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    Default Are You a Doomer?

    Are You a Doomer?
    Editor's Note: Anyone looking for a comprehensive and well researched debunking of doomer thinking need look no further than this presentation by Gary Alexander, a self-described life long and 18 years ago reformed professional doomer. (Thank you iTulip member Sapiens for finding it.) Alexander goes into his personal 50 plus year personal adventures in doomerism, as chronicled by the books that appeared during his career, starting with the 1957 nuclear doomsday book "On the Beach" by Nevil Shute and ending with the economic devastation envisioned by James Dale Davidson's and Lord William Rees-Mogg's “The Great Reckoning” (1990). If you have doomers among your friends or family members, or if you suspect yourself as one, read on. iTulip community members will want to take the brief Are We Doomers? survey to measure the level of doomishness in our community, ranging from Mad Max Pessimists to Mary Poppins Optimists (average completion time: 2min 3sec).

    In critique, I prefer the already well established term "doomer" to Alexander's term "apocaholic." Second, as a co-author of a book americasbubbleeconomy published by John Wiley & Sons and covered by Kiplingers, I am compelled to object to its inclusion on Alexander's list of "doomsday books." I'd also scratch John Rubino's “How to Profit from the Coming Real Estate Bust” off the list, or if Alexander is going to keep it add Peter Warburton's scholarly "Debt and Delusion."

    Neither America's Bubble Economy nor iTulip are about doom. They are about the nature of the next inevitable financial market and economic setback, how one might reasonably prepare for and deal with it, including not buying into the press coverage that will appear during the event to give everyone the impression that things will never get better. iTulip additionally explores the social implications, as those bear not only upon the experience of the period but also the form that the recovery is likely to take, the opportunity in the crisis.

    iTulip readers are skeptical, not paranoid, and they don't like to be surprised by unseemly economic events, such as the crash of the stock market bubble from 2000 to 2002 and the slow motion crash of the housing bubble which began in 2005, especially as these events were predictable by reasonably observant people of average intelligence who do not suffer the Desperate Optimism of the Invested.

    We are optimistic in the long run, citing a few thousand years of human progress as our justification for that optimism. To the frustration of the majority of iTulip readers, iTulip's editorial position on global warming, for example, is on the fence. We do not go along with Peak Oil doom prophesies: too much lead time, too many solutions–such as conservation–already exist, and too much money to be made on solving the problem. Flu pandemic scares are BS.

    iTulip is not doomer's heaven.

    Latest iTulip Community "Are We Doomers?" Survey Summary Results:

    5.00 on the iTulip Doomer Scale (5.0 = Neutral +/- 3%) with 80 surveys filled 10:00PM EDT 6/20/07

    Take the "Are We Doomers?" Survey

    Paradoxically, many of the financial and economic risks that have scared doomers for decades, and which Alexander in his presentation below dismisses as failed forecasts for having not occurred–yet–will in the event contribute to the challenges we will face during the transition period we anticipate. Doomers often correctly identify the source of future crises but fail to understand the timescale on which they operate. Forty or fifty years may pass before the seeds of an economic crisis bear fruit, before an imbalance reaches its terminal stage and ends, and several smaller and resolvable blossomings often occur along the way.

    Alexander lists many "The Coming Fill-in-the-Blank Crisis" books which have appeared over the years, such as the "The Coming Dollar Devaluation" (1970) by Harry Browne and "The Coming Credit Collapse" (1974), by Alexander Paris. But he neglects to note that while these writers may have the timing wrong, the basic premises of their warnings–that credit cannot be expanded forever more rapidly than GDP growth and that currencies valued daily by the actions of a herd of speculators are prone to wild price swings–are essentially valid. We have warned readers about the implications of the credit bubble since 1998, and the folks over at the Prudent Bear longer than that. We also warned that the end was not near, that the credit bubble was likely to go on for many years, and spin off sub-bubbles, such as the housing bubble, junk bond bubble, and private equity bubble. Today those doomers over at the Wall Street Journal warn of an imminent collapse in their own "Coming..." piece called The Coming Credit Meltdown, and they're probably right. For the junk bond bubble, the end is near. Whether that will mark the beginning of the end of the credit bubble versus a credit bubble, only time will tell. The iTulip community tends toward a pessimistic view on this; a lengthy and established record of arrogance, corruption, and incompetence among economic and monetary policy makers does little to reinforce expectations of a happy outcome. Starting with the collapse of the housing bubble, followed by junk bonds, various flavors of securitized debt, the stock market, and the bond market itself, we not foresee a "soft landing."

    Doomer Porn

    Doomers occasionally choose the right things to worry about while mistakenly believing that the crisis each will produce is imminent, but just as often they worry about the wrong things entirely. They tend to see all threats as presenting an equally high level of risk, and soon. Y2K was a reason to buy gold and hole up in the basement with canned food and a shotgun, hiding from the soon to be wandering hordes of armed gangs searching for food. While millions of words of dire warning were being written about this non-event–we at iTulip joked about Y2K at the time–Islamic fundamentalists were planning the attack on the U.S. they made 19 months later that killed thousands of people as they went about their daily routine. That threat received very little press before the event.

    Doomers tend to overlook real risks in favor of the ones other doomers have already latched onto and are excited about. Reviewing Alexander's list of events below, notably absent is the one that iTulip first warned its readers about, the year 2000 stock market crash. He also discounts the economic impact of the housing bubble, even as each article of faith that argues for a benign outcome, from "there is no bubble" to "prices only go up" to "the sub-prime meltdown won't spread," is contradicted by unfolding events.

    I have theories about why doomers get the timescales of ongoing threats wrong, treat all threats as equal, and often miss the actual threats–what makes doomers tick.

    Doomerism is a narcissistic behavior rooted in childhood experiences that set deep in the doomer's psyche an unconscious expectation of their own kind of doom, such as sudden decline into sickness or poverty, or some other misfortune. They then project this undefined general sense of personal foreboding onto the world. This theory accounts for the selectiveness of doomers, why some obsess about economic doom prophesies, such as Peak Oil, while others dwell on impending public health disasters, such as bird flu. The selectivity likely relates back to the original causes, a family financial crisis versus serious illness. Or maybe Mom or Dad or both were doomers; they learned to obsess about future doom on their father's knee, in which case the focus of obsession is less specific, and moves from one doom de jour to the next, whatever is getting the most press at the time. This theory also explains why doomers get the timing wrong: dooming is not about understanding the nature of a dysfunctional economic or financial system process and how long it is likely to take to reach its turning point so that one might deal constructively with the risks. It's about the emotional impact of the idea of the threat, the drama of it. (Ok, so my mother was a psychologist and my uncle a psychiatrist, and I've done some research on my own. I recommend readers who are curious put Freud on their reading list. The concept of repetition compulsion applies to doomers, as expressed by one of my favorite Freud observations of neurosis: "The wish is father to the fear.")

    The final point I'll make is that we all have at least some doomer in us, yours truly included, and wealth offers no protection. Berkshire Hathway's Warren Buffett told Charlie Rose in a May 10, 2007 interview that the world his children will grow up in after he passes on will be a better place than the one he lived in, "if they survive" he added, grimly, and went on to cite various terrorism threats. Charlie moved the interview on quickly past Warren's doomer moment.

    As another example, I attended a venture capital conference in California last year where some of the most successful and well known VCs on the west coast appealed to entrepreneurs in the audience for ideas to deal with an inevitable global flu pandemic. SARs was in the press just then. John Doerr said, "It's only a matter of when, not if." He put his money where his doomy flu pandemic beliefs are, investing tens of millions since then. The managing general partner of another firm said he was building an energy independent off-the-grid home in the desert at the cost of several million dollars to avoid the flu pandemic chaos.

    These fears are unjustified. If you read any of the books on the last major global flu pandemic, which took place in 1918, it becomes apparent what caused it and why it can't happen again: the medical establishment knew little about the causes of flu and how to prevent its spread, and WWI created the worst political environment imaginable for rational and cooperative approaches to coping with the problem. This is not the case today. Today a chicken gets sick and millions are slaughtered, just in case. In 1918, hundreds of sick soldiers were packed into barracks where the flu went through and killed half of them or more. Then the Army filled the barracks up again, and another 50% died. It was horrific. Crowds were allowed to gather in public for parades, and weeks later thousands would be dead. Today, an outbreak of SARs in Honk Kong clears the streets of one of the most densely populated cities in the world. A few months later, Hong Kong is business as usual. It's not 1918 anymore.

    iTulip is about seeing our financial and economic world for what it is, rather than as what we'd like it to be, and that includes discounting one's unconscious doomer fears/wishes. While we try to get our readers to drop naive notions of efficient markets and the invisible hand, to understand that concentrations of financial and political power will always distort a market system, and that these distortions create asset bubbles and other perverse market conditions that eventually lead to crisis, we don't want our readers going off the deep end, either. We want our readers taking reasonable risks with their capital because otherwise you can't make money, while keeping in mind that shit happens–The Great Depression, WWII, the holocaust, the crash of 1987, the 1997 Asian currency crisis, the year 2000 stock market crash–so the old fashioned idea of saving a few bucks for a rainy day and staying out of debt is still a good idea.

    Personally, I've never made a dime off pessimism, but haven't done well on optimistic bets, either. Always it is realism that has made me money and served me well. While realism is as hard to achieve as any nirvana, it is important to understand that one's personal biases and prejudices, often unconscious, forged by personal experience, distort the world from the inside out as much if not more to our detriment than do the external actions of bankers and politicians upon us, although those actors are easier to identify and the vilify.

    Read on and see if you can identify with any of Gary Alexander's experiences. But should you read this and pronounce yourself a doomer and commit yourself to reform as Gary has, remember this: just because you're paranoid, that doesn't mean they're not all out to get you.

    - Eric Janszen – June 18, 2007

    Join Me in a Crusade for Panic-Free Living
    Updated for the Atlanta Investment Conference
    20th Anniversary Reunion, 8:45 am, April 20, 2007

    By Gary Alexander, Recovering Apocaholic

    Hi, I’m Gary and I’m a recovering Apocaholic. I am currently Apocalypse free for nearly 18 years. I left the church of the Religious Apocalypse in 1976, over 30 years ago, and I resigned from the secular church of the Financial Apocalypse in 1989. Yes, I still feel the urge to proclaim the end of all things, from time to time, but I white-knuckle my way to a history book for a little perspective, and then I breathe easier. If you wish to join AA, the only requirement is that you give up the adrenaline rush of media-fed fantasies.

    Since I spoke to you last on this subject, in 1994, we have survived “Bankruptcy 1995” (the original epidemic of Hockey Stock charts), the Big Bang in Hong Kong, years of Y2K scare stories, a SARS epidemic, Mad Cow disease, Bird Flu, a real threat on 9/11, Triple Deficits (Budget, Trade and Balance of Payments), wars in Serbia/Kosovo, Iraq and Afghanistan, Deflation in 2003, Inflation since then, The Perfect Storms of 2005 (Katrina, Rita and Wilma, the 3 Witches of the Bermuda Triangle), and today’s reigning fears of Global Warming, $200 Oil and the Sub-prime Housing Loan Crisis Implosion. But before we go from today’s sub-prime fiasco to the ridiculous claims of imminent collapse, let me introduce the depths of my past addiction to the Apocalypse.

    I was born in July 1945, the day the first atomic bomb exploded in Alamogordo, New Mexico. That mushroom crowd has haunted our lives ever since. As a teenager, I became convinced the world would end before I was 30.

    Too soon old…too late smart, I was very, very wrong:

    50 Years Ago (1957) – The “Duck and Cover” Generation

    My apocalyptic addiction began 50 years ago, in the Year of Sputnik, when all of us Seattle-area 7th graders – mostly the offspring of Boeing engineers – were told that we must now learn more science and math, to close the missile gap with the Soviet Union.

    Back in 1957, the U.S. was the proud owner of 100,000 kilograms of U-235, in what was termed “45 times overkill” of the Soviets. But the Soviets had more missiles than we did. In that same year, 1957, the first underground nuclear explosion was set off near Las Vegas. In junior high, I soon became addicted to dystopian novels, like On the Beach, by Nevil Shute, a Briton who had moved to Australia, in order to be among the last on earth to be fried by the inevitable radiation cloud following nuclear Armageddon. The novel was adapted for the screen in 1959, directed by Stanley Kramer, and starring Gregory Peck as captain Dwight Lionel Towers of the USS Sawfish. The story was set in the near future, 1963 in the book (1964 in the movie), in the months following World War III. Nuclear fallout killed ALL life, with hot air currents killing off Australia last,

    The characters made their best effort to enjoy what remained of their life before dying from radiation poisoning. The film was shot in Melbourne, with a chilling ending of wind-swept but empty city streets there. That image has haunted me, to this day. I am convinced that this hopelessness sewed the seeds for the senseless rush to immediate gratification in the 1960s. With a world about to die, hedonism soon reigned supreme.

    In high school, I read Aldous Huxley’s “Brave New World” and the scathing exposes and novels of Philip Wylie (1902-1971), son of a Presbyterian minister father and a novelist mother (who died when he was five). Wylie wrote apocalyptic nuclear war novels like “Tomorrow” (1954), about the atomic bombing of two fictional Midwest cities adjacent to each other in the
    mid-1950s. One had an effective civil defense program, and the other did not. Later, I read his novel, “Triumph” (1963), another graphic description of the effects of nuclear war story involving a worst-case USA/USSR “spasm war,” in which both sides emptied their arsenals into each other with extensive use of “dirty” bombs to maximize casualties, resulting in the main characters (in a very deep bomb shelter) being the sole survivors in the northern hemisphere, the new Adam and Eve of a new creation.

    In the financial realm, I was also becoming convinced that America’s economy was doomed, especially after reading John Kenneth Galbraith’s “The Affluent Society” (1958), which said the rich get richer and the poor get poorer, while advertising creates artificial demand in the West. The same theme was echoed in Vance Packard’s “The Hidden Persuaders” (1957). He followed up with “The Status Seekers” (1959) and “The Waste Makers” (1960). Also popular was a book we young cynics all read, “The Ugly American” (1958), by William Lederer and Eugene Burdick. America was supposedly incredibly shallow and bigoted in the 1950s, soon to be rescued by the Liberated 1960s.

    P.S. The world is still a dangerous and violent place, but the most chilling example of violent death now is in Africa, with machetes. We’ve now gone over 61 years without using nuclear bombs against humans – thank God. Back in the late 1960s, Herman Kahn wrote “On Thermonuclear War” and “Thinking the Unthinkable,” in which he demonstrated that we can survive a nuclear holocaust, but that didn’t seem likely in 1962:

    45 Years Ago (1962): The Cuban Missile Crisis and “Silent Spring”

    The closest we came to a nuclear exchange was in October, 1962, during the Cuban Missile Crisis, in my high school senior year. That was one of the events that caused me to throw away a National Merit Scholarship and decide to attend a small church college that seemed to made sense of these global threats. Another impetus was the collapse of the global ecology, as demonstrated in another best-selling book that I read in 1962:

    Rachel Carson (1907-1964) published “Silent Spring” in 1962, based on a compilation of articles she had written for The New Yorker. Her book is credited with launching the environmental movement that culminated in Earth Day (1970), including a worldwide ban on the main villain in her book, DDT. Silent Spring was a Book of the Month Club main selection, spending several weeks on the New York Times best seller list. It was actively endorsed by one of my heroes at the time, a Washington State native, Supreme Court Justice William O. Douglas, as well as many other nature advocates in my school.

    As a result of that book and further research, I wrote an extended scientific article for a national magazine in 1970, linking the chemicals in DDT to many of the pest sprays commonly used in homes. I wrote other articles supporting the ban in DDT, which I am ashamed to say, has caused the deaths of millions of Asians and Africans since then. Many insect-borne diseases were on the verge of extinction in 1970, when the U.S. tied foreign aid to poor nations to their “voluntary” banning of DDT, to our great shame.

    Knock, knock!

    Who’s There?


    Armageddon Who?

    Armageddon outa here!

    In 1963, I threw away my future to apply to Ambassador College and join the Worldwide Church of God, in effect saying “Armageddon Outa Here.” The book that motivated me the most was Herbert Armstrong’s “1975 in Prophecy,” in which he showed from several perspectives that the world couldn’t make it past 1975. After four years of their college indoctrination, I became a leading writer, editor and researcher for a decade (1966-76) for their publications, turning secular trends into Apocalyptic rhetoric in magazines and in the electronic radio media, writing radio and TV scripts for the voice of “The World Tomorrow,” the late Garner Ted Armstrong. I didn’t have long to wait for ammunition.

    40 Years Ago: “The Population Bomb!” and “Famine 1975”

    Upon graduation from college, my job of predicting the End of the World by 1975 was made incredibly easier by a wave of new books proclaiming the inevitable end, based on the centuries-old (and easily discredited) theories of Thomas Robert Malthus, who wrote in 1798 that population grew geometrically, but food production could only grow in small (arithmetic) increments. In 1967, the brothers William and Paul Paddock wrote a book called “Famine 1975,” in which they said it was impossible for food production to keep up with population growth. The title of their first chapter said, “The Population-Food Collision Is Inevitable; It Is Foredoomed.” The Paddocks believed that the Malthusian formula was on a collision course and all we could do was starve a little less than others.

    Then came Paul Ehrlich’s “The Population Bomb” (1968), in which he opened famously by saying, “The battle to feed humanity is over. In the 1970s and 1980s, hundreds of millions of people will starve to death, in spite of any crash programs embarked upon now.” Writing in Ramparts magazine, he went even further, “Hundreds of millions of people will soon perish in smog disasters in New York and Los Angeles…the oceans will die of DDT poisoning by 1979…the U.S. life expectancy will drop to 42 years by 1980, due to cancer epidemics.” Hepatitis and dysentery would sweep America by 1980 and nearly all of us would wear gas masks. Over 65 million Americans would starve in the 1980s, leaving only 22.6 million starved Americans alive in 1990. In 1990, he incredibly justified his claims as being right – a trait common to Doomsday prophets. *

    * “The individual will frequently emerge not only unshaken but even more convinced of the truth of his beliefs than ever before. Indeed, he may even show a new fervor about convincing and converting other people to his view.” – Leon Festinger, “When Prophecies Fail.”

    In the meantime, Dr. Normal Borlaug was launching the Green Revolution, which has managed to feed billions more people on moderately more arable soil than in the 1960s. Instead of starving against our will, millions of us are trying to starve voluntarily – by dieting. Food is far cheaper, relative to the overall growth of the cost of living, than in the 1960s. From 1977 to 1994, food costs fell 77% in real terms. Grain is in surplus, despite 46 million idle arable acres of U.S. farmland, and 11 million idle acres in Europe.

    In the first 15 years after “Earth Day,” we made great progress against pollution. The amount of particulates spewed into the air fell by 64%, carbon monoxide emissions fell 38%, ocean dumping of industrial wastes was cut by 94%, and the number of rivers unfit for swimming dropped 44%. By 1990, cars emitted 78% fewer pollutants. Yet Lester Brown’s annual “State of the Earth” keeps saying the opposite, that pollution is growing.

    And for anyone who still believes in Dr. Malthus, I have one word to share with you: Chickens! Are they food, or are they population? Do they grow arithmetically, or geometrically? On the Delmarva Peninsula alone, 90 million cluckers live their nasty, brutish, crowded and short lives on the way the chopping block and your local KFC.

    The famine/population fear is older than Malthus. Confucius thought the earth was full, 2500 years ago. Romans thought they had “worn out the earth.” St. Jerome said “the world is already full, and the population too large for the soil.” Tertullian wailed about “teeming populations of Carthage” with “numbers burdensome to the world.” He saw death from famine, war and disease as “the means of pruning the luxuriance of the human race.” In truth, Rome was rich when it was crowded, and a wasteland when it was empty.

    35 Years Ago – The Club of Rome and “The Limits to Growth”

    In the early 1970s, Garner Ted Armstrong pulled me aside and gave me a challenging new project, which might take years to finish. He said that all the globe’s trends are getting worse, and that if we could only “feed all these trends into a computer,” we could predict the precise time of the end. Maybe it’s 1975, as we all still thought at the time, or maybe it’s a little later than that. After all, we can count the hairs we lose each day and predict when we will go bald. So we could do the same with all other trends–depleting resources, increased crime, nuclear overkill, chemical and environmental pollutants, etc.

    Ambassador College had a new IBM 370 computer and a huge programming team at my disposal, so I set out on this impossible project full of hope. Two years later, I gave up, but a bunch of secular statisticians in Cambridge, Massachusetts did not give up. They fed all the same kind of data into Harvard’s massive mainframe and came out with their magnum opus, “Limits to Growth,” modeling the future consequences of growing world population and finite resources. The study was commissioned by the world’s aristocracy, gathered into a group they called the Club of Rome. Limits to Growth was written by Dennis and Donella Meadows, among many others. The book used computer simulation to project a rolling Doomsday. (All this made me feel like less of a religious nut….)

    In short, the report’s authors projected that, at the exponential growth rates they expected to continue, all the known world supplies of zinc, gold, tin, copper, oil, and natural gas would be completely exhausted in 1992. They set specific dates for each commodity. President Carter later bought into this idea and published his gloomy Global 2000 report.

    Then, along came Dr. Julian Simon, who bet Dr. Paul Ehrlich $1,000 that the price of commodities would FALL, not rise, implying an expansion of resources, rather than a contraction of supplies during the decade in which they were all to disappear–the 1980s.

    By 1985, instead of running out of oil, an oil glut pushed the price down from $40 to $10 a barrel. Shortages beget higher prices and more exploration, not depletion of resources. In the extreme cases, shortages create new technologies. A wood shortage in England in the early 17th Century led to the use of coal and the birth of the industrial revolution. A shortage of whales led to the use and discovery of petroleum, and electrical lighting. The stench of horse manure in urban streets led to the invention of the horseless carriage.

    30 Years Ago – Global Cooling and “The Next Ice Age”

    My final TV script for Garner Ted Armstrong came in 1975, when I was about to leave the cocoon of the Church of the Apocalypse for a more mundane job at the University of Southern California. He wanted a program on Global Cooling, or the Coming Ice Age. In 1975, there were several covers in major news magazines about the Coming Ice Age.

    One example was Newsweek, for the week of April 28, 1975. It said that leading climate scientists were “almost unanimous” (sound familiar?) in their predictions of global cooling. Time Magazine had “The Coming Ice Age” on its cover, and the November 1976 issue of National Geographic had a lead article on the problem of global cooling.

    Later on, physicists combined the threat of natural cooling with nuclear war to predict a “Nuclear Winter.” Our future was clearly frigid. The trend from 1935 through 1975 was a gradual cooling of temperatures, since the Dust Bowl of the 1930s. (Most record-high state temperatures, to this day, were set in the 1930s, not in the 1990s, Mr. Gore.)

    One day in the control studio, Garner Ted Armstrong showed me a news clipping that pointed to the potential threat of carbon-dioxide emissions contributing to future global warming – a threat that currently assaults us in the daily media. He looked me in the eye, as his trusted researcher, and asked point blank, “Which is it – warming or cooling?”

    “With any luck, sir,” I quipped, “We’ll get both, and then they will offset each other.”

    He was not amused. But I was on my way out and no longer cared what he thought. I was happy that a peaceful new job awaited me at a less Apocalyptic California college. But that did not stop me from reading a series of best-sellers and coming back to the Doomsday business three years later. In the 1970s alone, all of this was “Coming…”

    The Coming Dollar Devaluation (1970) by Harry Browne
    The Coming Dark Age (1971) by Roberto Vacca
    The Coming Credit Collapse (1974), by Alexander Paris
    The Coming Bad Years (1978), but Howard Ruff
    The Coming Real Estate Crash (1979) by English and Cardiff

    The 1970s were also book-ended by two big #1 best-sellers telling the same story from the religious and secular angle: “The Late Great Planet Earth” by Hal Lindsey (1970) and “Crisis Investing” by Doug Casey (1979). They were the biggest best-sellers each year.

    25 Years Ago (1982): The Coming Kondratieff Collapse!

    I didn’t stay out of the Doomsday press for long. By 1979, I was back in the business, in Virginia, writing free-lance special reports for a leading direct mail marketer on a more secular version of The End of the World. As “Mr. X,” I wrote a series of reports on survival havens, banking secrecy, the collapse of the stock market and the fiat currency system. I was consulting editor to Survival Tomorrow, Tax Angles and Personal Finance (formerly the Inflation Survival Letter) at KCI. In 1982, my first special report for Jim Blanchard was on the coming Third World Loan Crisis, leading to the demise of major New York City money center banks, including the much maligned Citibank.

    In brief, I said, trying to re-arrange loans to Third World nations was “like re-arranging deck chairs on the Titanic.” At the time, most Latin American nations were following the Juan Peron model, as military dictatorships, starting in Peru (from 1948 to 1980), then Venezuela (1952), Colombia (1953), Bolivia (1964), Brazil (1964), Uruguay (1972) and Chile, under Gen. Auguste Pinochet (1973 to 1988). The giant of the region, Brazil, was ruled by a succession of four-star generals from 1964 to 1985, as their economy reeled from one crisis to another. Central America was in the same condition. El Salvador was under the military’s thumb for over 60 years, from 1931 to 1992. Then came military juntas in Guatemala (1954 to 1986), Honduras (1963-82), Nicaragua’s Sandinistas (1979-90) and Panama under General Noreiga (1968-89), so the situation indeed looked bleak.

    Latin America dominated the news in 1982, when I was writing that Third World debt threatened to bring down the region, and perhaps cause many major North American money center banks to fail. The major New York money banks and the U.S. Treasury of the late 1970s had loaned too much money to the “ABC” nations (Argentina, Brazil and Chile), who were each in default on those loans, after crippling back-to-back recessions.

    Like others, I said it was futile to re-arrange those loans. But behind the scenes, several New York bankers and Reagan-era Treasury officials quietly negotiated with the Latin American debtors, offering to reschedule their debts at lower interest rates, in exchange for some political concessions – such as free elections – which resulted in the gradual forced retirement of several military dictators. Throughout the mid-1980s, military juntas were replaced by democracies, the last one by a dramatic invasion of Panama in 1989.

    As a result of increased economic freedom south of the border, between 1987 and 1994, external debt as a percent of GDP declined by fully half in most Latin American nations: In Chile, external debt fell from 109% of GDP in 1987 to 42% by 1994. Argentina’s debt fell from 58% of GDP to 31%. The biggest basket case of the early 1980s, Brazil, reduced its external debt to the lowest level in Latin America, at just 25.8% by 1994. Even Mexico’s debt fell significantly, from 79% of GDP to 44%. We heard all about their high debt levels in the 1980s. But I bet your never heard the rest of the story. In 1975, there were only 31 global democracies, but now, we have over 120 democracies.

    By the way, Nikolai Kondratieff was proved right: The 1979-82 depression came exactly 50 years after the 1929-32 depression, but none of the Doomsday prophets noticed that.

    20 Years Ago – A Wave of “Coming Crash” Books (after the Crash)

    The #1 Best-seller in 1987 was Dr. Ravi Batra’s “The Great Depression of 1990.” Dr. Batra turned out to be right on his timing, but wrong on his geography. Japan suffered a decade-long Great Depression in the 1990s, but according to Batra and others, Japan was the last place this could happen. Many other best-sellers of 1987 were proclaiming the superiority of the Japanese management system, Japan’s work ethic, its currency, its wealth and ability to “buy up American assets” from Hawaiian hotels to Hollywood studios. (As it turned out, Japan only knew how to pay way too much for those assets.)

    Several other authors (including me) tried their hands at “coming crash” books, sadly published about the same time the crash happened, failing to warn anyone in time, and keeping them from re-investing in stocks, which would have been the smartest move at the time. In the next wave of “coming crash” books, the overextended American debts were the paramount threat. Harry Browne wrote “The Economic Time Bomb: How You Can Profit from the Emerging Crisis” in 1989. Harry’s “bullet points” predict this:
    • Be ready for both a deep recession and severe inflation.
    • Why deposit insurance doesn’t make your bank account safe.
    • How the trade deficit could trigger the next depression.
    • Budget deficits have reached a limit – causing the worst recession since 1937.
    • An economic time bomb is set to implode – one wrong move can set it off.
    Not one threat came to pass, despite deeper budget deficits and trade deficits in 1990-91.

    Then came “The Great Reckoning” (1990), also predicting a “Depression in the 1990s.” But the 1990s turned out to be the best decade ever for global economic growth and the stock markets of free countries, as the Dow gained 5-fold, from 2,365 to 11,723.

    It was at this time (1990) that I wised up and, mercifully, partook in the bulk of that rise:

    10-50 Years Ago DOW 10-Year Gain

    April 18, 1957 488.03 192.8%

    April 20, 1967 878.62 80.0%

    April 20, 1977 942.59 7.3%

    April 20, 1987 2270.60 140.9%

    April 21, 1997 6660.21 193.3%

    April of 2007 c. 12,500 87.7%

    60-Year Gain: 75-fold +7,400%

    For my grandchildren’s generation, I look for another 75-fold gain in the next 60 years, despite threats from Global Warming, the Housing Crisis, the Triple Deficits in America, and anything else Doomsday prophets dream up in the future. I have been inoculated against such fears. Please join me in abandoning the siren song of the Prophets of Doom.

    “Apocaholics Anonymous” Bibliography: For Further Reading

    (1) Proof that “Things Really are Getting Better”

    Anderson, Terry L., editor, “You Have to Admit It’s Getting Better: From Economic Prosperity to Environmental Quality,” Hoover Press, 202 pages.

    Goklany, Indur M., “The Improving State of the World: Why We’re Living Longer, Healthier, More Comfortable Lives, on a Cleaner Planet,” Cato Institute, 2007

    Lomborg, Bjorn, “The Skeptical Environmentalist: Measuring the Real State of the World,” Cambridge University Press, 1998, 352 pages + 153p of notes and bibliography.

    Moore, Stephen & Simon Julian L., “It’s Getting Better All the Time: 100 Greatest Trends of the Last 100 Years, CATO Institute, 2000, 265 pages.

    Simon, Julian L., “Population Matters: People, Resources, Environment and Immigration,” Transaction Publishers, 1993

    (2) Countering the Current Global Warming Scare

    Avery, Dennis T. & Singer, S. Fred, “Unstoppable Global Warming: Every 1,500 Years,” Rowman & Littlefield, 2007

    Horner, Christopher C., “The Politically Incorrect Guide to Global Warming and Environmentalism,” Regnery Publishing, 2007

    Michaels, Patrick, “Shattered Consensus” (2005) and “Meltdown” (2003)

    (3) How Media and Mass Psychosis Mislead You

    Chafetz, Morris E., MD, “Big Fat Liars: How Politicians, Corporations, and the Media Use Science and Statistics to Manipulate the Public,” Nelson Current, 2005.

    Mackay, Charles, “Extraordinary Popular Delusions and the Madness of Crowds,” 1841 first edition, 700+ pages

    Simon, Julian, “Hoodwinking the Nation,” Transaction Publishers, 1999, 127 pages

    (4) Currently Popular Doomsday Books in 2007: Random Sampling

    Arnold, Daniel A., “The Great Bust Ahead: The Greatest Depression in American and UK History is Just Several Short Years Away.”

    Brussee, Warren: “The Second Great Depression: Starting 2007, Ending 2020”

    Panzner, Michael, “Financial Armageddon: Protecting Your Future from Four Impending Catastrophes.”

    Rubino, John, “How to Profit from the Coming Real Estate Bust”

    Schiff, Peter, “Crash Proof: How to Profit from the Coming Economic Collapse.”

    Wiedemer, David & Robert, “America’s Bubble Economy: Profit When it Pops”

    In addition, Bill Bonner’s & Addison Wiggin’s “Empire of Debt: The Rise of an Epic Financial Crisis” (a 2005 best-seller) will be turned into a documentary film in 2008. Perhaps they will join Al Gore in the Apocaholics Hall of Fame in Hollywood.

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    Last edited by FRED; 06-20-07 at 09:56 PM.



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