All we have to fear is our optimism
Can optimism become a weakness? Can too much confidence become hubris, leading to imprudence? America seems determined to push our optimism to the limit, to provide future generations with answers to these questions.
Seen in terms of John Boyd’s Observation – Orientation – Decision – Action loop, excessive optimism creates a “locked orientation.”
The result is an Orientation that doesn’t accurately represent the changing external environment, and actions coming from such an Orientation are often inappropriate, ineffective, or late. Just like what we’re seeing today. [Chet Richards, source]
Once hubris takes hold, our very success works against us. Why play hard in a game we “know” we will win? Complacency kills in a rapidly changing, hyper-competitive world where, as Andy Grove says, only the paranoid survive. Our triumphant, incredible success in the post-WWII era world blinds us to the awareness that this was just one chapter in history.
Our optimism is our enemy
With this insight, so many incomprehensible things become obvious.
Why did we ignore so many warnings, given over such a long time, by so many prominent experts and institutions? (see this for a list showing a tiny fraction of the warnings). Optimism!
- Why did so many Americans ignore the many signs that the economy was slowing, dangerously slow? For example, in the almost 4 thousand of Internet posts mocking the warnings with “Dude, Where’s my Recession?” Optimism! (For analysis of this, see Making us dumber, chanting “Dude, where’s my recession?” and When did “Dude” predict a recession? How severe?)
- Why has our leaders’ response to the financial crisis been so slow, incremental, and reactive? Twenty programs, each too late and too small. Optimism! With success guaranteed, and recessions always brief and shallow (for the past quarter-century), our leaders concentrate on delicacy and precision with their medicine.
- Why have economists been so reluctant to acknowledge the magnitude and unprecedented nature of this downcycle? Optimism! Mainstream economists still tend to see this as a typical post-WWII recession. To open their minds to more extreme outcomes would push them to become Doctors Doom — “outcasts” from the safe community, like Professor Roubini.
We are like children playing on the beach who see a tsunami coming toward us. “Cool, look at the wave!”
An alternative perspective
We are about to suffer the consequences of past mistakes. At this point inevitable, unavoidable. Our last opportunities to even soften the crash passed many months ago.
Adults are realistic, looking at their problems with clear eyes and steely resolution. As did our forefathers in the Revolutionary War and the Civil War. Let’s hope we can put aside our bubble gum and beanie caps, and prepare for what lies ahead. A recession — even a depression — is not Armageddon. Just bad times, like those America has survived before.
With hard work and a modest portion of wisdom we can come out of this stronger than before.
For more information from the FM site
Reference pages about other topics appear on the right side menu bar, including About the FM website page. To see all posts about our new wars:
- about America – how can we reform it?
- about the Financial crisis – what’s happening? how will this end?
- about the End of the post-WWII geopolitical regime
- some Good News about America!
Forecasts and warnings on the FM site:
A brief note on the US Dollar. Is this like August 1914?, 8 November 2007 — How the current situation is as unstable financially as was Europe geopolitically in early 1914.
- We have been warned. Death of the post-WWII geopolitical regime, Chapter II, 28 November 2007 — A long list of the warnings we have ignored, from individual experts and major financial institutions.
- Geopolitical implications of the current economic downturn, 24 January 2008 – How will this recession end? With re-balancing of the global economy — and a decline of the US dollar so that the US goods and services are again competitive. No more trade deficit, and we can pay our debts.
- What will America look like after this recession?, 18 March 2008 — The recession will change many things, from the distribution of wealth within the US to the ranking of global powers.
- Making us dumber, chanting “Dude, where’s my recession?”, 3 June 2008 — Economic columnists do a disservice to their readers by ignoring the data showing a weakening economy.
- Another warning from our leaders, which we will ignore, 4 June 2008 — An extraordinarily clear warning from a senior officer of the Federal Reserve.
- When did “Dude” predict a recession? How severe?, 6 June 2008 — Why accurate economic forecasting is difficult, what we know about current conditions, and warnings from a top economist.
- Consequences of a long, deep recession – part I, 18 June 2008
- Consequences of a serious US recession – part II, 19 June 2008
- Consequences of a long, deep recession – part III, 20 June 2008
- A look at one page of what lies ahead in America’s history, 7 August 2008 — Death of an American industry.
- “The Coming US Consumption Bust”, by Nouriel Roubini, 6 September 2008
- The most important news of the month. Perhaps the year., 29 September 2008 — Warnings from our foreign creditors.
- Forecasting the results of this financial crisis – part I, about politics, 13 October 2008
- Forecasting the results of this financial crisis – part II, a new economy for America, 14 October 2008
- Miscelaneous news and thoughts about the financial crisis, 16 October 2008
- The Coming Global Stag-Deflation (Stagnation/Recession plus Deflation), 28 October 2008
- A look at the next phase of the crisis, as it hits the real economy, 31 October 2008
Please email me if you have a correction to this post. Or email me if you wish to make a comment and either have expertise in this field or are mentioned in this post. Send messages to fabmaximus at hotmail dot com (note the spam-protected spelling).
Also — you can now subscribe, receiving posts by email — see the box on the upper right.