Another summer is coming to an end, which means soon it will be time to pay close attention to the market. Investing is a passion of mine–an intellectual exercise that allows me to gauge the gap between reality and fiction. I enjoy it immensely because  you’re essentially making a bet on your own judgment and you either make money or you don’t. It’s that simple. But to talk about the market is to talk about the national economy, and that’s my focus this week.

Last Sunday I had one of those revelatory moments that makes you say, “I’ve seen this movie before!” I was watching Alan Greenspan on TV. The maestro himself, still trapped in his phantom glory, pumping stocks on “Meet the Press” as if nothing had happened. With a straight face he told America that a rising stock market would do more to stimulate the economy than any other economic remedy coming out of Washington. Complete amnesia. I laughed so hard I almost peed on my pants.

Then I thought about it for a minute–the actual subtext–what it means to have a rising stock market and a tanking economy all at once. There are simply too many political lives on the line for the stock market to tank. This bitch is going up even if it leads to another collapse. There’s no other choice; we have to resort to fiction. Fictional corporate earnings*, fictional growth, and phony optimism. Rejecting reality requires wishful thinking and that’s what TV is for. At the end of the day nobody gives a shit about the poor and the unemployed. Stimulus part deux is coming and the cash will flow into the wrong hands again. Corporate America is sitting on $1.5 trillion in cash. And some of that is going back into the market to generate more bonuses.

Manipulating public perception is easy–it’s mostly a matter of language, editing, and repeating the same lie until it’s no longer a lie. This is how the communists used to do it. They told you the sky was red and you ended up believing it. I experienced it firsthand. We might not have gulags in America, but we do have mass media and consumerism. Forget the Orwellian nightmare; this is Huxley’s A Brave New World plus Viagra and iPad porn.

Then there’s the industry of hindsight. The litany of ex post facto explanations from pundits, think tanks, fellows, and political celebrities. To them everything was quite obvious–the causes, who is to blame, etc. Never mind that most of these assholes were the biggest deniers when the economy was on the brink in 2007. That’s how history gets re-written by people suffering from cognitive distortions. Now they are back in the media circuit, repeating their nonsense on TV, trying to sell the same old, dead ideas. What’s their secret? A) Act like you know what your talking about. B) Sound optimistic. C) Make the zombie audience feel smarter. It works every time.

Unfortunately, the narrative of the financial crisis has already been re-written in order to absolve the guilty and punish the innocent because that’s how it had to go down to preserve the sanctity of the system. Accepting the truth is inconceivable–it would mean having to admit to ourselves that we are living a big ponzi scheme. Think of the guy with six or seven maxed out credit cards, leasing an $80,000 BMW so he can score more pussy while living in a shit-hole with two other assholes. Preserving the status quo is imminent under these conditions. Who wants to look in front of the mirror? Yet, this is how you get the majority to pay for the greed and stupidity of others. But it’s more complex than that.  There’s a cultural legacy, too.

Since the end of WWII, the symbiotical relationship between democracy and capitalism in the west was associated with prosperity–both spiritual and material. The monumental collapse of the Soviet Union added more fuel to this myth. But once China proved capitalism could survive and thrive without democratic institutions, the West began to experience an existential crisis. Who needs democracy right? At the corporate level, a rising China meant both opportunity and competition; pressure to cut costs and maximize profits. It’s always about cash. Efficiency meant outsourcing, killing research, keeping wages low, and pushing for deregulation. Easy to achieve in state-run economies; harder to do in a “free” enterprise system unless the government and the political elite are complicit. This is the ecosystem in which we live today.

Like I said earlier, I’ve seen this movie before–it’s called the third world. As a Latin American I know a thing or two about populism, too. Tea Party? Sarah Palin? Try matching Perón, Getulio Vargas, or Hugo Chavez. Populism, however, is synonymous with poor and low-growth economies. Populism needs political and social volatility to survive; it feeds on ignorance, injustice, and corruption. Is this what America has been reduced to? An unequal and unjust society run by a bloated political/economic elite?

It pains me to think in these terms because this was precisely why I came to America twenty-five years ago. I wanted to live in a country full of promise and opportunity. I understand the frustration and pain that millions of Americans are feeling. And I know how easy it is to manipulate disillusionment. I’ve seen men tear themselves to pieces over crumbs and empty slogans. However, reciting the Pledge of Allegiance to the flag and rounding up every Mexican illegal in the country won’t solve our problems. That’s just a distraction.

We have forgotten our history–Jefferson, Emerson, Lincoln, Edison, and Roosevelt. This country always had ideals and people willing to fulfill them when others came up short. Despite Nixon’s attempt to bury the country, a group of young entrepreneurs in Northern California launched one of the greatest technological revolutions in the history of mankind. Steve Jobs, Andy Grove, and Bill Gates pressed on with their vision and transcended politics. That my friends is what we have lost. Vision!

The central crisis is not moral or ethical. I used to think it was, but I was wrong to place so much faith in human beings. It’s the system itself. No moral man can withstand the pressure of the system. To pretend otherwise is moronic, self-defeating. The poison is never the cure. The pin pong match in Washington is meant to be a distraction. The ideological pornography on TV and the social web feeds on our fears and anxieties. In a real sense Democracy itself in under attack and that’s the real danger. Keith Olbermann, Rush Limbaugh and Co. are not essential to democracy. But we’ve been conditioned to think they are. Shame on us for holding on to this fiction.

I see a lot of uncertainty ahead. To borrow from trading terms our lies have reached overbought levels and it’s time to sell. It’s time to short the pipe dream. Everything has become an empty spectacle, where magical realism has replaced logic. Government itself has become a joke and a source of ridicule. But this, too, has a history. The presidential office never recovered from the infamous blowjob, Katrina, and the recent bailouts. Cynicism is at an all time high. We make fun of everything and everyone.

The safe bet is to not believe a damn thing coming from the press release driven media. At some point these things will get sorted out because they always do. But we’re still a long way from reaching that point. The cast of characters who created this mess are still running the show. The powerful and the privileged continue to bet against us. People are going to have to realize that the system is rigged, that the stock market is not meant to work for them, that most of their assumptions about upward social mobility are no longer true, that you can’t lose what you never had. We’re going to have to learn to embrace real optimism, not the corporate manufactured kind rooted in a fairy tales.

*According to the Federal Reserve, nonfinancial firms borrowed another $289 billion in the first quarter, taking their total domestic debts to $7.2 trillion, the highest level ever. That’s up by $1.1 trillion since the first quarter of 2007; it’s twice the level seen in the late 1990s.

Recommended reading:

- The Biggest Lies About U.S. Companies: http://www.marketwatch.com/story/the-biggest-lie-about-us-companies-2010-08-03
- The Enthusiasm Gap and You: http://robertreich.org/post/904101338/the-enthusiasm-gap-and-you
- How America Can Create Jobs: http://www.businessweek.com/magazine/content/10_28/b4186048358596.htm
- The Jobs Report In Four Pictures: http://jessescrossroadscafe.blogspot.com/2010/08/jobs-report-in-four-pictures.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+JessesCafeAmericain+%28Jesse%27s+Caf%C3%A9+Am%C3%A9ricain%29

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Maximo Zeledon Max studies consumer culture and technology. He is specifically interested in how people interact in virtual environments and helps others develop a more reflective approach to technology and the internet. His background is in digital communication technology and the history of science and technology. He works for tech startups, NGOs, and non profits. Max earned masters degrees from The Johns Hopkins University and San Francisco State University. He blogs here: http://consumerama.tumblr.com/

Tagged in: analysis, financial crisis, manipulation, populism, summertime