With the possible exception of veterans, humanitarian workers, and the genuinely poor, we in the good, old U.S. of A. are pretty much in the same "spoiled" boat. And we can't even see it, that's the irony. We're infected with a serious case of "privilege blindness," and it keeps us from seeing just how good we have it.
No, I'm not on any guilt trip (though my mom did tell me as a kid to eat all of my vegetables "because a billion Chinese will go to bed hungry tonight."). And I'm not about to compensate for my prosperity by moving to a poor country and following in Mother Teresa's footsteps, as noble as that might be.
It's just that, lately, I've had these anxiety bouts. And I've come to believe that our lack of perspective-this serious American blindspot of ours-may prove dangerous to us one day soon. Because just when we're most certain "it can't happen here," is when you can bet your bottom dollar it will.
Americans have grown up believing in the happy ending. It reassures us, inspires us, whispers to us that, while we may go through some pretty nasty stuff, things will always turn out well in the end.
For those living in America today, things mostly have. Sure, we've had our troubles. There was, of course, the Great Depression 76 years ago. For many poor souls back then, particularly those who jumped feet-first out office windows, it was the end of the line. Yet even in the depths of it, society held together. There were bread lines but few skirmish lines. States didn't secede from the nation. Peasants with pitch-forks didn't ravage Washington. America got through it in one piece.
And we got through the eleven recessions that followed, too, plus a terrible World War without enemy troops once setting foot on our shores. We're one of the few nations, in fact, never to be invaded.
There's been hunger, sure. Poverty, of course. Racial problems no one can deny.
Through it all, though, the U.S. has remained intact, a civilized, highly sophisticated society that still believes in sweet happy endings.
And that's what has me worried. Because yesteryear's happy ending assurance has morphed into something else that isn't doing us a bit of good: We've somehow acquired the attitude that, no matter what happens next, America, Americans, and our almost embarrassingly high standard of living will always prevail. Even if it's at the expense of other less fortunates in the world.
Unless I'm mistaken, the word for that is "arrogance."
Don't get me wrong; I'm no America basher. I adore our way of life. And I appreciate the sacrifices that have made it all possible. I really do. It's just that, as I said, I worry. Americans seem to be wholly embracing Satchel Paige's definition of denial, which is, "Don't look back, something may be gaining on you."
I now think it's gaining on us with a vengeance. Real estate, for just one thing, has already turned. Consider these new developments Bill Bonner recently reported in his Daily Reckoning:
In other words, all systems are "Go" for real estate to plummet. And the word "crash" isn't off the table, either. Yet what are most Americans thinking? We're thinking, as Robert Prechter puts it, "…that this is their last great opportunity to buy or re-finance a house/condo. Naturally, it is the opposite: it is your last chance to sell."
Of course. Sell your bubbled-up home before median house prices drop any further. That should make perfect, indisputable, incontrovertible sense. It should…but, then again, there's this misguided notion floating around the U.S., especially among those too young to know any better, that real estate, an institution as American as apple pie, never loses value. To lose value, especially a substantial amount of it, wouldn't fit in with our happy ending mentality, you see.
The hard, unsparing reality is this opening paragraph from a recent Boston Globe story: "Boston-area homeowners trying to sell their houses are sharply reducing asking prices -- in some cases, by $100,000 or more -- in response to the sudden slowdown in the real estate market."
Remember, that's just at the start of this decline. Doesn't look like real estate is heading for a happy ending regardless of how unwilling people are to accept it. "Risks do not go down just because people do not see them. The more sure people are that they have nothing to fear, the less ready they are for bad news. And then, when it comes, they are shocked and appalled - and ruined." That was Bill Bonner again, and, sadly, he's dead on.
As I said at the start, we've got it good here in America. Fantastic, actually.
But our prosperity blinds us to the danger we're now knee-deep in. Tumbling Real estate, as it turns out, may be just the fuse. Analyst Gary North sees, among other ominous things, a recession ahead. "As the economy moves toward a recession-and it IS moving toward recession-the yield curves for various forms of debt will invert. Near-term interest rates paid by the lowest-risk debtors will be higher than the longer-term rates." These inverted yield curves, he insists, are the dead giveaway of an economic slowdown…and without a robust real estate or stock market to ride in and save the day, as one or the other have over the last fifteen years or so, it could be a serious one.
There's more. Our debt-riddled dollar is now getting mentioned in the same sentence as "default" far too many times around the planet - foreign nations are already thinking through end-of-the-dollar scenarios to keep from getting too badly mauled when the real thing actually happens.
Meanwhile the average American keeps whistling past the economic graveyard as if nothing in the world were wrong. Blame the media, at least in part, for this mental slumber. Today's TV, radio and print "journalists" amount to little more than corporate yes-men anxious to tell the boss - the American people -only what he wants to hear.
Even so, we Americans seem more than content to disengage the critical thinking parts of our brains in favor of more "Don't worry, be happy" days ahead. Fortunately, unless you're one of the many who've had a media lobotomy, you don't have to share their fate.
There's a time for gold and a time for paper-and this is definitely the time for gold. "We do not buy gold because we know there is bad news coming. Bad news always comes. We buy gold because we suspect that most people are not prepared for it," was Bill Bonner's astute observation.
Author Doug Casey agrees. "People eventually will panic into gold out of greed and fear; right now smart people are buying it out of prudence."
The message here is becoming increasingly obvious:
Gold can be your happy ending.
Kevin DeMeritt
www.goldcentral.com
March 15, 2006