Well, it is not the economy, the “Dreaded Taper” or the market. The ten-year treasury closed Friday at a 2.71 % yield (up over 1% from where it was a month ago). It seems like the market has not only discounted tapering, which has not yet begun, but also some tightening on the part of the Fed. In the face of all this the Dow managed to close up 147 points Friday. I guess the employment numbers were good enough.
Save the unforeseen “black swan” event, it feels like we are in for a prolonged period of relatively good markets, fueled by ample liquidity, modest U.S. economic growth and the continuing industrialization and computerization of Asia (China and India in particular). By their nature, black swans are hard to predict, I have resolved not to worry about one until I see one. My concerns are of a longer-term, more secular nature, and I present this as a counterpoint to my normal optimistic, “What, me worry” tone.
One of my big concerns was articulated by noted historian David McCullough in a recent “60 Minutes” interview. He said in response to a question about one of his pet projects, history education in the United States:
McCullough went on to recount an anecdote about a young woman (bright, good family, good school), who came up to him after one of a speaking engagements. She said, in effect, ‘you know I really had no idea that the thirteen original colonies were just on the East coast.’ He was dumfounded and so am I. Remember, these are the future leaders, policy makers and electorate of our nation; and it is very scary in the context George Santayana’s admonition to ‘those who do not remember history being doomed to repeat it.’
In dealing with the 2008 financial crisis there were many calls to let the banks and auto industry go broke. Oh yes, please hold the stimulus. These were calls from people who did not know or had forgotten the lessons learned in the 1929 “Crash” and the “Great Depression” that followed. Because that is exactly how policy makers at the time dealt with the crisis….total laissez-faire. We ended up with 25% unemployment and did not fully come out of the depression until the wartime production of World War II (1941).
As an adjunct to this lack of historical grounding is a lack of real understanding of our constitutional form of government…what the document, The Constitution, actually says. The preamble gives us a fairly good summary of what the founders thought the Union should be about.
“We the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity, do ordain and establish this constitution for The United States of America.”
It would seem that we have already put into Congress a bunch of historically/ Constitutionally illiterate kids. I have a very tough time squaring what is going on in Washington today with the goals and dreams of the founding fathers as set forth in the eloquent paragraph above. If it were composed today, the preamble might read….promote our personal welfare, and secure the blessings of liberty to ourselves and people who think like us.
Now, I am not endorsing or panning the “Affordable Care Act” (a.k.a. Obamacare), but judging from the rhetoric surrounding the proposal, its formulation and its passage , there were a significant number of people in the Congress and the general populace that saw anything like it to be “Unconstitutional”. They must have missed that part about promoting “the general welfare.” There is much of this going on today with elected representatives, wrapping themselves in “The Constitution”, who either did not read the document or forgot what they read in civics class.
Again, in the debates surrounding TARP and the auto bailout, the level of understanding and basic economic knowledge exhibited by many of our elected representatives was appalling. What happens if these group gets complete control? Is this a “black swan” in the making?
Deficient historical and civic education in our country is one thing that really worries me.
What do you think?
PS General education is another huge secular problem which may deserve its own kortsession,com note.
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