April 28, 2009
Yes, knowledge is power, but increasingly in a world where we are told far more than we need to know, knowledge is fear. Take the swine flu affair. A virulent disease which is ripping its way through Mexico is being played as if the Apocalypse is upon us. Yet, in the United States, a country where vaccines and drugs are readily available to blunt the symptoms of the disease, there have been only a handful of cases. On this basis, the price of airline stocks dip, oil prices go down and there is a widespread belief that our friend the pig will bring down the whole world economy.
The handling of this story by the media is intended to make us very, very afraid. But so was the media handling of the real estate cycle, and so it still is. We are coming out of a severe downturn in the real estate market, a price we are paying for a ten year expansion. These things happen, sometimes gently, sometimes harshly. The reporting of this story has ignored how cycles operated, focused on prices rather than sales and made a hero out of Bob Shiller, an economist-entrepreneur who is attempting to profit from a futures market that has yet to get off the ground. And we are being taught to be very, very afraid.
Now that the worst of the real estate trouble is behind us, I guess the pigs will make a suitable substitute for the media types.