Project for Philosophical Evaluations of the Economy |
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10000 and still bullish
Dialog with the Alter Ego on Dow expectations, first drafted on Oct. 15, published on Oct. 21, 2009
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Question by Alter Ego of Noah denkt™ (AE): What do you make of yesterday’s Dow Jones’ close above the
10.000 points mark?
Answer by Noah denkt™ (Nd): We are delighted and feel vindicated by that.
AE: Do you believe that there is still some steam left to lift the markets even higher?
Nd: Yes!
AE: Why is that?
Nd: Mainly because the real economy was never as bad as the psychological reaction to the financial crisis made
you think it was.
AE: So you do not believe that the economy was “falling off a cliff” during the time of the Lehman collapse?
Nd: It was culturally and psychologically falling off a cliff. But the fundamentals of the world economy (i.e.
productivity gains through technology, rise of the emerging markets) were still strong. The only true negative was
the short-term demise of the US consumer and the lack of trust in the financial markets.
AE: So in your opinion the government stimulus programs were not necessary
Nd: They may have been necessary for psychological reasons but less so for their bare economic impact.
AE: Do you still stand by your earlier prognosis according to which we will eventually see a double dip in the
economy?
Nd: Yes, we do. It will take some time though before that will happen.
AE: When do you foresee it happening?
Nd: When people least expect it.
AE: Why do you say that?
Nd: Because it seems to us that the hallmark of today’s world is a lack of perseverance in reigning convictions.
And since this staying power is so underdeveloped, we believe that the facts on the ground will continuously
react to that. In other words, we presume that the economy will ever so often make us pay for the inconsistency
with which we defend our views.
AE: So you feel that people change their mind precipitously?
Nd: Yes, we feel that there is a structural lack of backbone in today’s democratic and capitalistic societies. And it
is precisely this opportunistic maneuvering that is causing the unexpected turns in our economy.
AE: But why is it wrong to change your opinion if it is no longer born out by the facts on the ground?
Nd: It is not wrong to change your opinion. It is wrong to sell out your philosophical principles once they cause you
any pain.
AE: But who is selling out his philosophical principles? After all, Wall Street, for instance, continues to believe in
the superiority of the free market?
Nd: Well, their belief in the superiority of the free market wasn’t very convincing when they called out for
government help, was it?
AE: Calling for government help does not mean that you have sold out your free market principles. Much rather is
this government whose help you are soliciting an integral part of the very same free market that you are trying to
defend.
Nd: So you are saying that these investment bankers were in favor of Keynesian views all along?
AE: Well, they may not have been very outspoken in this, but the truth, is that they always believed in the need
for government, and in particular, central bank intervention.
Nd: You may be right on this one but our recollection is that Wall Street was predominantly skeptical about the
effectiveness of government activities, wasn’t it?
AE: Sure, but that doesn’t mean that it’s stance was altogether anti-Keynesian.
Nd: Well, to tell you the truth, we are no so sure about that. Actually we even remember that Hank Paulson and
Ben Bernanke were praised by big business representatives in the US for “not being ideologically boxed in” when
it came to developing a multi-billion-dollar rescue package. Doesn’t that suggest that standard views before that
were in deed “ideologically boxed in”?
AE: Whatever. The basic issue however is that it is simply unwise to be as principled as you want leaders to be.
After all, there is nothing in this world that is perfect and so it would be simply devastating to opt for an ideological
fundamentalism. Just witness the inhuman consequences of Islamic fundamentalism! Isn’t that living proof as to
how barbaric a strict practice of consistency actually is?
Nd: In other words, you believe that it is wrong to accept personal sacrifice for your views?
AE: It is wrong to accept inordinate personal sacrifice for your views?
Nd: What do you consider an “inordinate” sacrifice?
AE: Anything that involves risking your personal health; anything that could result in substantial poverty, anything
that could severely disadvantage the security and stability of your family life, and anything that could cause
unheard of psychological hardship.
Nd: In other words, anything that threatens your career and your prosperity?
AE: That is stretching it a little bit but it is not entirely off the mark.
Nd: Well, we consider this view as way too convenient and complacent in order to be able to live up to the
challenges that freedom, reason and democracy have in store for us.
AE: Why do you say that?
Nd: We say that because a true search of the balance of freedom requires such a tremendous amount of
personal analysis, experiments and deconstruction that this is in itself is already career threatening.
AE: So in your view accepting substantial disadvantages is part of a true sense of responsibility?
Nd: Yes. You simply have to accept at least a certain degree of existential risk in order to be able to live up to the
expectations of freedom, reason and democracy.
AE: And you believe that the majority tends to not accept this point of view.
Nd: That is absolutely what we believe.
AE: And so it is this then what causes economies to flipflop whenever its majority least expects that?
Nd: Correct.
AE: Okay, let’s see if your interpretation is correct here.
Nd: Yes, let’s wait and see.
Dialog with the Alter Ego on Dow expectations, first drafted on Oct. 15, published on Oct. 21, 2009
-----------------------------------------------------------------------------------------------------------------------------------
Question by Alter Ego of Noah denkt™ (AE): What do you make of yesterday’s Dow Jones’ close above the
10.000 points mark?
Answer by Noah denkt™ (Nd): We are delighted and feel vindicated by that.
AE: Do you believe that there is still some steam left to lift the markets even higher?
Nd: Yes!
AE: Why is that?
Nd: Mainly because the real economy was never as bad as the psychological reaction to the financial crisis made
you think it was.
AE: So you do not believe that the economy was “falling off a cliff” during the time of the Lehman collapse?
Nd: It was culturally and psychologically falling off a cliff. But the fundamentals of the world economy (i.e.
productivity gains through technology, rise of the emerging markets) were still strong. The only true negative was
the short-term demise of the US consumer and the lack of trust in the financial markets.
AE: So in your opinion the government stimulus programs were not necessary
Nd: They may have been necessary for psychological reasons but less so for their bare economic impact.
AE: Do you still stand by your earlier prognosis according to which we will eventually see a double dip in the
economy?
Nd: Yes, we do. It will take some time though before that will happen.
AE: When do you foresee it happening?
Nd: When people least expect it.
AE: Why do you say that?
Nd: Because it seems to us that the hallmark of today’s world is a lack of perseverance in reigning convictions.
And since this staying power is so underdeveloped, we believe that the facts on the ground will continuously
react to that. In other words, we presume that the economy will ever so often make us pay for the inconsistency
with which we defend our views.
AE: So you feel that people change their mind precipitously?
Nd: Yes, we feel that there is a structural lack of backbone in today’s democratic and capitalistic societies. And it
is precisely this opportunistic maneuvering that is causing the unexpected turns in our economy.
AE: But why is it wrong to change your opinion if it is no longer born out by the facts on the ground?
Nd: It is not wrong to change your opinion. It is wrong to sell out your philosophical principles once they cause you
any pain.
AE: But who is selling out his philosophical principles? After all, Wall Street, for instance, continues to believe in
the superiority of the free market?
Nd: Well, their belief in the superiority of the free market wasn’t very convincing when they called out for
government help, was it?
AE: Calling for government help does not mean that you have sold out your free market principles. Much rather is
this government whose help you are soliciting an integral part of the very same free market that you are trying to
defend.
Nd: So you are saying that these investment bankers were in favor of Keynesian views all along?
AE: Well, they may not have been very outspoken in this, but the truth, is that they always believed in the need
for government, and in particular, central bank intervention.
Nd: You may be right on this one but our recollection is that Wall Street was predominantly skeptical about the
effectiveness of government activities, wasn’t it?
AE: Sure, but that doesn’t mean that it’s stance was altogether anti-Keynesian.
Nd: Well, to tell you the truth, we are no so sure about that. Actually we even remember that Hank Paulson and
Ben Bernanke were praised by big business representatives in the US for “not being ideologically boxed in” when
it came to developing a multi-billion-dollar rescue package. Doesn’t that suggest that standard views before that
were in deed “ideologically boxed in”?
AE: Whatever. The basic issue however is that it is simply unwise to be as principled as you want leaders to be.
After all, there is nothing in this world that is perfect and so it would be simply devastating to opt for an ideological
fundamentalism. Just witness the inhuman consequences of Islamic fundamentalism! Isn’t that living proof as to
how barbaric a strict practice of consistency actually is?
Nd: In other words, you believe that it is wrong to accept personal sacrifice for your views?
AE: It is wrong to accept inordinate personal sacrifice for your views?
Nd: What do you consider an “inordinate” sacrifice?
AE: Anything that involves risking your personal health; anything that could result in substantial poverty, anything
that could severely disadvantage the security and stability of your family life, and anything that could cause
unheard of psychological hardship.
Nd: In other words, anything that threatens your career and your prosperity?
AE: That is stretching it a little bit but it is not entirely off the mark.
Nd: Well, we consider this view as way too convenient and complacent in order to be able to live up to the
challenges that freedom, reason and democracy have in store for us.
AE: Why do you say that?
Nd: We say that because a true search of the balance of freedom requires such a tremendous amount of
personal analysis, experiments and deconstruction that this is in itself is already career threatening.
AE: So in your view accepting substantial disadvantages is part of a true sense of responsibility?
Nd: Yes. You simply have to accept at least a certain degree of existential risk in order to be able to live up to the
expectations of freedom, reason and democracy.
AE: And you believe that the majority tends to not accept this point of view.
Nd: That is absolutely what we believe.
AE: And so it is this then what causes economies to flipflop whenever its majority least expects that?
Nd: Correct.
AE: Okay, let’s see if your interpretation is correct here.
Nd: Yes, let’s wait and see.
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