Monday, December 31, 2012

Red Flag Warning: We just don't know.

Well here we are. December 31, 2012 and nationally, we’re standing about neck deep in fiscal debt about to wash us over the edge. It’s as if we are ten feet away from the edge of Niagara Falls, we’re resisting with all our might, but the torrent of debt is edging us closer and closer to that moment when, as a nation, over the falls we go. What then?

Just like the guy in the barrel going off Niagara Falls, we haven’t a clue as to the out come. Will our nation be smashed to bits by the economic fallout from crashing on the rocks below? Will we be lucky, just bounce around a bit, and then float to the top mid-stream as we sail triumphantly down the river? Those are the two extreme endpoints of flying off the edge of the falls. But maybe, and more likely, something in between will happen. We might get banged up pretty bad from the initial landing, take on a lot of water, bounce around at the bottom of the falls for a while, then slowly bob up to the surface where we’re caught in an eddy current of stagnant water off to one side of the river.  Surviving the fall, but going nowhere fast.

Here is where we find ourselves caught in the Law of Unintended Consequences (LUC).  Donald Rumsfeld, former Secretary of Defense, said it best about LUC,

“There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don't know. But there are also unknown unknowns. There are things we don't know we don't know.” 

LUC is an outgrowth of logic from one of the basic laws of physics that states for every action there is an equal and opposite reaction. We think we know what may happen if we dive over the edge, certainly most of us will be facing new tax requirements and many associated with the Department of Defense industry, government as well as contractors, will be hammered. But beyond these knowns, we don’t know what unknowns are lurking in that eddy current. The unintended consequences, the spin-offs from the initial action may be both good and bad. We just don’t know.

Some negative outcomes discussed by our pundit class, the talking heads who so accurately called the election for Romney, believe we will face massive unemployment, sharp rise in business failures, a increased inflation spiral, economic depression much worse the great recession, and the collapse of the student loan bubble, as well as, the housing market. But we just don’t know.

But might there be a silver lining in the debacle? How could that be, given the potential horrific economic conditions predicted?  Just maybe America will wake up from its debt-induced stupor.  Maybe our citizens will realize they can’t have it all for free. The free lunch promised to citizens, including our government, using easy credit is over and we have to go make it our selves.  Maybe our citizens will return to the founding principles that government can not, nor never will, provide for all our wants, but only for a few of our most essential needs.  Perhaps we’ll rediscover that spark of liberty in individual action that propelled our nation to its greatest heights.  Perhaps through hardship, austerity, difficult grinding day-by-day work we’ll find our way out and with that effort, find a new awareness of our America’s exceptional soul.

But we just don’t know. Good LUC in the coming New Year!

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