Guest Post: Failure: Don't Despair, It's The New Normal

Tyler Durden's picture

By Charles High Smith from Of Two Minds

Failure: Don't Despair, It's The New Normal

As our institutions fail, they will take down many individuals with them. Don't despair: the failure is systemic, not personal.

As the U.S. economy fails on a systemic level, it is pushing individuals into a deep sense of failure. Feelings that one has failed one's family and oneself can feed a despair profound enough to trigger thoughts of suicide, and for many vulnerable people, thoughts lead to action.

In a terrible irony, those who do take their own lives are often those with the highest sense of responsibility and highest personal standards; their sense of failure is crushing in ways that less responsible, more laissez-faire people cannot imagine.

The systemic failure of the U.S. economy is pushing many to the brink of despair, as they interpret their own financial failures as personal rather than as the result of a system-wide decline stretching back decades. The need to explain this systemic failure is part of what drives me to write this blog day after day, month after month, year after year--to help people understand the roots of our national and global failings.

Despite these multiple systemic failures, I am an optimist, and I wrote Survival+ to not only illuminate the roots of our institutional failures but to lay out guidelines for bypassing those institutions as they devolve and collapse.

I have addressed this many times, for example:

The Next Golden Age, Part I (July 28, 2010)

The Next Golden Age, Part II (July 28, 2010)

The Central State (Federal government) and the Federal Reserve are both failing institutions. Their policies, assumptions and mindsets have only one end-state: devolution and collapse. After the old institutions have imploded, some new sustainable, honorable version may arise; this is possible but not guaranteed. Nobody knows the future, and life is contingent.

Institutions are like organisms: they have a life-cycle and exist in a wider ecology. Our current institutions are in the Failing Stage of their lifecycle, where simulacra "reforms" and facsimiles of "change" are presented in lieu of true systemic refomation.

This strategy is based in the institution's politics of experience: real transformation would require their constituencies to lose some measure of income, power and perquisites, and since every fiefdom within the institution will deploy all its formidable resources to self-preservation, then real reform is rendered impossible.

I have addressed this numerous times over the past five years, for example:

What's Different Now (July 12, 2007)

Complexity: Bureaucratic (Death Spiral) and Self-Organizing (Sustainable) (February 17, 2011)

The Lifecycle of Bureaucracy (December 2, 2010)

The basic mechanism of this expansion and fatal resistance to reform/change is "the ratchet effect": expansions of staff, reach, power and revenues are frictionless and exciting--the cog wheel of bureaucracy advances easily. But when the institution expands beyond its carrying capacity, beyond the efficiencies reaped from advancing complexity and scale, i.e. to mission creep, bloat and sclerosis, then any reduction in staffing, reach, power and revenues are resisted with iron fortitude and the desperation of an organism fighting for its life.

I prepared this chart to illustrate the life-cycle of bureaucracy:

As revenue declines and pressure for real reform mounts, the embattled institutions find that propaganda and facsimiles of reform are "cheaper" "solutions" than real reform. This is the key driver behind the flood of propaganda, bogus statistical "proof" of "recovery," and all the phony "reforms" laid out in 3,000 pages of befuddling bureaucratic self-preservation.

Real reform would mean powerful constituencies would have to take real reductions in staffing, power, benefits and in their share of the national income. Rather than reveal this double-bind--reform is impossible but the Status Quo is unsustainable--the institution deploys its gargantuan resources to laying down a smoke-screen of bogus "reforms," distracting sideshows and ginned-up statistics to "prove" that "we're really changing things around here, yes-siree, and things are getting better and better, every day and in every way."

But it's all deception and lies. Nothing has truly been changed or reformed; another layer of self-preservation has been added to an already bloated defense of perquisites and power.

America's institutions are like stars about to go super-nova. They have increased in size to the point where their mass guarantees that once their energy source (as measured in fossil fuels and money) falls below a certain threshold, the institution will collapse inward on itself.

Until then, the best that we can do is to avoid official entanglements, lower our own cost basis, pay off debt owed to the Death Star Financial System and reduce our dependency on the institutions which are currently expanding in the final stages before they go super-nova and implode.

And don't take it personally if things fall apart around you. We're all doing our best, but we can't control everything around us.

You are missed, E.M.K., every day: When an Old Friend Takes Her Own Life  (December 1, 2007)

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mynhair's picture

I will take it personally, in that dips far out of my reach, did it to me.

Ahmeexnal's picture

"This is John Galt speaking."

Xibalba's picture

ANOTHER margin hike in silver?!?!?! We're closer to the brink that most realize....

mynhair's picture

The more hikes, the merrier.

nope-1004's picture

In a terrible irony, those who do take their own lives are often those with the highest sense of responsibility and highest personal standards;


That's why a white collar bankster criminal will never commit suicide.

andybev01's picture



The only people who have such a great sense of despair over what they deem to be 'failure' are those whose yardstick only measures the accumulation or loss of 'wealth'.

Lighten up, open the door, step outside and take a friggin' walk to the park and revel in something real like a beautiful day.

topcallingtroll's picture

Its only money.

Relationships are more important.

We can live well on rice beans potatoes and cornbread if we choose.

sabra1's picture

no, but we can surely assist!

flacorps's picture

For them there are wicker head baskets...

economessed's picture

I, for one, wish we could fail faster.  The slow motion "extend and pretend" & "fake prosperity" variant of failure we have is getting in the way of the sustainable future I so anxiously await.

cossack55's picture

Roger that, econo.  Hard Times by Studs Terkel is a oral history of the great depression #1.  Written in 1970, many of the key players were still alive.  Interviewed big players, small players, and everone in between. Some interesting insights into the suicides at that time.  Well worth the time, not some dry history tome.

I Am The Unknown Comic's picture

+1 economessed  This is like having to go to the dentist every day for years for the same root canal.  I mean, really, please, just fucking get it over with already.   

Rainman's picture

Money managers are dissing the banks......can't understand what's inside the box.

lolmao500's picture

But but but revenues are increasing!

Sokhmate's picture

I declare the Keynesian experiment a successful failure. Thanks.

TraderTimm's picture

If you don't have reserves, despair is plentiful. The corollary is those who do, rarely care about those who do not.

It is partly about pride and the overwhelming circumstances beyond their control. It is a hell I wouldn't wish on my worst enemy.


Timmay's picture

Silver bears, Silver bears, it's Christmas time in the city....

topcallingtroll's picture

Not to be a troll

but even if the bull in silver is still intact it could be up to 18 months before achieving new highs.

Meanwhile you get to watch everyone else make money whether it is a couple of months or much longer.

It is hard as hell not to puke up the silver in an eventual capitulation, but almost as hard is to continue to buy on the way down. Those who oppose high priced silver want to make this as painful as possible.

Can you handle watching silver drop to high twenties in a long slow downward grind? Think about what you can tolerate and plan accordingly.

Timmay's picture

Hmmm, you must be thinking the U.S. dollar will survive....

Absinthe Minded's picture

"Can you handle watching silver drop to high twenties in a long slow downward grind?"

Absolutely, I bought most of my silver in thlow to mid teens and I'm sure a lot of these good old boys did a lot better than I did. Bottom line, do you see this getting any better? Do you see how they can pay off all of this debt without making the dollar worthless? I'm an optimist but to put this as nicely as possible we're not half empty or half full, we're fully fucked.

Id fight Gandhi's picture

Some old timers or chart readers are looking back at the old peak and still view it as a commodity not alternative to fiat. I think they are the ones in denial that paper money can rebound and all will be ok.

The debt of the country isn't going down anytime soon and there's really no hope for growing tax revenue.

Re-Discovery's picture

Just as it isn't a profit unless you sell.  It isnt a loss unless you sell.  I added today, in retrospect, at the wrong time.  Then bought several stocks at session lows and bounced right back.  I also have bigger longer term positions I never touch.

I could buy and forget.  Or I could just wait til its lower.  Either way, it IS going higher than the old highs.  (And I didnt see anyone else making money today.)  If everything goes down, Silver's coming back faster.

Bicycle Repairman's picture

"Can you handle watching silver drop to high twenties in a long slow downward grind? Think about what you can tolerate and plan accordingly."

It won't be a slow grind.  Then there is this: Fuck you.

Diogenes's picture

Looking forward to it if I am so lucky. Missed the boat @ $16 - $18.  Will load up if I get a chance like that.

I Am The Unknown Comic's picture

I would jump for joy at the chance to buy again at $17.  I don't think that is going to happen unless the New World Currency happens to also be called "dollar" and is denoted by "$" 

Meanwhile, I bought May 6 $41 SLV puts yesterday at a decent price.  I had no idea margin hikes were coming and I hope this gives me some profits on the way further down.  This is total F*ing B*shite what is going on, but I hope to capitalize on it as it goes further down.  If my June $45 SLV calls expire worthless I will be one pissed off mofo.   

Urban Redneck's picture

If someone didn't capitulate after '87 or '08 or the intervening corrections they are not going to now.  If they are buying silver in the first place, they might also be less concerned with keeping up with the Joneses and their fiat profits.  However, if someone recently came to the silver market to lose their virginity riding the volatility machine, then they are fucked.  The veterans in the market learned to embrace the suck a long time ago.

Seasmoke's picture

i never understand if people think the powers have messed them up so bad that they have no other options, why they dont take a few of them with them......i doubt i will ever get that feelingof despair as i love to fight, but if i do, i promise i will not be going solo

topcallingtroll's picture

So would you just take out your boss?

Maybe a grandma and a couple of kids at Lubys?

Or would you have the balls to attempt to go to the lair of one of the beasts?

Diogenes's picture

You don't understand depression. You get to the point where you look forward to death the way others look forward to a Caribbean vacation, for the same reason.

If you are still capable of caring about anything in this world you aren't there yet.

FunkyMonkeyBoy's picture

"pushing individuals into a deep sense of failure"

- And rightly so, failing to stop fascism entrenching a once great land and people. Oh well, too late now, irreversible... let it burn before it infects the whole planet terminally.

jm's picture

Is it really so wrong to feel a sense of failure when you fail? 

Let's say you live in a house that you haven't paid a dime in mortgage on for a year.  Isn't a sense of utter pathetic failure the appropriate prelude to getting your shit together?

cossack55's picture

If the note is held by any of the TBTF or fraudclosure firms, I would feel a sense of VICTORY.  I would not be so happy if it was a small, local bank. 

jm's picture

There is a lot of denial going on, and it is what is getting in the way.

Banks have a bailout, so they aren't willing to restructure mortage debt.

So people live in denial about their income, and they don't make their house payments.

Creditors and debtors both get subsidized.  Guess who pays?


Id fight Gandhi's picture


We used to be Captialistic nation where businesses that fail go out of business. Now, if you're part of the crooks you get the tax payers to bail you out.

These banks then have the nerve to call struggling people deadbeats when they don't pay the mortgage. Fuck them.

Wheres the fairness?

jm's picture

If one can't pay the mortgage, stop the denial and live within your means.

Instead of all this end of the nation durge, people and need to get their head out of their ass and accept the reality of their situation.

There are worse things in the world that moving out of a house one can't afford. There's is no despair in that at all.


Id fight Gandhi's picture

The whole country can't live within its means. The solution is to borrow more, print money, keep debt servicing low. Why should the little guy do any different?

Besides these overvalued houses will just sit and rot. Better to have someone living in them.

jm's picture

If there were no bailouts the price of houses would fall and people with capital would buy them and rent them to people that don't have capital.  This is how the market redistributes wealth.

Ultimately, the little guy can't do this because he is the little guy.  The big will fuck him in the end.  You can count on that.


oogs66's picture

I agree 100 per cent! Though lavorgne (the db guy) and Erin Burnett were giddy over the prospect of bulldozing houses! Screw them. Let shit settle where it should and those who still have money buy it up.

Slim's picture

Honestly, with so many homeless and unfortunate people in this country/world, the day someone tries to implement bulldozing livable viable homes to help prop up prices due to oversupply is the day I go balistic.  Hell, you hear about rents rising right now and households doubling up - guess what, rent the shadow inventory for whatever the market will bare.  Issues largely done.  We have plenty of housing, it just needs to be distributed according to economics.  Those who are about to lose it or can't hang onto it (people and banks) need to barf it.  Want to use government money to incentivise people to live in and keep up those homes while it works out, go ahead but at this point stop funneling it through banks and do it openly in the communities to people who warrant it (i.e. not the guy who bought at 6x gross income living for free going on 2+ years while I'm funding him and his bank via my tax dollars).

QQQBall's picture

Really, is that what you are waiting for? Until then give them hell on the blogs. hahahahha

Id fight Gandhi's picture

At this point I honestly want people who can't afford or don't want to pay their mortgages to stay in their homes. The banks that made these mortgages would be gone if not for tax payer bailouts and accounting changes. There is no moral risk. That just the fear they try to put in everyone.

The homeless will end up eventually on the government tab for benefits or jail - jail costs 30-40k per prisoner (last I heard) not including the social damage and economic damage a criminal does.

We have a two track economy going with fed money and outsourcing pumping to the rich, and the other getting royally screwed over.

ceilidh_trail's picture

If people don't want to/ won't pay their mortgage, they should move on. I live within my means. I didn't buy the Mcmansion, drive a 12 year old truck, and continue to save and invest, and pay my bills. All choices that I make every day. Why should I subsidize a couple who bought more house than they could afford, drive a 2 year old and more expensive base price vehicle, buy every video game out there, continue to travel, go to movies and restaurant meals out? Answer- I SHOULDN"T! This is a true couple- they lost their house, blaming the bank and builder, and now live next door to me in the in -laws basement that they converted into a living space. Their kids run all over, hitting my vehicles with baseballs, run all thru my property, and scream and yell all day. God help this country as this will be the next generation... What ever happened to personal responsibility, respect for others private property and good citizenship???  Bottom line:  what are they teaching their kids?

wisefool's picture

A keynsian would say that you are the irresponsible one. If you would have just bought a new vehicle, took a trip, etc that would have created a ton of jobs, and a ton of taxes. Then the folks you are talking about might have gotten one of those jobs, and been able to afford to stay in thier original house, and you would not have to deal with them.

<sarcasim> Basically, you brought this on yourself because you refused to participate in a virtuous cycle </sarcasm>

But you are going to pay for it anyway through escalating taxation and/or means testing. If you don't have debt, you are automatically richer than anyone who has debt. Regardless of the relative actual assests you each control. And that is the lesson every child in america is learning. Same old song every society sings when it wants a bunch of drama queens "running around" and "doing stuff" and "getting to work on time"

Law97's picture

Yes, but the lesson is not that people should have stopped paying their mortgages, but rather the banks should not have gotten bailed out.  We should all have to live under the fair rules of capitalism and suffer the consequences or reap the rewards according to the wisdom of our choices.

Yen Cross's picture

I'll bet my P-Zeros on that one!

RunningMan's picture

This article resonates. It has been a difficult period. The fiscally irresponsible have it even harder. I have hunkered down for 2011, for this year will be worse than 2008. I watched a guy pulled off the train today with a suspicious bag... things will get far far worse before they get better. We are talking a decade of pain. I hope we all get through with our humanity intact. If any is left after being swallowed by greed and self-importance.