Frame of Reference
Howdy, Bubba! Hey, if you're new around these parts, I just want to say how much I appreciate you dropping by! Oh, and you may want to subscribe to my feed. Thanks, and a tip o' the hat to ya!
[Note: For those of you who are very long-time readers of the Middle Zone (a tip o' the hat to ya!), you may recognize parts of this article from its original post back in Feb. of '07: Unconnected Bubbles. Current events brought it back to mind, so I thought I'd try my hand at repurposing an old post. Was it successful? As always, you guys get to be the judge.]
Regarding the current financial, um, blip…
In the midst of a - well, let’s call it what it is: a wave of hysteria - being spread by anyone connected to the media, I was reminded recently of the need to keep things in perspective. I mean, sure, there are definitely bad things going on. But do you really understand where the real problems are? Do you understand the ultimate consequences to any given course of action?
Well, if you’re like me (and if you are, well, sorry ‘bout that), then you’ll join me in saying, “Probably not.” I mean, c’mon; how many of us really know the whole story, from beginning to end? And you do realize this ain’t something that just “popped up”, don’t you? The truth is, it’s been percolating for quite some time.
Oh, sure; there’s political posturing going on - hey, that’s to be expected - but I ask ya: What are the real issues here? I’d be willing to bet very few of us really know all that much. And everywhere you turn, you get at best only bits and pieces.
The problem is most of us don’t really have a valid frame of reference with which to really understand how all the parts fit together - and more importantly - what to do about it. Heck; even the so-called experts can’t agree on a course of action (and by the way, when I say “experts”, I’m not talking about the U.S. Congress). So how in tarnation are we supposed to know what to do?
Let’s remember the first principle in solving a challenge is to first understand it. And in order to understand it, we need a frame of reference.
Living in Taiwan
I recall a three-month assignment at a chip manufacturing plant (sorry; that’s computer chips, not chocolate chips) in the city of Hsin-Chu, Taiwan back in 2000. To make things easier for me, my employer hired a car and driver for the daily commute from my hotel (which was just outside of town) to work and back every day. On weekends, I used taxis to get around because alas, the hotel was not within walking distance of anything interesting.
To be honest, it really felt like a somewhat decadent luxury - but I gotta admit; I really enjoyed being able to sit back and watch the entertaining scenery go by. But I mean, c’mon - how often does a plain ol’ city-dweller like me get to see something as exciting as, er, a truckload of live ducks go by? Practically… well, never!
Anyway, within a few weeks I’d pretty much memorized the landmarks along our usual morning and evening routes. And, there were definitely some interesting things to see along the way. But seeing ‘em every… single… day… well, it got kinda old, if you know what I mean.
One thing, though. I still had no real sense of where I was in relation to the rest of the city. Oh, it wasn’t that I now wanted to drive myself (which from all accounts would have been a very BAD idea). No, it’s just that the places where I worked, lived, ate and shopped weren’t really connected. I simply had no idea where they were in relation to each other.
There was no frame of reference.
Location, Location
After a month or so, though, the hotel’s isolated location got to me. I asked my employer to move me to a hotel downtown, and although it was a considerable “step down” in accommodations, suddenly it felt like I was smack dab in the middle of, you know, some interesting stuff. What a difference it made!
From then on, I went walking at least a few hours a day after work (because they would probably have been, you know, displeased if I had gone walking during work). Every day I’d step out the door of my hotel, pick a direction at random, and start walking. I’d stop at some small restaurant for dinner, and sometimes even enter a store or two to window shop. But for the most part, I simply spent the time absorbing the ebb and flow of life around me.
During the Chinese New Year celebrations (the last two weeks in January), many of the downtown streets closed to traffic. Practically overnight they became filled with street markets, essentially turning much of downtown into a giant, sprawling flea market. (Should you be so inclined, you can read about some of this in Chinese New Year Part 1 and Part 2.)
Paradigm Shift
One day, though, I experienced a sudden revelation (sound of angels singing, accompanied by a light shining down from above). Well, maybe not that kind of revelation. Just two blocks away from my hotel was the SOGO department store (similar to Macy’s but packed into a small-footprint, fourteen-story building).
Well Bubba, I’m here to tell ya, it quickly became my favorite hang-out (when I didn’t feel like sight-seeing, that is). The top floor was basically one giant food court, but the best feature was that the ceiling-to-floor windows provided an incredible panoramic view.
On my first visit, after carefully selecting a lunch featuring exotic foreign cuisine (a three-piece Kentucky Fried Chicken dinner and Haagen-Dazs ice cream, thank you very much), I spent considerable time just gazing out at the city.
That’s when it happened (sound of - well, you know).
Almost immediately I spotted familiar landmarks I’d seen on my daily drives. Suddenly I experienced a genuine paradigm shift: the entire city switched from being a series of disconnected areas, and became more like an interconnected map, laid out before me in 1-to-1 scale!
I could clearly see the places I was already familiar with, and more importantly, their relation to each other. I suddenly had a clear frame of reference that put all the pieces into their proper places. The city was no longer just a bunch of places; it had now become one big place!
What a difference a valid frame of reference can make!
Keeping Things in Context
Now, lest you think I’m any better off than most regarding what’s going on here, let me be the first to dissuade you from that conclusion. The truth is, I haven’t a clue either. But to be honest, that’s not what bothers me the most about the whole sordid mess.
No, what really chaps my, er, chaps is the tendency for people to suddenly throw up their hands and shout, “Let’s not waste time arguing about how we got here - let’s just fix it!”
I don’t know about you, but how many times has that strategy actually, you know, worked in your life? Show of hands? Anyone? (sound of crickets) Yup; thought so. Oh, maybe - just maybe, mind you - it might help solve one piece of the puzzle - for the short term. But then there’s the rest of it you gotta tackle, right? I mean, the rest of it ain’t just goin’ away now, is it?
So before we charge off in one direction or another, we need to first identify, and then address the root causes. That’s the only way we can a) solve this particular crises, and b) avoid doing it all over again at some later date.
So no, contrary to what you’re hearin’ on the radio and television, this is not the time to panic, folks. One thing for sure; the problem is likely not what you think.
Nope; this is the time to think rationally and clearly. Think about the consequences of your actions. Think about your goals. And whatever else you do; think.
Reactions, Anyone?
What do you think the problem really is? (And let’s keep this civil, folks - no name callin’, no eye-gouging, no spittin’, OK?) Can the problem even be identified without, well, finger-pointing? I mean, SOMEbody’s to blame, aren’t they? Or - could this be one we all share equally? What’s your take on it?
C’mon, y’all; I’ll set out the boxing gloves and let’s get at it!
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Photo credits:
Frame of Reference, by suavehouse113
Ben the Chauffer, by heyyu
Boxing gloves, by KayVee.INC
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17 responses so far
Middle Zone Musings is a comfortable place to stop, have a cup of coffee, swap a few stories and share practical ideas for the real world. I don't ask for much, just a bit of your brain every now and then. Have a seat, take a load off, and relax...
Robert,
I enjoyed reading your article - and I think you are absolutely right in saying that there has to be a frame of reference. Regarding your last question (what is the problem?) I beg your pardon for sitting back and listening to the coming discussion - being not a citizen of the United States nor being economy savy makes me refrain from actively participating.
Ulla Hennigs last blog post..Silence and Peace
It’s very difficult to get a handle on a long term fix for this one. The media is biased one way or another and inflames the conversation with end-of-the-world rhetoric. Politicians posture by playing the blame game - especially now, being so close to the election. As best I can understand, the “bailout” plan now on the table, designed to take home mortgages of unknown value off the books of lending institutions, is an idea that was proposed many moons ago. So I think the panic is more a timing issue - we were too slow to respond — than a panic caused by not having thought through the issue. Some people, many people, may not like this type of governmental intervention, but it appears that in the few days this bill has been percolating, new provisions have been inserted that make the whole thing more palatable to all constituencies.
Brad Shorrs last blog post..Trust Me
This certainly is a hot topic right now, and I totally agree that the nation and our leaders are rushing to “fix it” rather than understanding what needs to be fixed. We’ll all learn exactly how we got here eventually, but to fix anything that’s broken, you need to understand what the problem is, what really has to be fixed and then prioritize financially the order in which to address them.
Throwing money blindly at a problem never solves anything. Specific, targeted inprovement or correction projects can solve identified issues.
Sure, there are going to be folks who will be hurt by the current economic environment - many of them totally unrelated to the housing, banking, and mortgage industries. This is unfortunate, but isn’t unexpected when a bubble bursts (and big one at that).
I truly wish the mainstream media would be more responsible in reporting on this issue - working harder to bring the backstory and the reasons why we’re here. They could work to explain some of the technical jargon of the banking, credit, and finance industries as they talk about different institutions problems. Experts could be educating folks on what goes on in the mortgage industry and how the laws that govern these industries directly affect the products and solutions offered to high-risk customers. They should be doing this instead of fueling the finger-pointing… there’s enough blame to go around, but it hardly matters at this point.
Sorry for the long comment, but like many I’ve got my undervalued $.02 to add to the mix.
Regards,
Rick
Rick Mahns last blog post..Launching your brand, 3-2-1… ignition
Robert, it’s funny that the economic crisis dovetailed with my own personal crisis and reminded me of exactly what you’ve written today - perspective. We make decisions unable to see the consequences or impact (unless you know we’re God) - we try to assess as far as our mind can see (and that’s not always that far!), assume, plan and prepare but a series of seemingly innocuous decisions can lead to disaster. Then we find ourselves smack dab in the middle of a crisis wondering how we got there. The economic fallout as you noted did not just happen. It did not begin with the present Administration but in my opinion is the result of small actions and decisions that seemed okay when judged in a silo but ultimately contributed to a system crumbling before our very eyes. We may be in a crisis but I do not favor swift political action. I agree that we don’t know the whole story and piling money on has been known to be a poor fix. I mean, didn’t we bail out the airline industry a few years ago. Yea, that worked out really well! The sad, funny thing is that for many years “regular folks” have been suffering. There has been an ever widening gap between the wealth classes, and no one seemed to care. We blamed the poor and accused them of not taking advantage of opportunities or being lazy. I am reminded of Proverbs 29:14, “If a king judges the poor with fairness, his throne will always be secure.” Okay, off my soapbox now! Great discussion Robert!
Karen Swims last blog post..Climbing the Rough Side of the Mountain
Applying the “butterfly effect” to the current financial “crisis”. Your epiphany in the foodcourt reminded me of a quote I found posted in the Magee Marshland Preserve off Route 2 in Ohio. “When on tugs at a single thing in nature, he finds it attached to the rest of the world”-John Muir
I believe this is true in the “civilized” world as well as in nature.
Thanks Robert.
My husband and I read the Wall Street Journal, so we expected problems like this when we read some companies were using a leverage of 30 to 1. That means they were investing with borrowed money, which gives great profits when the value of the investments go up. It causes a crisis when the values go down. See http://en.wikipedia.org/wiki/Leverage_(finance) for an explanation of leverage.
Jean Browman–Transforming Stresss last blog post..Tapping…A Surprisingly Powerful Tool
Oops. That link didn’t work. Try http://en.wikipedia.org/wiki/Leverage_(business)
Jean Browman–Transforming Stresss last blog post..Tapping…A Surprisingly Powerful Tool
I really enjoyed reading this article and I think you are absolutely right in saying that there has to be a frame of reference. The economic fallout as you mentioned did not just happen. It did not begin with the present Administration but in my opinion is the result of small actions and decisions that seemed okay when judged in a silo but ultimately contributed to a system crumbling before our very eyes. I think we are in a crisis and I have no idea how to get out of it…..
The economic crisis is like a noose that keeps getting tighter and tighter as it gets pulled inch by inch. The noose was rather loose at first, but with each economic fall out, the strings closed in. Next thing you know, we’re feeling that noose around our neck.
How to loosen it? Well, inch by inch we have to gently tug it back.
I think it’s going to take a paradigm shift on how we look at credit and borrowing. We’ve got a negative savings rate in the U.S. Time to get back to basics and cutting back– this goes for businesses as well as the rest of us.
Karen Putzs last blog post..What I Learned from my Homebirth
While reading the first paragraph of your post, I thought, “He read my blog!” Then I did a reality check. But, anyway. I posted on this yesterday and on Friday.
Let them eat cake
Should we fire everyone that caused the Great Crash of 2008?
I don’t see this as a problem to be solved. It is an opportunity to be explored.
Hi Robert, liked the frame of reference story. It’s one of the reasons I like to walk - it helps me work out where one thing is in relation to another. When I wrote my book of short walks on Skye - a place I’d been visiting for 20 years - I suddenly realised how one village, island, hill, mountain, headland connected to another. How historical patterns had emerged, why sea transport had been so important in the past, all sorts of things.
Back to your question: it’s a big one. But maybe I’ll stick with walking. We all need to keep our feet a bit more firmly on the ground, drop the idea that buying things will make us happy, learn to live more closely within our means again, and put our energies into building a different sort of world that’s fairer and might have some chance of lasting in the long run.
Just my tuppenceworth
Joanna Youngs last blog post..October Theme: Writing With Responsibility
Our German newspapers are full of articles about the global financial crisis. Obviously not only the United States but also states like Japan and India are hit. As far as I understand (and that is rather limited, I have to admit), the cause of the crisis was nothing else than creed - the urge to make as much money as possible without the real basis for it.
So, in my humble opinion, a bailout only makes sense if it is accompanied by restrictions which will make it impossible for the future to act like this again.
Just my 2 cents
Ulla Hennigs last blog post..The Colours of Autumn
[...] when I wrote Frame of Reference the other day, I sorta expected to see comments. (Hey, I’m nothing if not an optimist.) And I [...]
I enjoyed reading your article - and I think you are absolutely right in saying that there has to be a frame of reference…………..so nice
Thanks for dropping by, James. Welcome to the Middle Zone!
Sure, there are going to be folks who will be hurt by the current economic environment - many of them totally unrelated to the housing, banking, and mortgage industries. This is unfortunate, but isn’t unexpected when a bubble bursts (and big one at that).
@Mike - I think there’s one key to the problem right there, Mike - we’ve been in an economic “bubble”. Unfortunately, most folks have a distressing tendency to fall into the trap of thinking that what’s going on “right now” is, well, how it’s always going to be. The market’s cycles are often forgotten.
Alas, when reality comes and bites us in the butt, we forget and start panicking. Too bad, too; there’s some really good opportunities here and now, if you’re steady enough to see them.