This is a response to a deliberate smear by Welshman earlier, but it is not about that. He lied for his short term gratification, and does not have the decency or the honesty to admit it. He also has a large enough body of supporters that there is nothinig I can do about it. So noted, the community smears its own.
But for those people who want to know why my reaction is so vehement, let me outline the process of writing about economics, particularly professionally.
One investment manager I know constantly sends out bullish missives to his clients - and runs one of the most conservative investment portfolios I know, bond heavy, rebalancing only once a quarter, and highly diversified in low debt companies. He sends out such optimistic letters because his client base consists of skittish retirees who cannot afford any risk what so ever. If one were to read his emails, you would think that his portfolio was leveraged to be a beta of 2 against the NASDAQ.
The reality is that people's economic instincts are, like their political preference and sexual tastes, prone to change only very slowly. One must write to people based on that basic sense of identity, of being bullish or bearish, and one must present a balanced view of the risks and rewards. One reason that Welshman's smear job is so offensive is that I am very careful, and known for being careful, to balance the views of risk and reward - when describing a problem I am careful to emphasize what it does not mean, and that in many cases collapse or contraction is not imminent.
When writing to people who want political change, there is a natural bearishness of tone that people desire. The challenge is to speak to the anger, upset, pain and pessimism that people feel - and give them a different way to validate how they feel about the economy other than predicting immediate collapse. That is, people know where it hurts, but they often don't know how long the illness has to run, how bad it is going to get, or what the cure is. The challenge of writing on economics is to reach that emotional ressonance - to tell people "yes, the economic pain is not your fault".
The reason this point of ressonance is important is because people who feel bad blame themselves first, and then, if they don't blame themselves tend to believe that collapse is just around the corner. Sometimes it is, I've made two crash calls in 18 years. Both of them were right. I was advising people out of the dollar when a dollar still bought more than one Euro. As a bear, my track record is very, very good at not jumping into the water before the boat has arrived.
Instead, the challenge is to show people how what is causing pain to them is widespread and general, without necessarily reaching the point of producing catastrophe now.
The reason I am offended at Welshman's lies, and his smug demand that he be taken seriously, is that I spend a great deal of my time, day in and day out, explaing to people why, for example "peak oil" isn't going to cause a massive economic collapse right now. Why the problem isn't "peak oil", but ramping up demand and the peak of "light" oil combined with a structure that produces a bottomless demand for rent. Not just in articles, nor in blog posts, but in replying to individual emails by worried people.
This is a difficult balance to run - on one hand reaching out to the emotional stress that this economy has put on people - bright, ambitious and educated people who have had their lives thrown back tremendously. Hardworking honest people who are about to be shaved of their pension plans, and who may well have their social security benefits nibbled away at. There is a massive looting of the public going on, and an attempt to massive transfer wealth from the industrial cities, to the home building exurbanites. It leads down a hole which will take decades to get out of.
My own work often deals with short term events. Later today I have to sit down and prognosticate about the market's actions next week. An activity that is roughly like nailing jello to the wall. Fortunately last week I made some good calls. Today, I have to do it again. But that isn't the point. Other than a few spectacular weeks, people will not care what happened during one particular one.
And that, ultimately, is the important point. Business cycles come and go. We are not going to repeal the business cycle now or any time in the future. The question is whether we bob up with each wave, or fall behind. The question is whether we are making progress, not just for ourselves, but for the entire world, much of which is trapped in poverty so intense that people here simply cannot imagine whole countries living that way. "Good news" on the scale of human suffering that our current affluence rests upon is almost trivial. Several million people are going to die this year because of lack of bed nets, DDT and new medicines for malaria. The developed world can't afford to deal with this problem. Nor can it afford to hand out condoms in Africa, nor build a the schools to keep people out of destructive economic cycles on that troubled continent. The West can't even afford to rebuild Iraq, which it had no small part in breaking in the first place.
Hence, while there may be short term upward ticks in material prosperity within the developed core, it is impossible to believe that the West is all that rich, simply because it cannot afford to do what is in its own long term best interest. Borrowing, by another name, will come due.
And this is the challenge of writing for political economics: to write about the problems, without pandering to fatalism. Without making it so that people feel they can simply wait until the next recession to take political power, a problem that reaches up to the highest levels of the Democratic Party, nor that catastrophe is right around the corner. Instead, it is important to focus energy in such a way that people can live with the tensions and live with the problems - so that they can keep working on the solutions, regardless of what the ups or downs are, so that moods don't rise and fall with the stock market.
This task is enormously difficult, and smarmy and dishonest people liek Welshman who demand that we respond to problems that don't exist, and defend things we didn't say. Weaning people off of "crash now" scenarios is a delicate business, one has to get, and keep, their attention, even as one is explaining how a bubble can cook along longer than anyone expects. Some very high quality minds have given in to believing that we were going to have a massive crash soon, and lost their shirts on doing so.
This is why I have written at such length on how the rent for oil cycle works, and how it, on the margins, pushes people out of the industrial system and into the rental system. How this slow erosion will, eventually, reach a point of collapse, but not today, and probably not tomorrow either. There is a lot of ruin in a country, and that lesson is as true now as when it was said.
Hence, I do not accept or appreciate an unforgiveable slur on the work that I do, a complete mischaracterization of the efforts that I have made, both in terms of explaing the problems and in proposing positive solutions. It is also a blow to basic trust: there isn't some list fascist deleting diaries like Welshmans. There community has to do it itself - and instead the community promoted that diary and defended the smear. I can't stay here right now, because, quite frankly the community as a whole has shown they can't police themselves and aren't to be trusted.
And that is very sad indeed, because all self-government rests on people's ability to police themselves.