Cyreenik Says
The wildfires in Victoria province in Australia this February (summer, Australia time) have brought on another fine example of panic thinking. Next we get to watch for the blunder that will follow.
Here's an article about what happened there:
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Tuesday Feb 10, 2009 12:56am GMT
By Mark Bendeich SYDNEY (Reuters) - Australian police treated the country's entire bushfire disaster zone as a crime scene on Tuesday as investigators combed through a blackened wasteland to find clues to the culprits behind the country's deadliest fires.
Arson investigators began their work even as about 25 fires still raged across southern Victoria, including some of the hardest-hit areas north of Melbourne where so far 173 people have been confirmed dead, many burned in cars and their own homes.
"All of the fires have been treated as a crime scene," a police spokesman said, adding that arson investigators from up and down the country were descending on the disaster zone.
"We do believe they may have been lit deliberately, but we can't confirm it," the spokeswoman said.
Prime Minister Kevin Rudd has already branded the unknown culprits as "mass murderers" and Victoria state has ordered an official inquiry into the causes of the wild fires, which sent four-storeys-high sheets of flame racing through towns and farms.
Arson is often involved in Australian bushfires which break out every summer but rarely kill anywhere near half as many as the number of people killed in Victoria state's weekend infernos.
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That's the article. Sounds pretty serious, doesn't it? Sounds like drastic action is definitely called for. The prime minister himself is calling for finding the "mass murders".
But... here's an excerpt from a Brushfire Q&A that this same article links to... by the same author...
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By Michael Perry SYDNEY (Reuters) - Australia's deadliest bushfires eased on Monday, but the death toll rose to 126 as firefighters and families search for scores of missing in the twisted, charred ruins.
Here are questions and answers as to why Australia annually suffers destructive bushfires:
WHY DOES AUSTRALIA SUFFER BUSHFIRES?
Bushfires are a natural phenomenon in Australia, due to its hot, dry environment. Aborigines also traditionally burned the country for many reasons: hunting, communication, horticulture, ease of travel and for ceremonies. This constant burning controlled the build up of fuel and reduced large, intense fires. A mosaic of growth in different stages and types of vegetation development, which provided a range of food sources and habitats both for Aborigines and the animals they hunted.
European settlement has seen an end to Aboriginal burning and resulted in a build up in fuel for fires across Australia.
WHY DID THE BUSHFIRE INFERNO START?
Australia's deadliest bushfire resulted from a combination of extreme weather conditions.
Souheast Australia baked under a record heatwave, with temperatures over 40 degrees Celsius, for a week due to a stationary high pressure weather system. A decade long drought and hot, dry interior outback winds last week created a tinderbox. A series of small fires joined up into one big fire but strong southerly winds on Saturday night whipped it into an inferno, destroying towns and killing people.
COULD THE FIRE HAVE BEEN PREVENTED?
No. The Victorian fires started in remote national parks and spread toward rural towns.
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Whoa! Do you see the twist in logic that I do?
Could the fire have been prevented? No.
What caused the fire? Hot, dry weather.
Hmm... If the prime minister is chasing mass murders who started a fire that couldn't have been prevented... This smacks of someone who is talking from the heat of the moment, not from a cool head.
This is someone who has lost track of the big picture.
This is someone who is panic thinking.
In this case, I suspect the prime minister is echoing the thoughts of the Australian community in the heat of crisis. Australia has annual wild fires, but rarely so big, fast moving and devasting.
The wildfire this season is a novel condition, a surprise, and a scary condition. This makes it fertile ground for panic thinking.
The next big question is: will a blunder follow this panic?
We will get to watch and see. If the government starts catching "mass murders", then trying and sentencing them as if they are murders, then we are seeing blunder in action. In this case, in the form of scapegoats.
This bank crisis we are now living through started way back in 2007 as the SubPrime Mortgage Fiasco. All through 2007 and 2008, and now the beginning of 2009, it was supposed to go away soon. Every few months, the banks and the US government enacted measures that were announced as "restoring confidence" and thus ending the problem so we could get back to business as usual.
But the crisis solution has proved elusive. Conventional solutions, even big money ones, have not solved the problem. Instead the crisis has spread like ice cream under a hot summer sun.
And, it's now effecting a lot more people than bankers.
It's novel, it's scary and conventional solutions haven't worked. Panic and Blunder time are fast approaching.
The time is upon us for "feel good, feel right, solutions" that are, in fact, wrong and horribly expensive.
Watch for "The Colin Powell Experience" where cool-headed thinkers are discarded and hot heads with fast, emotionally satisfying solutions take their places.
16 Feb update: Bailout Blunder spotted
Something that seems to have slipped under US media radar, but is a top story on Xinhua, the English Language China News site, is the "Buy American" provision in the economic stimulus package being passed by Congress. I haven't seen anything about this in Google News, the Economist or the Wall Street Journal, but there are several articles about it in Xinhua.
Here's a summary from one article in Xinhua:
CEA: "Buy American" provisions to hurt U.S. economy, lead to trade war
WASHINGTON, Feb. 13 (Xinhua) -- The U.S. Consumer Electronics Association (CEA) warned on Friday the "Buy American" provisions in the economic stimulus package would hurt the U.S. economy and lead to a trade war. "The 'Buy American' provisions in the stimulus bill will signal to our trading partners around the world that the United States is returning to the bad old days of protectionism and economic nationalism," CEA President and CEO Gary Shapiro said in a statement.
Is this a case of, "It feels right", so right, it's too obvious to talk about?
Is this an "Of course, it's right... and we need to move fast!" choice?
Are there "cool heads" arguing that there's a problem here, but they are being actively ignored?
Ummm... sounds like Blunder Time is upon us.
Recessions start when old boom ideas run their course. Recessions end when new boom ideas are found and proven successful. In between, the recession itself, is a time of searching.
This last boom was fueled by a new invention in finance: the structured debt obligation, which created a new and huge market for home mortgages and other forms of debt. The housing boom of the 2000's was not the product of a new generation of home buyers, it was the product of a new generation of mortgage buyers.
The "rock" that turned to "clay" was the assumption that housing prices would rise indefinitely. Small dips were not a problem, but when a general decline kicked in that lasted longer than a year... that wasn't in the cards, at all!
So... now we need a new idea.
Expecting that we will go back to the steadily booming housing market of the 2000's is a bad idea. We shouldn't be aiming for that. We need to wait twenty to fourty years... for a new generation of buyers... before housing will push the economy up the way it did before 2007.
We need a new, big, positive feedback component.
The boom before the housing boom was a personal computer-fueled boom. Rising computing power was making business cheaper to conduct, so the more computers that were purchased, the cheaper the cost of doing business became.
Now that was a solid, positive feedback boom! But it came to an end with the Dot Com Bust of 2000. At that point most of the personal computerizing of business was done -- further advances would be slower.
At the same time the SDO Boom (Housing Boom) was happening in the US, China was going through a different kind of boom. The Olympics were coming, and China got into an Olympics Mania boom in the years before 2008 -- people of China just got generally excited, and that made the Chinese economy prosper. Now the Olympics are over, and it's hangover time in China.
The US is undergoing a mania hangover, as well -- the mania associated with the 9-11 Disaster is finally ending. The War on Terror is going to be replaced with other worries, and the ending of any mania is a hangover time.
So, the surprise, the thing that keeps the recovery from happening, is based on three problems:
A) We are searching for a replacement for SDO "boom fuel" in the US.
B) China is going through a post-Olympic hangover.
C) The US is going through a post-War on Terror hangover.
This is why this recession is becoming surprising long term and deep. There's a lot to recover from.
I'm watching.
Recessions are a time of dream-changing. The US, and China, and the whole world now, will have to rethink its dreams. We are going to have to rethink what is possible and practical. We are going to have to rethink our relations with other parts of the world.
As new, practical, dreams are picked and followed through on, the recession will end.
Bernard Madoff has proved himself a virtuoso. (This is the man who convinced thousands of other people to let him manage $70 billion of their assets.)
So, what is he a virtuoso of?
Not finance, the fact that there are thousands of investors with $70 billion lost says his financial virtuousity is in serious question.
In retrospect, what he was a virtuoso of was playing off people's instinctive thinking. He convinced people to trust him.
The second-guessing analytic thinkers are now pointing out that there were many warning signs of problems dating back years and years. He was investigated several times, and any analytic thinker would have steered clear.
But Madoff didn't appeal to people's analytic thinking, he appealed to their more comfortable instinctual thinking. He tickled people's old "Neolithic Village"-type thinking by convincing investors that they could become part of his "tribe", and that being part of his tribe would bring great benefit.
He played on the old "us versus them" instinct, and played it... well... like a virtuoso.
This is what Bernard Madoff was really good at.
That's what I have for February in Cyreenik Says.
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