August 13th, 2010
When I was a kid in Sunday School, our teacher asked the class “How do you know if a prophet is good?” Hands shot up. “If the people listen to him” the first student answered. A second said “If his prediction comes true”, a most logical response. After shooting down similar answers from half the class, the teacher finally said “If his prophesy doesn’t come true.”
“Huh?”, the class said befuddled. “What’s he talking about?”
The teacher finally said “He’s a good prophet if the people hear his prophesy of doom and change so that it doesn’t happen. He fails as a prophet if the people don’t listen to him and they perish in the forewarned calamity.”
I can’t bear to hear any more from Nouriel Roubini, Robert Shiller, Peter Schiff or any of a handful of other prophets of financial gloom. Were they good prophets since they predicted way back when the housing bust, mortgage meltdown, or rush to gold and other safe haven investments? Actually, they weren’t good prophets because we either didn’t heard them or, if had, we didn’t believe them enough to act on their warnings. But yet they’re still around, still being given mics and still spewing their prophecies of gloom.
An on-going debate I have is whether this economy will ever get off its back and on its feet if the housing market doesn’t first hit bottom and start coming back. In other words, in this cycle of
- foreclosed housing,
- stubborn unemployment,
- fear of deflation,
- fear of inflation,
- lack of business spending,
- lack of bank lending,
- ballooning Federal debt,
- broken state and local budgets,
- tax increases,
- federal stimulus spending,
- burgeoning consumer savings rates,
- cash hoarding by businesses,
- no-win wars,
- shrinking $US and rising import prices,
- economic anxiety,
- economic uncertainty,
- economic malaise
which is the cause and which is the effect. If we array all these problems in a circle, which link, if removed, starts the disintegration of the whole circle and begins the path to confidence and recovery. If we can’t deal with them all at once, which item needs to be tackled first, which item might be easiest to fix and offer a fairly certain and high payback.
Hear the voice of FDR in his stirring first inaugural address (the text and an audio excerpt is available by clicking here) and you might hear a good place to start. As you read the speech you’re struck by how often his words then could have been spoken by a leader today:
“This great Nation will endure as it has endured, will revive and will prosper. So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself—nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance. In every dark hour of our national life a leadership of frankness and vigor has met with that understanding and support of the people themselves which is essential to victory. I am convinced that you will again give that support to leadership in these critical days.”
Without endorsing the Roosevelt’s political orientation (my political persuasion does leans the other way), I do endorse his optimistic and hopeful style of speech and leadership. We might be able to begin breaking the circle of our current malaise if we were better able to deal with our own anxieties and fears.
A good place to begin, CNBC and Bloomberg, might be to deny a mic to those doomsayers. It’s not like sticking our heads in the sand because we now do know what the problems are. We just need to begin focusing on the problems as manageable and solvable and believing that our future includes prospects of better days. And we could use an inspiring leader to keep us all moving together in the right direction.