In Praise of Pessimism

A Practical, Forward-Looking Distrust of the Past

“I learned long ago to distrust my childhood.” --- B. Obama in Dreams From My Father.

I sympathize with this view. We may find comfort in an idealized past but it provides too much unrealistic competition for the visible present.

Vintage Sense of Self

Speaking of his more recent work, John le Carré suggests that it reflects a “clearer confusion, perhaps — a more articulate pessimism.”

You Betcha Look 'em in the Eye by Golly

People who think that confidence can substitute for wisdom need a refresher course on the First World War, or almost any other rough patch of human history where only the skeptical survived.

Compared to the much applauded optimism, ornery skepticism and tenacious pessimism are far more reliable guides to sensible decision making.

International Banker Lowers Life Boat, Tells Truth

"Intensifying solvency concerns about a number of the largest U.S.-based and European financial institutions have pushed the global financial system to the brink of systemic meltdown." --- IMF chief Dominique Strauss-Kahn.

If DSK were a bit more nautical he would have simply said: "Sauve qui peut!"

And we always thought international bankers were tight lipped and diplomatic.

Now Bill Tells Us!

"PIMCO’s Investment Committee to a man (no women yet) believes that capitalism is the best and most effective economic system ever devised, but it has a flaw: it is inherently unstable." --- Bill Gross, PIMCO co-chair, (PIMCO Oct. '08)

BTW, this theme of inherent instability has legs. Your dollars to my donuts, it will be a major part of the "conversation" for the next twenty years.

More from PIMCO

A much later 7/31/2010 Economists piece on PIMCO has some relevant snippits:

Thought Epidemic

"The theory that housing prices could only go up began to sound plausible. It became a thought virus. And people believed it was true rather than realizing it was a thought epidemic.” --- Robert Schiller in the NYTs 10/12

Origins of Confidence --- and Humility

"There is nothing that saps one's confidence as the knowing how to do a thing." --- Mark Twain --- Speech, 3/30/1901

Fruits of Grumpiness

“Brecht only wrote when he was unhappy. This disdain for Los Angeles kept him productive.” --- Erhard Bahr, author of Weimar on the Pacific. (NYTs 10/5/08)

Survival of Old Traders (and their Rules)

"Never add to a losing position." --- Anon

Which old trader rules linger in our collective memory? My guess is that the ones that attend to regret (as opposed to profit maximization) are the ones with legs. We take wins as our birthright, but we stew over losses.

Scary Out There

"In my adult lifetime I don't think I've ever seen people as fearful, economically, as they are now" --- Warren Buffett speaking on Charlie Rose (10/1/2008).

Hey, they were right to be scared. The rest of October and November were bone crushing.

What Me Worry? (A.E. Newman, Mad Magazine)

"The nice thing about not planning is that failure comes as a complete surprise rather than being preceded by a period of worry and depression." --- author unknown, but there is a source.

The Enemy of My Enemy...

"The true enemy of man is generalization.”

Clearly, no mathematician said this. For us, generalizations are simply stair steps, cleared of all clutter. Such paths cannot be enemies.

The words make sense only given their source --- the diplomat poet Czeslaw Milosz who despised the soul numbing "generalizations" of Stalinist Eastern Europe.


"It is acutely uncomfortable to have so much in macroeconomics depend on how one deals with a concept like expectations, for which there is (inevitably?) so little empirical understanding and so much room for invention." ---- Nobel Laureate Robert Solow

Who's Best to Say?

"If the rich aren't happy, it's their own fault." --- according to V. Lenin, if we believe the always strident, sometimes amusing, Lenin look-a-like Jim Cramer (CNBC 9/23/08)

March of Time

“Science advances one funeral at a time.” --- Max Planck's succinct view of academic flexibility.

"Neutral" --- No Claim to the High Ground

"The Constitution is not neutral. It was designed to take the government off the backs of people." --- Justice William Orville Douglas

Devil in the Details

"La durée de l'armistice est fixe à trente-six jours, avec faculté de prolongation." --- 11/11/1918, agreement.

Thirty-six days was optimistic. The Treaty of Versailles concluded on 6/28/1919, and to call it the conclusion of the war would compound the unwarranted optimism.

Tyranny of Prevailing Opinion?

“Protection . . . against the tyranny of the magistrate is not enough, there needs protection also against the tyranny of the prevailing opinion and feeling.” --- John Stuart Mill

Evidently by the time of J.S.Mill, professional philosophers were running low on true grit.

Greek Quotes for Modern Times

“Our democracy is destroying itself because it misrepresented the right to liberty and equality. It taught the citizens to regard disrespect as a right, lawlessness as liberty, impertinence as equality and anarchy as enjoyment.”

The quote is circulating this turbulent week (12/12/08) in Greece.

Wink and nod? It is Socrates who speaks.

Vistas Defined in Poetry

“Thus Ants, who for a Grain employ their Cares,

Think all the Business of the Earth is theirs.

Thus Honey-combs seem Palaces to Bees,

And Mites imagine all the World a Cheese.”

--- Alexander Pope, recently quoted in the NYTs.


Wild Guesses --- Just $23.4B Each

"Being unable to predict oil prices is disappointing, to say the least, when you have 16,000 federal employees to do just that and are funded with $23.4 billion of your taxpayer money." --- Steve Austin writing at

These are dubious figures, and the phrasing is horrible; still, the package is amusing.---JMS


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