Monday, September 14, 2009

At the edge of the abyss? not yet

You really did have -- for the first time in 80 years -- the initial signs of a classic panic. Everybody knew we were looking at the abyss. Treasury Secretary Geithner

But, whether the US likes it or not, the dollar reserve system is fraying; the question is only whether we move from the current system to an alternative in a haphazard way, or in a more careful and structured way. Joseph Stiglitz

This past Friday, September 11, was chilly and rainy here in upstate NY so I "pulled a Howard Hughes" - sat in front of a TV for hours on end (clothed, mind you, and swapping his pain-killers for a nice Pinot Noir, as I'm not that much of a purist)- watching hours of 9/11 coverage and a film, Apocalypse Now. As a former resident of the Big Apple who worked just around the corner from the Trade Center at the Chase Building, I'm always moved by those broadcasts. This time round, however, I was riveted by the dawning realization of both the "man on the street" and the TV announcers, of the gravity of that day's events.

Two programs, in particular, captivated me: the History Channel's 102 Minutes that Changed America and MSNBC's 9/11: As it Happened. The initial reactions of the "man on the street" to the smoke coming from the first tower was similar to that of a motorist driving past a crash- morbid curiosity. The TV personalities too initially exhibited a desire to see more, to get closer.

Using the abyss metaphor, the initial reaction of people was that it might be deep but most wanted a better look. If you've ever walked near the edge of a cliff you too might recall the desire to see just how far the fall would be. For most people, the nearer to the edge you get, the more likely are acrophobic fears to set in- curiosity is replaced by the sense that you might fall. For me, the "edge of the abyss" feeling only happens when you feel the need to grab onto something solid. You have to feel that you are at risk, and lose the desire to peer again. As the Buddhists would put it, you must be "in the moment."

This mental transformation was captured time and again that day. For some, this transformation occurred when the second tower was hit. For most, it occurred when the towers started to fall. People no longer wanted to get close, they wanted to run away, to get somewhere safe, to step away from that abyss and not look back.

I get that sense from Mr. Stiglitz's comment above. His mind is clear- the abyss is deep and all who fall will suffer negative consequences.

By contrast, Mr. Geithner's claim above of universal acceptance rings false. If "we" were all looking into the abyss there would be little resistance to reform. In my view, most are still edging closer, trying to get a better look. The moment when fear of falling forces one to grasp something solid has yet to strike many in policy circles.

Thus I suspect Mr. Obama's speech today will do little to change opinion. Reform will have to wait until we all truly peer into the abyss, feel that fear of falling and grasp onto the solidity of sound finance.