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Thoughts from the Frontline

The Bang! Moment Shock

July 13, 2013

Future shock is the shattering stress and disorientation that we induce in individuals by subjecting them to too much change in too short a time.

– Alvin Toffler

What is it about humans that we fail to see a crisis in advance, yet when we look back, its likelihood or inevitability so often seems blindingly obvious? Rather than a flaw, our under-reliance on foresight as opposed to hindsight is perhaps a necessary evolutionary design feature that has allowed us to make rapid progress as a species (especially over the last few thousand years), but in a complex modern society it can really create quite the crisis for individuals. This week we resume our musings about Cyprus, to see what that tiny island can teach us about our own personal need to engage in ongoing critical analysis of our lives and investment portfolios. Cyprus is not Greece or France or Spain or Japan or the US or … (pick a country). I get that. No two situations are the same, but there may be a rhyme or two here that is instructive.

This Country Is Different

In 1974, Turkey invaded Cyprus. Eventually the island was divided into two zones, and Greeks in the Turkish zone, like Turks in the Greek zone, were forced to leave with only the clothes on their backs and little else. That was a defining moment for Cyprus, and the aftershock is still evident when you get past the normal polite conversation. Plus, the wall dividing the two countries is always there…

Discuss This


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Barry Mannefeld

July 18, 2013, 12:32 p.m.

Nice article John.  I will get the Peter Bernstein book

Curt Sanders

July 15, 2013, 2:37 a.m.

Thank you for sharing John. Your masterful overview is as usual posted with exceptional eloquence.

Tom Ervin

July 14, 2013, 2:47 p.m.

Yes. John, you could quite easily go “one step farther” and make more concrete recommendations for the little guys like us.

Michael Bell

July 14, 2013, 1:58 p.m.

J. Wyatt
You say, “Who cares about Cyprus?” The problem with Americans is they only think of America. What affects Cyprus affects Europe and what affects Europe affects the world. Hopefully you did not mean what you said, otherwise your xenophobia will be your undoing.

Michael Bell

July 14, 2013, 10:52 a.m.

John, you are right. What made America great was that it had a rule of law. That has been replaced by a law of rule.
To DT: No one can predict the future. To protect yourself you need to balance your investments. Give equal weighting to stocks, bonds, real estate, gold (when in trades like a commodity) and cash. 20:20:20:20:20. Re-balance your investments every one to two years to maintain that ratio. You won’t get rich but you will stay protected.


July 14, 2013, 9:42 a.m.

Once again Mr. Mauldin provides us with his informative and entertaining insight into the financial and economic scenario in Cyprus.
Thank you!

Larry hancock

July 14, 2013, 5:38 a.m.

“My suggestion is that you pay attention to what is going on around you. If things are out of balance, do what you can to not get caught in the problem. It is almost never, ever different this time. You do not want to experience your own personal Bang! moment”.

I started paying attention in mid September 2001.  In late 2007, a statement by then candidate Obama that raising the Cap Gains tax was not about increasing revenue but about “fairness” not only sent a creepy chill down my spine but took my paying attention level to new highs.  Over the last six years, I have occasionally wondered if it would have been a better decision to ignore it all and stay ignorant like almost everyone I know.  It’s like living in a twilight zone episode that never ends.

As a small business owner in the financial industry I have daily thoughts like “things will eventually return to normal so continue the tail busting 60+hour work weeks to build something for my family”, followed by “this is absolutely insane… maybe I should buy a farm in Idaho and stock up on mean dogs and ammo or move to another country”.

“do what you can”  My question is What Can I do?

Dale Thomas 61533318

July 14, 2013, 12:04 a.m.

John, I love your newsletters and have read them for quite some time now.  I appreciate your cautious style.  There are not enough people like you who are sounding the alarm!  However, there is one problem I have and this newletter demonstrates it clearly.  You say, “If things are out of balance, do what you can to not get caught in the problem.”  You say take action but you never give guidance on what that action should be!  Do we become preppers and store food and water for the upcoming apocalypse, convert our $ to gold or silver, quit the market so we don’t get caught in the bang moment?  What should we do?  I suggest that with your sober reflections on the state of our world and economy, you give us at least one actionable piece of advice in your newsletters so average folks like me will not get caught in the bang moment!  Right now I feel like Chicken Little, the sky is falling but I don’t know what to do or where to go to hide!

John Korondy

July 13, 2013, 5:27 p.m.

Excellent post; thank you, Mr. Mauldin.

Perhaps the problem of people not seeing the looming catastrophe (which is the same or very similar in nearly every language) is that they either do not want to see it or fail to understand some fundamental principles.

One such chronic failure is the escape from personal responsibility and its inevitable consequences. When one fails to accept responsibility for some aspect of one’s life, we give up power over that part of our life, usually to some amorphous entity called government. Some very common instances are our health, our lawful conduct, the education of our children, our safety and our security. An increasing degree of control thus passes from people to the government. This is not an economic problem or a legal problem but a moral or spiritual failure of social order and thus it cannot be solved in a context other than where it was created.

I notice a morbid lack of understanding among people about borrowing. Many think that borrowing is free money. They fail to see that the only path to wealth (for a person or a nation) is to create more (value) than is consumed. When money is borrowed so that greater value can be produced, it is productive debt—as long as the total cost of money is less than the incremental value produced. When money is borrowed to consume more, the resulting debt is destructive—even if the nominal value of what is consumed seems to be increasing, as was in the case of residential housing up to 2007.

Lon Purvis

July 13, 2013, 4:49 p.m.

Good letter as always.  Sorry you have been sick.  If you can find someone trained in naet they can always help you get well much quicker.  Naet works on the electrical part of the body that runs the immune system.  At least 50 years ahead of anything else.