Take the Pain

So, let us check in on the health of the patient. Yes, everyone's health is truly a snapshot - you have a cold today, perhaps a fever - and then you recover tomorrow. It is a truism that in order to stay alive, your body has to fight every illness and win - a single loss, and you're history. It is often said about medicine and the "healing arts" -- "the trick is to amuse the patient while nature does the healing." For untold ages, quacks and witch doctors have been selling their nostrums and chanting their weird mumblings in an effort to impress their patients as well as their snookered, overly eager-to-believe and pay relatives.

So what has changed? As a simple spectator on the presently proffered cures for modern life (the cure just happens to be the disease) -- more cheap and easy money to rescue us from the era of cheap and easy money -- I am reminded of the old Keynesian quip about how it is better to bury money and hire people to dig it up, than simply let the economy work on its own (yes he really did write that). If spending money is good, why is it better that somebody spends my money for me on something that I don't want -- or that money I don't want to borrow -- is borrowed for me that I will be required to pay back? And if saving money is a good thing, why not let me save my own money -- in an amount that I deem prudent for myself? Although we can always whimsically look back at the past and create a mythic golden age in our filtered recollections -- there was a better day and age when credit cards were the exception and not the rule -- revolving credit loans were not prolific and easy – people only borrowed for necessities -- not big screen tvs, computers, atvs (yes, I know these things didn't exist in the way back) -- and debt was something that you only considered for a necessity -- something that you could manage and afford -- and if, in the end you failed -- and whether you were an individual or an institution NO ONE BAILED YOU OUT. Ah, yes, the great golden age of the 1950s -- no, not a perfect world, but a world of higher minority employment than today (yes, check your history books), very few children born out of wedlock, thrift was important and people didn't expect someone else to rescue them when you messed up and you found yourself in a pickle because it was your own damn fault.

At that time, Government as a percentage of GDP was remarkably much lower, and when JFK became president at the conclusion of that golden decade, military spending was close to half of the federal budget -- not because war and guns are cool -- but because government was small and everyone understood that the government was limited by its constitutional functions -- one of which is maintaining and army and navy (yes, the constitution says nothing about a marine corp and an air force -- that is at least why it used to be called the army air force, I suppose). No, I don't want to go back to the fifties -- after all, I would have to be in bed by eight pm and living under parental tyranny -- as opposed to governmental tyranny – (the former I couldn’t fight, the latter I can – although neither it seems could I ever defeat). But I do want to return to those principles.

Yes, I am nostalgic for a better and simpler -- and more understandable world -- where people invested for value, people worked hard and saved - the only lottery was the Irish Sweepstakes -- there were no Indian Casinos, few credit cards, there was far more social responsibility -- and two parent households were the rule with both parents concentrating on raising good kids rather than abrogating their responsibility and unleashing little monsters onto the world. Yes, I would rather Leave it to Beaver, rather than Big Brother.

So, how do we get there (metaphorically)? I can’t answer all of that except for the financial part. I have come to the conclusion that we need to take the pain – at least short term – and that we break the fever. Please don't get me wrong -- I am no fan of populism - and the mob is almost always wrong. But the present opinion of the man in the street - whether he be assembled in a mob or not -- that propping up and, thereby, rewarding bad behavior in the end only creates more bad behavior - is right on. I am all for making people (individuals, business and government) pay for their mistakes. Well, does that make the rest of us suffer too if things get "really bad" (whatever that means) if we don't keep empowering the idiots and institutions - public and private that brought us here? Perhaps. But the best way -- and I maintain -- the only way to heal a market is to let it clear -- all on its own. I am very tired of smart people -- the self-appointed best and the brightest -- who claim they can see beyond the horizon and who are able to tell us the consequences of not doing something they have engineered. These painless society people are the problem. Rather than running on a slogan of "Change," the real truth seeker in the last election should have been holding up another one word sign: "Pain." Yes, I am all for "Pain we can believe in." The only way to get through this is to let inefficiencies die out, run their course and let the truly smart people (including the former smart people who have perhaps become rehabilitated and learned their lesson) step forward and reassemble and reignite that great dynamo called capitalism – a world in which everyone takes care of themselves and suffers for their own mistakes -- and where charity, not a welfare bureaucracy takes care of the rest who cannot effectively participate. That world has existed in the past and it could exist again.

At least that was the perfectly imperfect world of a once-upon a time America.

So, I end this where I began.

Take the Pain.

Doug Foley