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The Disillusioned


Ross M. Miller
Miller Risk Advisors
February 14, 2011

This month's commentary was three months in the making, which should not necessarily be viewed in a positive light. The idea for the commentary came in a fleeting moment of disillusionment in December as winter weather began to sink in after the best spring, summer, and fall that I have seen in my 22 years in the Albany area. As soon as I graded the fall semester's last exam, I was off to Southern California to extend (artificially) my run of good weather. As I write this we are buried in over a foot of accumulated snow (down from two feet), which although not that much compared to much of the Northeast, when coupled with frequent subzero temperatures is giving me a bad case of cabin fever.

I have seen a lot of disillusionment, but fortunately little of it has been mine. The baby boomers that came before me, think of Bill and Hillary Clinton, were one giant mass of disillusionment. In a single moment in Dallas all the dreams of that generation evaporated. I remember where I was then, who does not, but I was too young to grok what had gone down. (Indeed, it would be another five or six years until I even knew what "grok" meant.) In any case, one person's disillusionment is another's enlightenment.

Generations of Xs and Ys later, the ranks of the disillusioned continue to grow. Disillusionment is such big business because it starts with delusions, which are in especially great abundance. When visiting with a SoCal fan of these commentaries (whose name is withheld to protect the innocent), I was instructed in the dangers of even discussing such delusions in this commentary. Apparently, there is a silent pact among my fellow humans that goes something like "if you don't burst my bubble, then I won't burst yours." What this means is that if I were to write a commentary that points out that there is no conceivable way that the governments of the United States (federal, state, and local) could ever collectively meet the financial commitments that they have out there in the form of debt securities, pension obligations, and health benefits under any reasonable set of economic assumptions, I will be one unpopular guy. I will not do this, however, because I am a responsible person and have yet to perform any analysis that would show that this is unequivocally the case. On the other hand, neither have I seen any credible analysis that would indicate answer reason for hope in the so-called long run.

Delusion loves company because if enough people share the same set of delusions those delusions can become a social reality, leaving those who fail to share the delusion out to dry. Or, as my putative boss at GE would say to me at least once a week, "perception is reality." The same holds in financial markets, which are subject to a multiplicity of expectational equilibria. The Fed and some segments of the federal governments are currently working to move the economy away from any bad equilibria in which everyone know that everything is falling apart to a better one in which everyone ignores the dangers and acts as if everything is proceeding on a path, albeit a slow one, back if not fine, to a new fine. In recent months, drinking this Kool-Aid has been the profitable path, so pass the smiling pitcher my way until we hit the next bump in the road.

Two things got me through the '60s and '70s in the relatively delusion-free state of mind that I have tried to maintain through the various sling and arrows: Mad Magazine and Jean Shepherd. My father introduced me to Mad when I was eight, much to my mother's dismay. (And to my friends' mothers' dismay as well, because I was the first kid of my cohort that had access to the mag, which made almost as popular as the guys with access to their father's stash of Playboys.)

Mad should have been called the Holden Caufield Journal; it exposed phoniness wherever it appeared in American society. Mad served as a potent antidote the manifold manipulations of media that used to be focus of the contemporary cable series Mad Men until it turned into a glorified, low-budget soap opera over the past season or two. Television and movies can no longer serve up the rosy, sanitized view of the world that was the norm in the '50s and into the early '60s because Mad and its numerous contemporary progeny (The Simpsons, South Park, etc.) have exposed the dark side of many popular delusions.

Jean Shepherd, who wrote a single article for Mad and who was the subject of one of my commentaries, specialized in exposing society's little lies in his extensive body of written work. Through his radio show, "Shep" clued a generation of teenage boys (myself among them) in on the cold, cruel realities of existence. Indeed, his typical story centered on the process by which some terrible truth was revealed. While the now-classic movie, A Christmas Story, which is derived from several of his short stories and which does not do Shep's work justice, the shattering of illusions is central to the story. Shep nurtured in his audience the belief that by listening to him that they were the cognoscenti and everyone else was just an ordinary shmoe. As a result, in a world where Facebook was not only inconceivable, but unnecessary, Shep's followers knew the secret handshake and in middle schools and high schools across the Northeast would eventually discover one another. We were many things, but we were not disillusioned because we had learned what to expect from life. By the time The Who's "Won't Get Fooled Again" started playing on the radio in 1971 we had long known that the new boss will always be the same as the old boss.

Speaking of the radio, my next commentary, "Back to Earth," discusses my rediscovery of terrestrial radio.

Copyright 2011 by Miller Risk Advisors. Permission granted to forward by electronic means and to excerpt or broadcast 250 words or less provided a citation is made to