Oil? America's addicted to
everything!
And our denial is sabotaging
the economy and markets
By Pual B. Farrell, MarketWatch: Feb 14, 2006
ARROYO
GRANDE, Calif. (MarketWatch) -- Addicted to oil? Just oil? You're joking? No,
we're a "nation of addicts," doing what addicts do best: Denying
reality.
In denial the brain can rationalize anything.
The more self-destructive an addict's behavior, the stronger their denial,
louder their protests, arrogance, bravado, even optimism: "I'm fine,
everything's under control!"
So when a Texas oilman admits 295 million
Americans are addicted to oil, as President Bush did in his State of the Union
address, that's historic!
I've worked professionally with people in and
out of recovery; politicians, doctors, celebrities, rock stars, pro athletes
and royalty, some in the Middle East, many from the Betty Ford Center. Addicts
will do anything to get the next fix or drink, oblivious of the destruction
around them. They create living hells, losing health, family, kids, careers,
wealth, and most of all, their freedom.
Nations are no different! This is not news. Two decades ago psychologist Anne Wilson
Schaef wrote "When Society Becomes an
Addict." Her opening line: "Our society is deteriorating at an alarming
rate." The symptoms: Greed, arrogance, ethical deterioration,
obsessiveness, rationalism, self-centeredness, tunnel vision. We're out of
touch, living with an illusion of control.
Flash forward. New
addictions: credit cards, obesity, massive deficits, iPods, plasma HDTV's,
McMansions, SUVs, outsourcing to India, buying plastic from China. Go deeper:
We have a near-religious addiction to rationality, logic, data, numbers, stock
quotes, productivity, interest rates, GDP, etc. Our brains gorge on an endless
diet of numbers from cable's talking heads, online breaking news, print
reports.
Information is our new mind-numbing drug, worse than cocaine
and heroin. Often distracted, in a stupor, narrowly focused on immediate
gratification, we lose perspective, integrity, even our identity; we're addicts
in a myopic bubble, in denial of the real world.
Paradoxically, America's addiction to
rationality and numbers is a major part of our brain's denial mechanism,
blinding us to unpredictable risks and irrational dangers that do not fit
neatly into our conventional wisdom. Please notice how we've programmed denial
into the thinking behind our economic and market forecasting systems:
First: Economic modeling. Economists use
elaborate computer models to simulate how America works. Past performance is
projected using complex mathematical formulas. But they cannot predict wars,
pandemics, another 9/11. By screening out these high-cost, unpredictable
variables, economists build denial into their forecasts, coating over
increasing dangers, then feeding us forecasts that are invariably misleading
and wrong.
We are a nation of addicts, in denial, and
our mastery over the economy and markets is an illusion, creating a false sense
of security. Wall Street, Washington and Corporate America are all addicted to
computer models that minimize or eliminate unpredictable threatening variables:
Global wars, pandemics, terrorist attacks on American soil, the very things
that could do the most damage to the economy and markets are not included.
Meanwhile, Main Street is focused narrowly on getting the next "fix."
And recently, we learned of an even bigger
threat: about World War III. Seriously, a war is being provoked by loose
cannons in America as well as abroad. Irrational, absurd and unwanted, fanatics
on both sides are prophesizing an all-out war in the next couple years.
For years America has heard religious
fundamentalists predict the "End of Days," Armageddon, an Apocalypse,
The Rapture, Tribulation, a final battle prophesized for the Holy Land.
Prominent evangelists believe it's coming soon. Many are so convinced their
rhetoric may be a self-fulfilling prophecy.
Until recently this was outside market and
economic thinking. That is, until Iranian President Ahmadinejad addressed the United Nations in October. His prophecies mirror those of
America's evangelists. Ahmadinejad not only hopes for but is trying to provoke
both the free world and Islam into war.
Iran's "End-of-Days:" Ahmadinejad
passionately believes that in the next couple years the world will witness the
"second coming" of the Mahdi, a messianic "hidden 12th
imam" of Shiite Islam, prophesized to appear at the "End of
Days." Ahmadinejad even embraces his "divine mission" to
"pave the way" for the second coming.
Get it! We have ideological fanatics on both
sides, like two alcoholics itching for a bar fight. Both sides want a global
war, provoking enemies and allies alike. Both pray for an irrational first blow
triggering the "End of Days," a WW III nuclear conflict between the
world's greatest cultures. Both expect fulfillment of ancient prophecies. Both
want a war to end all wars, and the end of the world as we know it.
Irrational? Probably. But remember, these
high-risk variables are not programmed into America's economic models and
market forecasting systems that Washington, Wall Street and Corporate America
throw at you every day. Yet in the hands of fanatics these variables can
trigger events that can easily overwhelm entire economies and markets.
Wake up America! Oil's only one minor
symptom. We are a nation of addicts, in denial of so many threats external to
our bubble world. Mentally we are at greater risk than with the irrational
exuberance of 2000. Except this time the threat is global, systemic and
potentially catastrophic, far outside the box of our mega-rational economic
models and market forecasting systems. Soon your denial system may no longer
work, reality will implode.
So please, be prepared for market losses far
greater than the $8 trillion we lost between 2000 and 2002.
Plan
conservatively.
Remember, when any addict "hits
bottom," the big thing they lose is their freedom ... the same holds true
for an entire nation of addicts.