The Great Tree Felling of 2023
Some reflections on a Saturday afternoon stroll
This installment is less of a current events blog with lots of links, but an attempt to communicate to you my state of mind ahead of what could be one of the most difficult economic events of our lifetime. I don’t know the best way to cope with what’s ahead, as I wouldn’t consider myself particularly spiritual in nature, just someone who likes to read stuff and learn new concepts and trivia.
There have been many moments these past three years that I felt a foreboding feeling about what lies ahead. I’m sure that many people had anxiety about what we were living through during the COVID lockdowns and the political and economic turmoil associated with it. However, I noticed that many people in my personal life had an attitude to the situation where they believed that it was a passing phase and normalcy would prevail. All they wanted was the chance to go back to dining out in person, visiting their children and grandchildren, fly on an airplane, or vacation in Florida without all of the restrictions and limitations. The desire for normalcy itself became a major factor in billions of people worldwide accepting things that were inherently abnormal: Masking and social distancing, closing of schools, eating in an outdoor enclosure because eating in a proper building was “unsafe” and compelling one’s employees to accept administration of an experimental vaccine. I did not think that after all of these intrusions on individual rights things would just magically be allowed to go back to the days of old. Yes some elements of our previous state of being were restored. We are allowed to travel, attend events, and live as a society again.
But in my mind this was not a sign that normal life has been restored. The phrase “this too shall pass”, which it turns out is an old Persian adage, doesn’t mean everything goes back to the way it was after a traumatic event; only that the event itself is temporary. For some time since the lockdowns I began to read some books regarding what an economic downturn would mean for the average American. I’ll share with you two in particular at the end. However, the main thrust of them was very simple: The United States of America is like an old prizefighter: sick, bloated, and mired in debt. We take our way of life for granted because the average American for four generations has enjoyed more prosperity than people anywhere else. Unfortunately too many Americans are hooked on social media, video games, and their material comforts to realize that our economy is heading toward oblivion.
A recent experience has reinforced this for me. This past Saturday my wife and I were walking home from the synagogue after sabbath services and were forced to hold on to our hats as the wind gusts violently tossed all sorts of debris around us while we crossed the street on our way home. We were soon walking up the incline of a block where our friends Phil and Anne* live and were considering waiting at their house for a little break. They weren’t there but would be walking home as well, and hopefully meeting us. But the wind gusts were so distracting that we passed up their house. Suddenly my wife noticed that on the other side of the street a massive three was laying on the ground pointing toward the house whose tree lawn it occupied. The branches reached to the outcropping of the roof and windows of its second floor, but were just short. We stood and gawked at the site, because only a few hours earlier we had walked the same way in the other direction and the tree had been upright. Now it was completely torn out of the ground the concrete curb of the tree lawn significantly degraded. Soon neighbours poured out into the street. Phil and Anne* happened along at this point as did another couple that we knew. Everyone was marveling at how this thick sturdy tree had in the space of minutes was now laying there. Really there was no reason to stand around, the tree obviously could not be replanted and none of us could do anything about it anyway. So we continued home.
The next morning my wife and I drove to do an errand and rounded the block where we lived only to see yet another tree had fallen. This one had fractured a few feet from the base and had fallen away from the house and spilled out into the street. I would walk my dog along this sidewalk usually every day, but now my way would be blocked when we went out later that evening. Once again we could only bless our good fortune for being out of the way when it happened - the force of the tall 50’ pine would have either killed or severely injured anyone caught under it.
This is also the feeling of many the world over following the banking turmoil of the past month. Just like a tree with strong roots, most people depend on a bank to be a solid institution that will be there tomorrow so as not to worry about whether their savings will be safe. But a tree is only as strong as its roots. The American banking system’s roots are currently clinging for dear life as client fund withdrawals are exposing the lack of liquidity of many well known banks. Not everyone had heard of Silicon Valley or Signature banks until they collapsed like a house of cards; however Credit Suisse and Deutsche Bank were top brand names in their home countries Switzerland and Germany as well as abroad.
I think that it would be meaningless to end it here without getting to the point. A lot of the news today is focused on how words people say or awards not given to people of a certain group are a major barrier to the success of marginalized peoples. Really what this means is that if being called by a slur was our worst problem in life then it would still be pretty sweet, but it’s not. There are a lot worse things happening than a handful of morons in Hawaiian shirts throwing flyers on people’s driveways. Yet until a bank actually did fail no one in the financial media or regulatory bureaucracy was actually sounding the alarm to the public that many of the banks were exposed to massive risk as they invested in Treasury bonds ahead of rising interest rates. Then Silicon Valley collapsed and after two week the New York Times ran an article detailing how the Federal Reserve was aware of much of SVB’s vulnerabilities a full year before. So it sounded like a tree ramdomly falling even though it was known by those with access that this was bound to hapoen.
We don’t have the benefit of the information that the Fed or media insiders have. However, we do have the experience of the 2008 financial crisis and the flight of capital from the markets as major lending institutions collapsed. This time the carnage could be much greater, so much so that I believe Americans are in for an irreversible wave of degrading economic developments linked to inflation and geopolitical strangling. I do want to urge you to have a Plan B for your family on how to weather this crisis. It will likely take longer to rectify that 2008, the unrest will be much worse, and there will be a search for a proper scapegoat. The Plan B should involve keeping food supplies that can last through a crisis, as well as medical supplies and weapons if you’re able to legally obtain them.
I wish you all the best, and for all of our sakes that my readings and instincts have gotten this wrong.
*Pseudonyms used
Recommended Reading:
Bankruptcy of Our Nation by Jerry Robinson.
The Real Crash by Peter Schiff.