The Downturnaround does not shy away from bad news. We stare into the murky, troubling depths and try to think of ways they might not be as dreadful as they look at first glance.
It was with this resolve that we read When Giants Fall, by Michael J. Panzner, one of the leading purveyors of pessimism porn. He has been much lauded for his prescient 2007 book Financial Armageddon, which pretty much nailed the 2008 crash and might have saved all of our 401(k)s, if only we’d known to listen. His résumé looks impressive. He’s worked at a bunch of Wall Street firms, including JPMorgan Chase, and identifies himself as specializing in “equities, trading, global markets and technical analysis.” Major doomsayers like Mark Faber speak highly of him, as does Barry Ritholtz, proprietor of the top-notch financial blog the Big Picture.
A problem for Panzner is that once you’ve cried “Armageddon!” what’s left to say? But like Hollywood, he refuses to give up a successful franchise, even if it means destroying the world all over again. And so his new book, When Giants Fall, sets out to be scary right from the cover, with the image of an inverted Statue of Liberty. The book turns out to be a hard, manly slog, not least because Panzner is a dreadfully repetitive writer. Among other abuses of the English language, he must now own the Guinness record for sentences that start “To be sure … ” Think back to college and the deadliest, most logorrheic professor you ever had. That’s this guy.
In the end, though, that’s the least of our problems with Panzner. Eventually you become inured to his hackery as the rank amateurishness of his “argument” is laid out. Here it is, and maybe you guessed it already: The world is going to hell. To prove this, he has patched together all the bad news that he has amassed in a clip file, and then added his own steel-trap analysis. For example:
“The United States is now literally dependent on the kindness of foreigners, especially China…”
Panzer is referring to the large share of U.S. government debt held by China, which is being relied upon to buy a good deal more of it to fund our copious bailouts and stimulus packages. While it is true that the U.S. runs the risk of maxing out the Chinese, kindness or lack thereof has not the slightest thing to do with it. The Chinese bought all that debt, and continue to do so, to bolster the U.S. dollar right along with their own export economy. They did not do it because they want to be our friends, nor will they stop doing it merely because they decide they don’t really like us after all. As long as it remains in their economic self-interest to hold U.S. debt, they will hold it. Period. The growing of their own “domestic-demand economy” to a level that will make them entirely uninterested in exporting to the U.S. is going to take a long, long time.
Eventually, Panzner works his way through all the world’s worries, including:
Peak oil
Loose nukes
Terrorism
The new “scramble for Africa”
A newly belligerent Russia
A newly belligerent China
A newly belligerent [fill in rogue nation of your choice]
Global warming
Depletion of global water supplies
Depletion of global food supplies
The end of the Utopian promise of globalism
We were a little disappointed that “killer bees” didn’t make the cut. That’s always been the Downturnaround’s biggest fear.
Panzner sees all of these adding up to a worldwide cataclysm, leaving us with war, famine, and the secession of Vermont. The picture is, to be sure, frightening but also familiar — because nearly every piece of “evidence” is drawn from major newspapers and broadcast media. Which is to say, we know all this. We just never decided to block out the rest of the world and see only this. Sometimes, we admit sheepishly now, we perused the “House & Home” section.
Let’s carefully look at one major world crisis: Could the European Union soon collapse due to financial stress? By all means, it could. But might the constituent countries find a way to support their weaker partners and emerge with a stronger union that has a chance to endure through the ages? Yeah, they certainly might. We have no idea how to calculate the odds of either outcome, and you know what? Panzner doesn’t either.
Along with this heavy artillery blast of pessimism, Panzner also means to be helpful. He wants to provide a “road map” for us. But his vision is vague, incumbent on all of us turning into some version of Rambo, loading up on gold and hatching our own escape plans (some hedge-funders are already doing this). Which is the most selfish, cowardly advice we can imagine. If all the world’s cooperative systems break down, the only plausible remedy is for the United States to pull together as a country and help each other through it. Take a ride on the 23rd Street crosstown and see how many of your fellow riders look like they might be able to morph into Rambo.
If the worst does come to pass and the U.S. were somehow forced to shut its borders tomorrow to all people, goods, and capital, we would be in sorry shape indeed. But the rest of the world would be a far uglier shambles. The price of Middle Eastern oil would drop below the cost of getting it out of the ground, sending the Arabs into apoplexy. China, with its treasuries and dollar reserves rendered worthless, would be dead broke and revert to pre-Cambrian times. The Europeans would throw themselves one last wild party and then commit mass suicide.
See how much fun this pessimism game can be? You can wipe out whole countries like pieces on a chess board. But what’s the point?
Still, the Downturnaround would like to thank Panzner for helping us formulate our own Armageddon plan. We glanced at his author photo, and the first thing that occurred to us was, we could take that guy. So after we strap on our bandoleers and close our hearts to the cries of widows and orphans, we’re going to hunt him down — he’ll have a lot of canned goods and platinum and possibly a motorized dinghy that we can commandeer and use to cruise off into the apocalyptic sunset. That’s our plan, and we welcome you, dear reader, to join our army.
