Wednesday, September 11, 2013

The coming orderly panic

5 years after Lehman, how safe is your bank?
... and the next panic will be more orderly.
 I want to know who actually thinks that.  Let's look at the definition of panic.
sudden uncontrollable fear or anxiety, often causing wildly unthinking behavior.
So, yeah, people will be experiencing uncontrollable fear or anxiety, but they'll be more orderly about it without thinking about it.  This statement alone tells me we better start thinking about the whole "next panic" thing now, because we won't be thinking about it when it happens.  It's probably better to try to avoid the next panic altogether, but I doubt that's possible.  And when people start saying there won't be another panic, that will be the time I start to panic.  Only, of course, my panic will be well-controlled.

All of that aside, way down the page, the article makes mention of what, to me, was a major contributing factor to the last panic, and will most certainly result in yet another panic:
Two other areas of criticism are worth noting. The first is the critique that the real problem had little to do with banking excesses or the lack of regulation but with government policies, both from the Fed, Congress and successive administrations. These policies, such as those that promoted home ownership, distorted private sector decisions and led to asset bubbles and busts.
We can see this happening again in real estate, as well as higher education, and probably other areas as well.  This is what happens when the government adopts the "everybody gets one" philosophy.  This is why I expect the next panic to come much sooner and be much worse than anybody expects.  But, I'm not quite ready to panic yet, and who knows, maybe there never will be another panic, cuz, you know, we're that much smarter than we were before.  Just look at how many people are graduating from college these days.  We MUST be smarter.  And being smarter means our unthinking panic will just naturally be more orderly.

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