Seemed Like A Good Idea At The Time

Joe Doakes from Como Park emails:

Reading a book from 2004 called “Dark Age Ahead” by Jane Jacobs, who has written about culture and cities and societal change.

When it was written, everybody assumed the house price bubble would never burst.

When it was written, everybody assumed that if the house price bubble did burst, the market would quickly correct itself making housing more affordable.

Nobody saw the endless string of stimulus packages and interest rate cuts to bail out foreign banks hoping to keep home prices propped up for a decade.

A whole string of public policy recommendations turned out to be based on bad assumptions. We see it now, of course. But at the time . . . .

So: what bad assumptions are we using today as a basis for public policies which, in 15 years, will have people shaking their heads saying “What a bunch of idiots”?

Joe Doakes

Mitchketeers? Go to it!

Posted

May 2, 2017

Business, The Economy and The Markets, The Great Recession

Mitch Berg

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4 responses to “Seemed Like A Good Idea At The Time”

The Big Stink

May 2, 2017

“Anyone who predicts the future based on the past neglects the present.” – Me. It’s a circular way of saying no one but God knows the script (oh, and network anchors, of course). The cynic, the doubter and the skeptic will always hold the title of Chief Predictor – because people assume the worst is going to happen. They’re not always right.

But they’re not always wrong, either. A prophet is rarely recognized in his own time.
mjb003

May 2, 2017

That people will want to live in 500 to 900 square feet rented places without owning a car and ride public transportation that takes hours to get to anywhere because climate change.
nerdbert

May 2, 2017

So: what bad assumptions are we using today as a basis for public policies which, in 15 years, will have people shaking their heads saying “What a bunch of idiots”?

Deficits don’t matter.

Right now they don’t, much, and that’s mostly because the US economy is by far the strongest in the world, making the dollar the reserve currency. But the US is hell-bent on hogtying itself with regulations and social spending that is crippling growth. Weakening the US economy relative to the rest of the world will shift the reserve currency status away from the dollar, lower the ability of the US to issue debt at rates which it can afford to pay; a real, historically average 6% interest rate will consume just about all discretionary spending.

I guess we can be happy that the rest of the developed world is even more stupid about spending and regulations. But Sweden and the other Nordic countries have wised up and gotten better and if that sanity spreads the US bacchanalia is threatened.
Mammuthus Primigenius

May 2, 2017

“So: what bad assumptions are we using today as a basis for public policies which, in 15 years, will have people shaking their heads saying ‘What a bunch of idiots’?”

I’m afraid that the only good policies that the feds have ever come up with are the nearly authoritarian policies that we used to win World War Two, and the policies that we used to win the cold war (though they almost bankrupted us and left us a world in chaos). It was very close to a decade between the failed KGB coup that ended the Soviet Union and 9/11.
People don’t vote for policies/politicians that will be good for the country middle and long term. They vote for the policies that will benefit them personally, or that they believe are best for the country.
That said, I do think that we will see a major shift in policies towards the end of the fifteen year horizon. By 2032 even the youngest Boomers will be at or beyond retirement age, thank God. And I was born in the last days of the Eisenhower administration, so technically I am a boomer (I think the definition is Americans born between ’46 and ’64).
We’ve been caught in the Boomer pop-culture time stasis for decades. When was the last time a new pop-music genre appeared? Not a new sub-genre (like hip-hop), but a new genre like rock ‘n roll? We are still listening to same pop music genres that appeared between ’64 (Beatles tour America) and 1981 (Blondie releases “Rapture” as a single).
The economic globalism that became the default policy of the elites of conservatives and liberals after the collapse of the USSR seems to be dying, but dying hard. What will follow is anybody’s guess.