Anticipation: Black Swans and Dark Days
While speaking with ABC News' Diane Sawyer Tuesday, Federal Reserve Chairman Ben Bernanke commented that the US is in a recovery, but that "it's far too early to declare victory". Bernanke: "The recent news has been good. But I think we need to be cautious and make sure this is sustainable. And -- we haven't quite yet got to the point where we can be completely confident that we're on a track to full recovery."
Among the main socio-economic headwinds facing the US economy, Bernanke and Sawyer discussed gas prices, unemployment, and the housing market. Bernanke: "Gas prices are -- a major problem." Bernanke noted that gas prices are a moderate risk to recovery. That being said, Bernanke also commented that "we'll probably see prices go up" through July owing to seasonal patterns. Bernanke noted that after July, "we should see some relief" with gas prices, but the Fed chairman also conceded that "that's...a guess."
With respect to the housing market, Bernanke commented that "housing remains -- a big concern for us." Bernanke: "So far housing is -- kinda still pretty flat." Despite "a few signs of progress", there is more construction in multi-family housing. Bernanke: "More people are moving into apartment buildings for example."
With more people pursuing renting over owning, does this mean that the American dream is being threatened? On that topic, the Fed chairman suggested that American dream remains intact. Bernanke discussed that the US still has the strongest economy in the world, but "we have a lot of problems". Bernanke: "We've got education issues, we've got health issues, we've got fiscal policy issues." Despite the fact that the economy will recover and the US will "continue to grow and be a world leader", Bernanke conceded that "we've got a lot of challenges".
Bernanke's recent comments on the US economy going forward highlight not only political and economic uncertainty, but also the hope for recovery. In this way, the delicate tripartite balance of Wall Street, Washington, and Main Street would appear to be at stake as consumers struggle with rising gas prices and prolonged unemployment. Despite fears of rising gas prices, it is significant to note that the price of West Texas Intermediate crude oil has declined from $110 per barrel in late February, declining two dollars on Wednesday to $105 per barrel.
Even in light of recent gains in the stock market in 2012, one cannot help but notice the black swans circling all around us. And even with hopes for a possible recovery, it's as if one cannot help notice a Kafkaesque Zeitgeist emerging in the US owing to political and economic issues. Whereas there are those of us who would choose to be optimistic in the long-term even with the specters of unemployment, rising gas prices, and rising living costs, one cannot discount the formidable headwinds on the horizon. And even then, we have to also take into account geopolitical and environmental issues that may arise in the near future. It is as if we can anticipate the next crisis despite various signs suggesting that everything is business-as-usual.
The Financial Times reported Tuesday on Pope Benedict XVI's visit to Cuba and its respective political implications. In pertinent part, the Pope commented while traveling from Rome, "It is evident that Marxist ideology ... no longer corresponds to reality." Pope Benedict XVI: "In this way we can no longer respond and build a society. New models must be found with patience and in a constructive way." The Pope's commentary on Marxism and the search for new economic models seems to reflect the underlying hope for (and subtle frustration in) constructing a new sense of global politics and economics while balancing liberty, growth, justice, and prosperity.
For me, the pontiff's words brought to mind my recent discussion on possible alternatives to capitalism and questions regarding the course of humanity. I recently wrote that "a fair and realistic socio-economic forecast would be to say that Marx's vision of socialism is roughly 100 to 300 years away from realization and Marx's vision of communism is between 500 to 1,000 years away from realization." Ergo, from a Marxian economic perspective, "there is reason to be optimistic going forward" whereas in theory, there remain a handful of economic booms yet to come.
Marxian economic analysis regarding the course of capitalism in light of the relations of production and the development of the productive forces may appear solid, but the problem is that Marxian analysis is substantively theoretical. In this way, one has to take into account the story of Easter Island. Where in theory the people of Easter Island could have progressed from ancient society to feudalism to capitalism, owing to the depletion of natural resources, war, and various other factors, the island's society collapsed while in the process of Marx's historical materialistic progression. National Geographic: "Scientists have long treated Easter Island's extinct society as a textbook example of a once thriving civilization that doomed itself by wiping out its natural resources." Thus, even with the optimistic hope of a few major booms left in capitalism's chamber in theory, there would appear to be practical limits and boundaries to historical materialist progression.
To say the least, it would appear that a day of reckoning of some sort is on the horizon. Given fears of inflation, unemployment, and gas prices, it doesn't take an economist to see that a black swan event could potentially derail any recovery in the US. But even then, in the aftermath of a black swan event (whether geopolitical, environmental, economic, etc.), one has to wonder what is next for the human journey. Commenting on the prospect of no-growth capitalism, MarketWatch's Paul Farrell recently wrote that "population control is now our No. 1 economic issue." Whereas the Pentagon has warned that by 2020 "warfare will define human life" owing to global problems, "we don't know which 'black swan' will trigger the awakening, but we do know something's coming to end mass denial."
Even with Farrell's recurring discussion on the prospect of "catastrophes, disasters, revolutions, wars, famines, [and] epidemics" in conjunction with a growing world population and fears of "doomsday capitalism", at the end of the day, nature has ways of striking a balance. The trick rests in anticipating the crises before they come and finding a sense of solace in that booms and busts will happen. That being said, if it is true that humanity must look to colonizing space within a century or risk extinction, the prognosis for the human journey appears dire.
Nevertheless, in terms of the human journey, given impracticalities of space colonization, maybe our world today is as it is supposed to be. I would go so far as to suggest that our current global predicament appears to be a bit too convenient of a "perfect storm"; in my humble opinion, the fact that we are facing this quasi-apocalyptic perfect storm while humanity is on the verge of not only leaving Earth and colonizing space but also expanding computing technology suggests that our predicament goes beyond mere humanity.
From a big-picture perspective, it could just be me, but our global quagmire looks too convenient; global catastrophe, overpopulation, economic collapse, technological growth...all of it -- historically convenient on a global level. Per science, our species began 200,000 years ago and human civilization began 10,000 years ago in a universe that is 13.7 billion years old -- a blink of an eye in the context of eternity. This discussion brings to mind Voltaire's quote, "God is a comedian playing to an audience too afraid to laugh." Perhaps there are factors behind the scenes that portend hope for humanity going forward. Who knows, maybe something bigger is going on that we're not aware of at this point in time. And maybe it will all come together in the end. Though various political and financial commentators cannot pinpoint what exactly is going to happen, it's as if they can sense that something big is coming, something big is on the horizon.
As is often said regarding dire prospects for the future, "Hope for the best, but prepare for the worst." In preparing for the worst, we can anticipate that some of those black swans circling the planet will at some point land and wreak havoc on the global economy. And while the Dow Jones Industrial Average is currently above 13,000, in the spirit of Carly Simon's song "Anticipation", as we anticipate black swans and dark days in our economic future, if only for the time being we might as well tell ourselves, "These are the good old days."
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