Mish and I were unable to connect this week, so here's what was on my mind for that podcast.
One of the fundamental aspects of life today is that so many people are unable or unwilling to understand the nature of the predicament, which leads to all sorts of understandable, but unproductive, outbursts.
Put simply, people don't want their stuff to go away. This is perfectly normal and understandable; the only problem is that a lot of people's expectations are entirely unrealistic and were formed during a period of time when they were, individually or collectively as a nation, living well beyond their means.
Cutting back is hard, and necessary, and it seems that many people are unwilling to entertain either the prospect of having less or the inevitability of the coming decline in living standards.
On a purely economic front, the idea that one can forever borrow at a faster pace than one's income is increasing is obvious folly, one well known throughout history but somehow recently lost to many people and politicians.
As Wilkins Micawber, the fictional Charles Dickens character in David Copperfield put it,
Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
Of course, that was back in the day when your income and expenditures had to match in the moment, as credit was not widely available or used. So the effect was immediate. Spend more than you have and misery results.
To translate this into modern, credit addled terms, I suppose we would say something like, Twenty years living beyond your means on credit, result twenty years of satisfaction. But then twenty years of pure hell.
Well, as the people of southern Europe are figuring out first, hell is not a fun place to be. Unfortunately, there were so many years of living beyond their means that it has all come as something of a shock.
In Spain, more than fifty cities were crammed with throngs of people protesting the recent austerity cuts and the general slide in opportunities.
A wide swath of Europe is now embroiled in the sweeping resentment and anger that the fall in prospects has precipitated:
Violent clashes as austerity protests grip EU cities
Nov 15, 2012
Millions of EU workers have held a day of action against austerity, with protests in Spain and Portugal marred by violence.
by eexpo 
