
From Left Field
Thanks for reading--
charles
