A passenger on the Titanic

I have only a few personal phobias or hang ups which serve as an endless source of amusement for my family. Cotton balls, dirty hands, and bees are partial list of items that I can’t stand. Another is the movie, “A Night to Remember”, a 1950’s black and white film about the sinking of the Titanic. I saw it once as a child and since then I have never been able to watch it or any other movie about that fateful night since. The utter sense of helplessness of the passengers and a feeling of deep frustration on my part somehow always strikes a painful chord with me.
One scene that is etched in my memory is where a couple is standing on the foredeck of the Titanic looking at the stars. One of them spies a large object up ahead and comments on it. The other notes the object and comments, “its just an ice cube in a large saltwater bath.” A few seconds goes by and the first again notes the object, observing that it is approaching fast. Again, her companion dismisses it with the words, “the Captain knows what he is doing.” Not long after, they both begin to notice that the iceberg is a threat but try to calm themselves with assurances that the crew are able and the Captain experienced. You can see the desperate attempt to remain calm, and the mutual feeling of helplessness the couple felt. Then the ship hits the iceberg. You know the rest of the story.

I mention this because that same feeling of frustration and helplessness has come on to me recently. The signs up ahead are not good.

In conversation with friends and family, I hear that banks are offering incredibly low interest rates on CD’s and IRA. Lower than the rate of inflation. Also, banks are now offering very low (historically low?) interest rates on loans. Both indicate that banks are awash with money and finding few willing to borrow it.

Credit union and bank failures are coming hard and fast to the point where the FDIC and its credit union companion have been forced to pull additional funds from their member banks to offset the losses.

At the Northeast Conference recently held by the Campaign for Liberty, two economists both predicted that spending jag we have been on will come back to bite us with hyperinflation. A local banker I talked to also indicated that this is a real concern in the banking community.

Finally, I open my web browser this morning and find the following article: http://www.telegraph.co.uk/finance/financetopics/recession/6190818/US-credit-shrinks-at-Great-Depression-rate-prompting-fears-of-double-dip-recession.html which states that bank loans in the US have fallen to a level unseen since the Great Depression and seems to indicate a debt-deflation.

While Ben and company sing their siren song of “the danger has passed”, a lot of people on the street and in positions to know, are not so sure. When the media tell us our Captain and his crew know what they are doing, I can’t help but recall the scene mentioned earlier.

Is there any hope? Yes, but it will require a change of Captain, Crew, and Course before we stand a chance of avoiding the on-coming iceberg. The real question, however, is do we have time?