Malcolm Gladwell’s The Tipping Point: How Little Things Can Make a Big Difference is a book I recommend as it really captures the essence of how ideas, products, messages, and behaviors spread like viruses. Since most of my essays are devoted to our present national economic crisis, I’d like to view present events in light of Gladwell’s “The Law of the Few,” “The Stickiness Factor,” and “The Power of Context” presented in his book and ask a few questions. I think you’ll appreciate this because winds of the greatest economic hurricane to dash our shores are gaining momentum. This growing lack of confidence may well soon become unstoppable.
The Law of the Few
According to Gladwell, the success of any kind of social epidemic is dependent upon the gifts of socially connected people described as Connectors (people with a knack for knowing lots of people), Mavens (people gifted in accumulating special knowledge and information), and Salesmen (social persuaders). When the social epidemic is falling confidence in the US Dollar, Treasuries, and economy, the leadership of connectors, mavens, and salesmen plays a special role in pushing the epidemic to a tipping point (where the momentum is unstoppable). Who are these connectors, mavens, and salespeople who have precipitated the fall of confidence? Do they have inside information or are they simply gifted observers? Are any of them changing their tune? Celente, Roubini, Ritholtz, Shedlock, JohnGaltFla, and Taleb are folks I deem mavens. None of them think this ends this year.
The Stickiness Factor
The very thought of an American economic collapse itself is a message with resonating and memorable impact. The message continues to be reinforced when the likes of two of the three big three car companies GM and Chrysler file bankruptcy and big banks such as WaMu, Lehman Brothers, Wachovia, and Bear Stearns fail. People notice the precipitous drop in the value of their 401K retirement plans, spend less, invest less, and thereby cause other businesses to lose revenue. It becomes a pandemic of fear. Are the actions taken by the fed and the Zero administration designed to stop the fear or to address the root causes? Are their actions working? I think they’re trying to abate fear and I don’t think it’s working. Read the Charts sticky posted by HouseWolf, it's like an EKG.
The Power of Context
In a time when our nation is fighting war in two countries, being threatened by nuclear upstarts in North Korea and Iran, laughed at by the Chinese, and concern for the spreading instability between Russia and Georgia over pipelines, the possibility of a collapse and it’s probability become enhanced in the context of growing global uncertainty. Continue to read the posts of The Flying Dutchman and Housecarl.
People find themselves stuck with a tax debt they didn’t vote on. They find themselves owning car companies they didn’t buy. They find their rights constantly under attack. They see brutality shelled out by law enforcement. They see a Federal Reserve out of control. They see their bills rising and their incomes shrinking or vanishing. Any collapse will surely cause severe dislocations and unrest within. The unintended consequence could well be violent civil unrest. DOOMER DOUG has posted several opinions on how deep things could fall.
Is There a Way Out?
Trends, fads, and viruses eventually fade and die out. With respect to this economic virus, I don’t think we have even seen the pandemic phase hit yet. There is still a great deal of risky assets needing to be wound down. There are commercial real estate CDO’s about to implode, corporate earnings are still falling, and car sales are crashing! If anything, downward momentum is gaining force. The ‘green shoots’ are a myth concocted by the mind-control agencies serving milk toast and propaganda as news. Watch out folks. INVAR has warned us, their intentions are wicked.
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