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Friday, January 02, 2009

closing thoughts on 2008: our bipolar world--the best of times/worst of times

Here we are, at the beginning of 2009. Try as we might to live in the present moment, the habits of looking back (and forward) are not shed easily. I sat down this morning to write out some quick thoughts on 2008, but this ended up going in a different direction. Let me know what you think..

So, 2008: the famous, paradoxical, insistently inconsistent Dickens lines ring true: it was the best of times, it was the worst of times.

(A google search on that phrase reveals that I'm not the only one to think in such cliches w/rt 2008--3rd hit is ABC News' 2008 Year in Review piece:

But the first hit, reassuringly (Google knows all), gave me what I was looking for--the whole opening passage, on Which is worth quoting in full:

It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to heaven, we were all going direct the other way - in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.
Charles Dickens, A Tale of Two Cities
English novelist (1812 - 1870)

A lot of that rings it winter in America? Or morning in America? It all sounds very much like the present period indeed (though can someone unpack that last segment for me? "the superlative degree of comparison only"?? I lost him there..)

The most obvious examples of the two sides of 2008's metaphorical coin were the US presidential election and the financial/economic crisis. The bipolarity of it all was enhanced here in NYC--living at the epicenter of the latter, but also within the capital of blue America. The best thing I read on this was Kurt Andersen's piece in New York Magazine this fall, titled, appropriately, "Whiplash City", with the subhead "In this terrifying, giddy fall, our days are numbered like never before. And somewhere between the polls and the Dow lies destiny" and the following cover:

Andersen's virtuosic opening paragraphs:

So seldom do we motley millions all think and talk about the same thing at the same time—let alone two great big things, let alone intensely and continually for weeks at a time.

Welcome to the extraordinary fall of 2008. As the imploded financial industry is nationalized, and we prepare to elect—can it really be?—an African-American intellectual the next president, New Yorkers are in a kind of breathless, Twittery mind meld about matters of huge historic consequence. Because Wall Street is (excuse the expression) ground zero for the present cataclysm, we are probably experiencing financial vertigo more acutely than most of our fellow Americans. And yet at the same time, because something approaching nine out of ten New York voters will pull the lever for Barack Obama two weeks from now, we are at the same time brimming with uncanny, yes, hopefulness about the imminent change in national leadership and policy. Every day, crazily fibrillating numbers (the Dow down 777 points, the Dow up 936 points) make us feel sick, while another set of equally amazing numbers (Obama well ahead in every national poll, and tied or better in three southern states) puts a song in our hearts. This data-driven combination of sky-is-falling dread and OMG giddiness—meth-laced Ecstasy, anyone?—is bizarre, unprecedented.

Oddly, I didn't follow the numbers as closely as many this fall. I didn't watch the markets on a daily basis, and I wasn't obsessively checking in the lead up to Nov 4. That is odd, since (a) my thinking has become increasingly quantitative and data-driven; primarily due to the fact that (b) I worked on as a sort of "quant" on said Wall St; up until (c) my employment was swept up and away in said cataclysm; and finally, since leaving the Street, (d) I've become increasingly interesting in matters of politics, economics and policy.

Andersen's essay is worth reading in full; and also worth revisiting in, say, 7 years. (When we'll be on the cusp of 2015 going into 2016...just wanted to see what those digits looked like in type. They may seem so far in the future, but that's how far we are from 2001, which does not seem like that long ago: the lazy days of Bush vacationing carefree in Crawford in the first 8 months of his presidency; the remnants of the bursting dot-com bubble, with the housing bubble was not even a gleam in investors' (or Alan Greenspan's) eyes; the planes hitting and the two towers going down, and all that ensued...)

Andersen's next paragraph:

Exactly seven years ago, we had already become accustomed to the cliché that the previous month’s terrorist attacks had “changed everything.” As we know now, they did and they didn’t. (Irony, for instance, did not die.) Seven years from now, I’m betting, we’ll look back and reckon that this fall changed everything at least as much as the fall of 2001 did, and maybe more.

One of the fascinating aspects of living in NYC has been talking to people who lived and worked here in the city in Sept 2001--many of them, in fact, worked downtown at the time. Here is more from Andersen: we discovered in the weeks and months after 9/11, there is some solace in the collective experience of disaster. Misery shared is preferable to misery alone, and an ebbing tide lowers all boats. It’s not just one overleveraged bank or brokerage in trouble, as it seemed at the start, but nearly all of them. Everyone who owns stock is watching their wealth shrink at more or less the same rate. And those of us who’ve fretted, passingly, about the growing extremes of economic inequality in America? That problem has been, um, addressed, by the free market: In just two months, the investor class has had its wealth reduced by $2 trillion or more. Thanks to the stock market, the rich got much richer, and now, thanks to the stock market, the rich are getting much poorer faster, in relative terms, than actually poor people.

A certain leveling is taking place. On the stoops and sidewalks of my Brooklyn neighborhood, there are lots of middle-aged men lounging all day long, comfortably pensioned-off former longshoremen and sanitation workers; I’m thinking that before long, the Upper East Side and Greenwich will acquire their analogous populations of robust, not-old guys without anything urgent to do every day.

I haven't quite noticed that in our Brooklyn neighborhood--but last time I took the bus out to Bread Stuy (way back in late Sept?), the proprietor (a wise, kind, and funny man) told me he'd definitely seen an uptick in non-rush hour business, plenty of new faces spending days in the cafe (a good counter-cyclical investment? a comfy, welcoming cafe in an slightly gentrified neighborhood, with reliable wifi and relatively affordable eats and drinks..)

Andersen nails it--I'm one of those (relatively) robust, not-old guys, lounging around with anything urgent to do. So going into '09, the question is, what to do if nothing is that urgent?

I'll close with Andersen's closing paragraphs, which circles back around to our data- and web-driven bipolarity: so many people these last few weeks deeply invested in both equities and Obama, I’ve been toggling like a madman, compulsively and constantly, between Web-browser tabs: from the fever chart of the DJIA on Google Finance over to the national polling page on Real Clear Politics, then back to the Dow, then to FiveThirtyEight for analysis of the new tranche of polling data, back to the Dow, then the electoral-vote map at Pollster, back to the Dow, Real Clear Politics again for the latest state polls, and so on, dozens of times a day. The psychological result, of course, has been a high-frequency bipolarity—thrilled, depressed, thrilled, depressed—powered by Google.

The steadiness of Obama’s momentum has reflected (not coincidentally, I think) the soothing, absolutely even-keeled steadiness of his public manner since the crisis began. He’s come across like the person in the stuck elevator or subway car to whom all the freaked-out passengers instinctively grant authority. And for those of us obsessing over every tick in the financial and political metrics, it’s additionally reassuring to watch at least one of the graph lines moving in a continuously positive direction.

This is something that was remarked upon a lot through this remarkable campaign--Obama's temperament, his even keel; how he himself says that he doesn't let himself get too high over the highs, nor too low due to the lows. A middle way...

Andersen continues, with some anecdotes that echo Thomas Friedman's morning-after column (or rather, if anything, it's Friedman echoing Andersen), which I also posted some thoughts about (here), and that also refer to South Carolina, which coincidentally also came up recently (see here):

I do leave the computer screen sometimes and get out of the house. Back on the first of the month (the Dow still up almost at 11,000, Obama already five points ahead of McCain), I had dinner in the Village with a friend of mine who lives in the South. He’s middle-aged, wears a suit and tie, and probably voted in the past for a Republican presidential candidate or two. He told me, amazement in his voice, that two different South Carolina pals of his—well-to-do Republican white men his age—had confessed to him they were planning to vote for Obama: one because Palin was a deal breaker, the other because he thought that electing a black guy president would once and for all absolve white America of its historical racial crimes. And so when the conservative pundits started mutinying—Kathleen Parker, who has implied she’ll vote for Obama because of Palin, and William F. Buckley’s son Chris, who endorsed Obama last week—it didn’t shock me.

And, finally, Andersen's penultimate paragraph::

I’ve been saying for years and years that the eighties never really ended culturally and politically—not the way the fifties and sixties and seventies did. But 2008 will surely turn out to be the conclusion of an era. Reaganism—the utter devotion to deregulation and hypercapitalism, the unbending antipathy to the federal government, American power as nothing but cheerful bullying—is over. We all enjoyed playing cowboy until too many of us fell off our horses or got shot. The most fundamental form of American exceptionalism—that is, among all developed countries, our peculiar predisposition to magical thinking about human perfectibility and business schemes and supernatural salvation—won’t disappear overnight. But in our economics and politics sane people understand that we’ve reached that Wile E. Coyote running-in-midair moment where reality kicks in and he falls to the bottom of the cliff. Gravity (like evolution, and man-made climate change) exists.

Here Andersen reiterates an idea that's been in the air since the morning of Nov 5--that we have finally, belatedly, arrived at the end of the Age of Reagan. It's an idea I first came across in Leonhardt's long Aug '08 NYT Mag survey of "Obamanomics" (which I'm still planning on posting an annotated summary of!). Leonhardt attributes the idea to Princeton historian Sean Wilentz (see here), but then it popped up, unattributed, in George Packer's similarly themed essay "The New Liberalism", which appeared post-election in the New Yorker. And if Andersen has in fact been saying that for years and years..well, it goes to show we need to pay more attention to what he's been saying (you could start with this and this, both also from NY Mag and from this fall, both about this moment in time, about Obama and NYC (resp)).

Also in the paragraph above is the idea of the end of American exceptionalism, of moving into a post-American world--those are both titles of books, the first by Andrew Bacevich, the latter by Fareed Zakaria, that I've added to the ever-expanding to-read list for the new year.

And the ultimate paragraph, which also encapsulates a theme that's been on my mind: who is to blame for this mess we're in? To quote Mos Def (listen here, at about 1:20 in): me, you, everybody. We all got into this together, and we'll have have to get together to get ourselves back on solid ground:

We are, maybe, becoming a more reality-based nation again. We can no longer get by on tautological self-love, believing we’re smart simply because we’re New Yorkers, or virtuous because we’re Americans. The debacle caused by our reckless, party-hearty overleveraging of the economy should make us realize that we have met the enemy, and he is us. And then, if we’re lucky, we’ll redeem ourselves by fixing the huge messes we’ve made, and thereby discovering that we really are the ones we’ve been waiting for.


jeremy said...

Nice piece of writing. Lot's of interesting ideas. I particularly find the idea that New Yorkers think they are somehow a little bit brighter than others interesting. How are all of those Junior Gekkos going to find validate themselves going forward? It seems to me that many are 'hoping' Obamanomics brings back the good times in some kind of way. I'm dubious and would recommend that they try to find the next thing.

ryan said...

good stuff suman ... i'd add that that the onslaught of numbers and quantative analysis has a dulling effect ... when bailouts are discussed in numbers that none of us can relate to (100s of trillions?????), unemployment steadily climbs, the market drops so many points ... these numbers are indigestible .... they mean nothing to me or anyone else .... then when you compare what even just the car bailout cost (which only steadies their internal economies till january's end) with other things such as education funding, a national works program, welfare, you realize that something is fundamentally out of wack .... i would also caution against the media's use of binaries in these situations... there are frequently more than two choices available outside the construct of either/or ... but media rarely illustrates a grasp of subtlety ... nice work though my man .. check out last sunday's metro section about the policing of nyc the last 8 years under kelly ... good good stuff and the article on VaR's in the magazine ...