Sunday, July 19, 2009

Our Country's Top Problem

July 2, 2009
American Arrogance

  1. Myth of the dollar. The world is stuck trading and saving in US dollars and the US is therefore able to run any size trade deficit. Any attempt to leave the dollar would result in foreign reserves of dollars becoming worthless and prevent global trade.
  2. Myth of cornucopia. America is well endowed with natural resources and any resource that runs out can be substituted easily.
  3. Myth of the military. Spending more on the military then the rest of the world combined means we can successfully fight our way out of any problem.
  4. Myth of the market. Market forces will address all of our needs.
  5. Myth of Eutopia. Americans are competent and our country well run.
Though the last decade went very poorly, belief in the myths prevents concern.

I believe in the "American Arrogance" theory with every fiber of my being. If nothing else, it has allowed TWO stock market crashes AND Ben Bernanke's "there is no housing bubble to go bust" to actually go bust in just one decade's time. I don't blame the government, Wall Street, or the media though. They are just reflections of all of us.

Further, the arrogance in the following article by Paul Krugman makes me want to vomit.

Deficits saved the world

What Hatzius is saying is that the initial shock — the surge in desired private surplus — was if anything larger this time than it was in the 1930s. This says that absent the absorbing role of budget deficits, we would have had a full Great Depression experience. What we’re actually having is awful, but not that awful — and it’s all because of the rise in deficits. Deficits, in other words, saved the world.

In my very humble opinion, the jury is still out on the taking on more debt to solve the debt crisis and save the world theory.

It's a bit like ACCELERATING out of danger on an icy mountain road and then bragging about how we avoided the accident. If one must brag, at least wait until the car is under control and we're back to normal driving again.

Further, I turned bearish in 2004 as I tended to believe the exact opposite theory. Borrowing a recovery doesn't work for the country any better than it works for an individual. I'm reminded of the $5,000 loan offer I got in the mail yesterday. Here's some ideas they offer on how I can spend the money. I can pay for car repairs. I can cover emergency medical bills. I need a minimum income of just $20,000 to qualify and no bankruptcy filings in the last 12 months. If I need more money they've got that covered too. I just need to let them know and they'll work with me to get the money I need. No joke. There's not one mention of the interest rate I'd be paying though (not even in the fine print).

Taking out loans to pay for car maintenance doesn't sound like the best of long-term plans. Works great in the short-term though. I have this sinking suspicion the exact same thing will someday be said of deficits saving the world. Just an opinion of course.

This arrogance post was inspired by a
heckle left for me on a (nearly) dead thread.


Anonymous said...

Yea, but the one who posted those myths also penned, and I quote: President Obama truly represents America...


Another quote from the same post: Here we come to one of the paradoxes of democracy - do I root for the President to ignore the will of the people and promote a more sane agenda or for him to follow the will, though ignorant, of the people and hope everyone changes their minds?

This is riduculous. Of course Obama is going to follow the will of the people. That would be the only reason he is President. It is like asking whether this President wants a second term.

It amazes me that those who were ga-ga about Bush were blind to the fact that he was a politician in the same way that those who beleive in Obama can't see how similarly ambitious he is when compared to Bush.

A politician who wins today will certainly not have what it takes to lead us out of this. That is a given.

Stagflationary Mark said...


Very well said!

As the title suggests, chaos occurs repeatedly in the film; in many scenes Kurosawa foreshadows it by filming approaching cumulonimbus clouds, which finally break into a raging storm during the castle massacre. Hidetora is an autocrat whose powerful presence keeps the countryside unified and at peace. His abdication frees up other characters, such as Jiro and Lady Kaede, to pursue their own agendas, which they do with absolute ruthlessness. While the title is almost certainly an allusion to Hidetora's decision to abdicate (and the resulting mayhem that follows), there are other examples of the disorder of life, what Michael Sragow calls a "trickle-down theory of anarchy."

The Real Deal said...

Arrogance? Not quite. Americans have been on top of the arrogance heap since winning WW2. Arrogance can be 'justified' if the deeds and the goodness match that attitude. Foreigners have tolerated the famous American arrogance for decades precisely for that reason.

No, the real characterization is HUBRIS.

Hubris - n. Overbearing pride or presumption, often results in disaster due to stupidity of action

Stagflationary Mark said...

The Real Deal,

Thanks for the clarificaiton. I think hubris probably is the better word to describe it. Hubris is not a word I often use and had to look it up in an attempt to understand the distinction between it and arrogance. There wasn't much difference at between the two words but then I found this.

"An accusation of hubris often implies that suffering or punishment will follow, similar to the occasional pairing of hubris and nemesis in the Greek world. The proverb "pride goes before a fall" is thought to sum up the modern definition of hubris."

Pride goes before a fall describes our economy for the past 10 years perfectly in my opinion.

Anonymous said...


Thanks for the Ran reference. I saw that film when it came out, mostly for the art - I was a film major at the time. I agree that the story is relevant to what’s happening in American politics today. I don’t think there will be any stopping this devastating ambition for power/greatness; the future pails in comparison to what can be seized today.

The night that Obama was elected, I thought there was a good chance that his actual Presidency would fall into disarray because it seemed to me that the prize had been won. Success in governing was not the point; the point was overcoming opponents in a contest to be number one. That remains the point; voters are pawns. The outcome of his healthcare bill will tell what becomes of disarray. No matter how you look at it we’re in trouble. If he succeeds at everything he does I believe the ultimate outcome will be devastating.


Stagflationary Mark said...


"If he succeeds at everything he does I believe the ultimate outcome will be devastating."

From 2005...

Intractable Problems

"Mr. Volcker could have stopped after he told us that our problems were intractable, as they are. There is nothing that can be done, because if there WAS something that could be done, someone would have done it, and nobody in all of recorded history has ever come close. Of course, this does not mean that the Fed and the Congress will not TRY to do something, like all the rest of the brain-dead bozos in history have tried when their asinine spending excesses got to this point. And what will they try? It will be, as if you had to be told, more of the same thing that got us into this mess! Hahahaha! More money and credit and deficit spending! Hahahaha! What idiots! And we elected them! Hahahaha! So WE’RE the idiots! Hahahaha!"