Americans have always been an energetic and optimistic people. The vastness of the American landscape and the attraction of being able to make it big with a lot of hard work and a little luck attracted the restless and disenfranchised from around the world to America. Despite imperfections America was and remains an energetic mix of one ethic group after another in pursuit of their own personalized American dream.
That restless spirit imported to and bred in America likes and expects fast results, not only from their own efforts but from their politicians and government. Long term solutions to problems of any sort are not favored in America. Americas want, even demand, that problems no matter how complex be fixed fast. Like right now.
As evidence of the American fixation on fast results just look at the Obama government’s effort to fix the economy. An economic system that has imploded due to the use of excessive debt and financial leverage by the public as well as the private sector is being primed for a quick fix by adding even more debt and leverage. Probably some short term improvement will occur in some areas at the expense of a greater than necessary mess, pronounced disaster, in the future.
Most mainstream economics are still predicting a V recovery, others a U recovery. The prospect of a long crisis and a L shaped depression, similar to the path experienced by Japan, is a minority view. It is a view that few Americans can accept and certainly are not prepared for. After all, isn’t the US government on the case? Are they not spending trillions and trillions of dollars to “save” our economy and the American way of a consumer driven wasteful life?
Indeed they are and that is adding to the breakdown of the world’s financial system. A system built on the premise that debt is money does not function very well when the debt burden becomes so large that it can no longer be repaid. The implosion of debt is destroying a lot of money. Or what passed for money.
The typical American is hopeful that any crisis will be short lived but they are not stupid. They realize that their personal finances have reached the point where savings and paying down debt is a far wiser course than continuing to spend money they don’t have. For many the revelation has come too late.
The deflationary forces of the depression that we are in now are so great that for many Americans the reduction in wealth caused by tanking real estate values, a stock market that even with a fantastic March rally is still 40% plus off its highs, and an end to easy credit, is leading to record bankruptcy rates. And to record rates of foreclosed homes.
Most Americans are still not willing to believe that the crisis could and probably will go on for many years. Their natural optimistic leads them to believe that by the end of this year, certainly in early 2010, happy motoring and shopping days will be here again.
Even those who believe that we will have to rebuild our financial system from the ground up and that the process will take many years before the economy will fully recover can not imagine an America where living standards are reduced by up to 50%. Americans are not prepared for a long crisis even when it is becoming increasingly obvious that a long crisis is what we are faced with. It is not possible in a highly competitive world to return to the cheap energy days upon which American wealth was build.
The collapse of the commercial real estate market and the closing of large regional malls will be a horrible shock to Americans. The spread of shanty towns across the nation and the sad plight of former middle class people who are now homeless will be poison to the American mindset. The frustration that will follow will be a danger to every politician. And to every banker and high profile executive. The private protection business is one business that is already booming.
The long crisis will bring many changes within America that we are absolutely not prepared for. In future articles I’ll discuss some of the changes that will be forced upon us and how Americans may react.
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