Charlie Munger article at slate.com, America "Basically it's over" (loans, capitalism)

[John23]

A parable about how one nation came to financial ruin. - By Charles Munger - Slate Magazine (http://www.slate.com/id/2245328/pagenum/all/ - broken link)

Any Charlie Munger fans?

He has a great book about his investment decision making process and about various speeches he's given over the years (Poor Charlie's Almanack). Besides that and a few other things, you dont hear about him much (not as much as you hear about Buffett).

I wonder what Sorrowland is going to look like?

[floridasandy]

that is an interesting read!

i was entertained by two of the replies, "the banana hymn of the republic", and i agree with ignacio about the cause of this disaster.

bad decisions must be greeted with failure or lessons will never be learned.

[Grandpa Pipes]

A very key sentence that covers more ground that one might imagine.......
"A strong family-oriented culture emphasizing duty to relatives, plus considerable private charity, provided the only social safety net.

America now lacks a good measure of "community" that is required in a rural framing nations which America once was. This sense of "community" is the glue that holds every nation together over time.

Sadly, America is all about self today.

[hindsight2020]

Originally Posted by Tightwad

A very key sentence that covers more ground that one might imagine.......
"A strong family-oriented culture emphasizing duty to relatives, plus considerable private charity, provided the only social safety net.

America now lacks a good measure of "community" that is required in a rural framing nations which America once was. This sense of "community" is the glue that holds every nation together over time.

Sadly, America is all about self today.

This is very true. I keep on harping about the real meaning of the American Dream being "F.U. I got mine". Look at anything from housing, healthcare, employment and educational debates on this board and you'll see a very pervasive undertone of "if it doesn't affect me then I don't know what you're talking about". Americans go a long way to spout off abstract rhetoric on moral adjudication of issues such as abortion and financial frugality, but then turn around and disregard their very rhetoric when it is them that is faced with hardship or scarcity. We've become a very selfish and fragmented strata of people. I would be very reserved in attempting to use the word "society" to refer to America. We define our very self-worth by what socio-economic strata we can pawn off ourselves as to the rest of the street.

Another contributing factor to this social erosion comes from our labor construct. Job nomadism has taken full control over the labor landscape of this country. Short job life spans have become accepted as normalcy in this country. Homesteading, though still aspired to privately, is considered passé these days and scorned publicly among the working masses. Population centers are dominated by self-absorbed "family units" whose only thing in common with the other self-absorbed "family unit" down the street is the same employer they toil for that particular year. Heck, I don't even see the point of local news channels anymore; nobody's from anywhere! Even the newscasters are transplants JHC!

Then fast-forward the movie 20 years and you get threads on here about people struggling to find a place to keep the kids from getting uprooted again. Sick and tired of the moves, can't sell the anchor house 'cause the market didn't go up 10% a year like I demanded it to, life is tight, spouse is up on my grill about money, kids don't want to move away from grandma and their high school friend base, and I STILL don't know my neighbors of 7 years nor do I care since either me or him will be moving in a year anyways.... what a country.

And then we top it all of off by getting on a tirade about those lazy inefficient western europeans and their "immoral" homesteading, 35 hour workweek and subsidized healthcare and off-work-time for the nominal price of living two generations to a house, spending minimally on defense, and taking the train to go anywhere. Gimme a break

Newsflash: Hyper-productivity is not inherently virtuous. Slow the f down.

This all matters little, the standard of living in this country is resetting substantially in the next 30 years. If people had doubts we lived in an oligarchy as Americans, 2040 america will open most people's eyes to the overarching disparity of standard of living, and the real ratios between the haves and have nots. This quaint perception of the middle class standard of 250K home in the safe ethno-centric suburb with two new cars and a cheap commute to work, with kids in cheap and great school district, one-stop-shop college education to an above median income job with enough slop to repeat the story and adequately fund 401K with is all but over. This may seem hyperbolic, but that shift is HUGE. Simply put, the notion of a an affluent middle class is all but dead in this country, we're just propping it with credit but in 2040 that crap will be all but a history page.

The difference will be that in Brazil (curtain #1: the few rich, no middle, the rest poor outcome) or Spain (curtain #2: the mature welfare state outcome) people are not so classist so as to continue to cling on to self-interested adjudications that rebuke the viewing of things like health care as a utility, et al. Likewise, the economically-driven cultural norms such as multiple generations to a house are not viewed pejoratively. Job nomadism is viewed as value-detracting within these societies. Under-productivity is viewed as value-adding, for the given level of dispossession of the masses (i.e. if you're gonna be working poor, might as well live slowly while you're at it, not working three jobs like in America).

This is why it's over. Most will snicker at this outlook, but it's just a matter of time before they're consumed with that reality slapping them in the face. Maybe then 'community' will start becoming a principle of importance in their otherwise self-serving lifestyles. True to americanism, only when it hits us in the face we adopt change.

Conversely and to temper the discussion. If you find these changes acceptable (most obviously don't, since it defeats the purpose of hyper-toiling in America) then the outlook for the new american standard of living is not that terrible.

[Authenticity]

I like Charlie Munger. He is a great thinker and investor in his own right. For those who want a visual into what "Sorrowland" is going to look like, it is going to be like every other great society that came before and after it.

Ironically, a couple of weeks ago a gentleman from Foreign affairs has written a closely related article entitled "Complexity and Collapse". I have provided a link for those who are interested. By the way, Foreign Affairs is a GREAT publication (well...if you are some interested in public affairs).
Complexity and Collapse | Foreign Affairs

Plato once said "The price good men pay for indifference to public affairs is to be ruled by evil men."

Enjoy.

[John23]

Munger is a genius. His intellect is towering (as you'd expect from a billionaire).


YouTube - BBC NEWS Business Charlie Munger Boom and Bust Is Normal

Here's his "worldy wisdom" speech. It's probably one of his top 5 or 10 best speeches. It was in his book, poor charlie's almanack.

MungersWorldlyWisdom

[John23]

Originally Posted by hindsight2020

This all matters little, the standard of living in this country is resetting substantially in the next 30 years. If people had doubts we lived in an oligarchy as Americans, 2040 america will open most people's eyes to the overarching disparity of standard of living, and the real ratios between the haves and have nots. This quaint perception of the middle class standard of 250K home in the safe ethno-centric suburb with two new cars and a cheap commute to work, with kids in cheap and great school district, one-stop-shop college education to an above median income job with enough slop to repeat the story and adequately fund 401K with is all but over. This may seem hyperbolic, but that shift is HUGE. Simply put, the notion of a an affluent middle class is all but dead in this country, we're just propping it with credit but in 2040 that crap will be all but a history page.

Conversely and to temper the discussion. If you find these changes acceptable (most obviously don't, since it defeats the purpose of hyper-toiling in America) then the outlook for the new american standard of living is not that terrible.

With the adequately funded 401k, I think people may get back to managing their own affairs (in this community society). We have to wake up from this collective sleep we've been in for 30 years. And stop letting Suze Orman or Jim Cramer manage our money.

Why would you let investment funds, brokers, etc continue to skim 2-3% a year of your money (or more) in a declining society? The fees that the investment community makes don't match the underlying economic fundamentals of this country.

We're going to have to get back to the roots of money and debt in this country. Do Spain or Brazil have a payday loan problem? I don't think a poor person in brazil (living a slow life, not working 3 jobs) is paying 300-400% for loans.

Saw this today.

Payday lenders giving advances on unemployment checks - latimes.com

We're already in sorrowland. The maximum loan in california is $300, which is coincidentally about the average size of a california unemployment check.

[chet everett]

My goodness that transcript is blindingly hard to read...
And it would seem that if "stocking picking" has any sort of science to it at all the consistent returns to the unmanaged index would be clear.
It is not.
What does seem to happen is once a "stock picker" acknowledges that they've been luckier than they have any right to be they can move into the areas of operational synergy, expensive arbitrage and other exotic areas that protect their gains ...

[cdelena]

We are headed of the cliff…

“Transfer payments — unemployment, Social Security, food stamps, Medicaid, Medicare and other forms of government welfare — grew $231 billion last year to just over $2.1 trillion. Meanwhile, individual taxes shrank $325 billion to $2.1 trillion, slightly less (before rounding) than transfer payments.”

Investors.com - Gov't Dependents: The New Majority

[golgi1]

Originally Posted by Tightwad

A very key sentence that covers more ground that one might imagine.......
"A strong family-oriented culture emphasizing duty to relatives, plus considerable private charity, provided the only social safety net.

America now lacks a good measure of "community" that is required in a rural framing nations which America once was. This sense of "community" is the glue that holds every nation together over time.

Sadly, America is all about self today.

Of course.

An economic system (capitalism) is as much about group psychology as it is about economics. This country has been in a schism between the two for a long, long time. To preach die hard pure capitalism and family ideals at the same time is preaching two opposing philosophies, at their root.

Capitalism is the philosophy of the individual. Its the single hunter on the plain.

Socialism is the philosophy of the family. Families, by their very nature, are socialist units.

If the hunter takes a family, he has, by definition, moved a step toward socialism. If you want him to care about his next door neighbor, that is another step.

Through the magic of modern political structure, you can have a healthy mix, and still preserve a free and democratic society that has a median high quality of life. However, it is about compromise. Compromise that people of extreme wealth don't want to make.

If you insist on pure capitalism, societal cohesion and the psychology of the masses will pay the price. This becomes more evident the larger the population becomes. That this countries politicians and "conservatives" preach such strong patriotic (a value of the family, not the individual) rhetoric in everything that they say, but insist on eliminating all social support, demonstrates either outright manipulation of the people for personal gain or the intellectual inability to think through the socio and psychological conflicts of their positions. Inferior minds shouldn't hold office.

What type of world do you want to live in? In the deepest part of your psychology, do you want to view your neighbor as enemy or friend?

A mix is best, in my opinion, but make your choice soon, as this country won't survive, in the future, trying to do what it has done in the past century.

This is the deep and analytical truth of the matter.