The Oil Drum

You say....
"Perhaps now you risk the converse - holding on to bull market psychology at another time of impending reversal."

When you say "you risk" I assume your talking in the generic sense...I own no shares, and have little faith in the current bear market, which is what it is, by the way, we have been in a full secular bear market since 9-11-01, with stocks now getting out to a half decade with no real gain, if you count for inflation, plus the lost time, and the lost interest money that could have been earned at no risk, stocks have been a massive loss.  What you call the reversal is now a half decade old, despite attempts to recover since that time.  

You say....
"Roger, in the seventies you were sucked into the psychology of a bear market as were many, if not most, others."

True, but to limit the scope of the mood, the culture, the sheer shock of defeat and decline of the 1970's to just "a bear market" does not do the period the justice such a defining, declining deserves...

You see, We have seen post peak. Do you want to know what it looks like?

Go to the poor rural states in the South, and take a look at the scattered "basement homes", with nothing but a roof above ground, heated with nothing but a woodstove.  The "zero energy home" is not a high tech idea.

Look behind them or up in the shed, up on the blocks sit a Diesel Volkswagen Pickup truck, long ago broke down, now brown on the creases with rust as the paint disappears....these were capable of hauling firewood, commuting to work, and getting the kids to school.  With a stick shift, 50 plus miles per gallon  (Coca Cola Corp. used them as route trucks for their order takers and vending machine service....one Coca Cola route salesman told me how they knew when to take it to the shops and change the filters and check the timing of the injection pump...."we keep a log, and when it drops to 48 miles per gallon it goes to the shop."  This was in 1978.

Allow me to quote a bit of poetic nostalgia for the days that would never come again.  There is something haunting about people writing the chronicle of a dead or dying age.  Think of the Biblical passages of the Jews in exile..."we sat by the waters of the river and we wept for old Israel", or W.H. Auden as he sat in the dives, feeling the pain of a destroyed London in World War II....sad, but haunting and beautiful.

Now, for the 1970's version, I hold in my hands a treasured issue of "Automobile Quarterly"  Third Quarter, 1978.  The issue opens with an essay by a Stan Grayson, called "Garages".  It celebrates cars, but not cars out on the road.  Instead it celebrates cars as they consume no fuel, stored, treasured as art pieces in the garages of the nation, the world.  It is a haunting beautiful ode to the end of the auto age by a magazine and a writer who deeply love the auto age.  Allow me to give you a sample of the last two pagagraphs, describing the last garage examined in the essay.  
After describing the collection of a wealthy Wall Street broker, complete with V-12 Ferrari built into his home as a centerpiece beside which the owner can sit and eat dinner, we move to...

"...the opposite extreme is a young Firebird owner who lives in a small northeastern Pennsylvania city.  His little apartment is lined with hot rod magazines and Pontiac brochures among which are filed a few treasured letters from Pontiac executives responding  to some of his more esoteric mechanical queries.  The object of all his affections sits out in a detached and dingy alley way garage.  The building is red brick and there's a window at one end so grainy you can't see inside.

Open the door and you'll find an utterly immaculate red Firebird Trans Am crouching in the gloom.  It's got a Super Duty 455 in it, maybe the last really high performance V-8 Detroit will ever build.  In front of the car on a workbench is a set of pistons, on the floor, a set of specially prepared, flowed and polished cylinger heads.  There, hidden away with less than three-thousand miles on the odometer is just the sort of exciting, brutally fast car that the government and a changing world is going to eradicate.  Now, it goes out for an occasional midnight ride.  Think what it will be like to see the car still alive in that garage ten years from now-forty years from now.  It will be enough to make you very sad indeed."

Notice, please, there is no mention of seeing it on the road 10 years, 40 years from now...

Think about the time frames mentioned, 10 years from 1978, as the first of the V-10 Dodge Vipers came on the market, or now, with twin supercharged Porsches and Mustangs on the market, and 500 horsepower Corvettes taht also get over 20 miles per gallon....how could they have imagined in 1978, at that darkest hour for the automobile, for those who loved the powerful and fast auto, or the giant luxury trucks, (one writer called them "road locomotives") that the "last giant V-8"  would soon be rendered puny by a new muscle age and astounding advances in automotive technology?  

But, reread the piece above, WITHOUT knowing what was to follow, as I did for the first time at 19 years old....

No, the 1970's were not a "bear market".  For most people who read, studied and learned and payed attention, it was what the current peak folks call TEOTWAWNI.....the end as we knew it.  There was no doubt then....the fossil fuel era was over, the good times had ended, America, disgraced by Watergate and Vietnam was powerless, social, racial and sexual unrest was dismantling the nation as interest rates soured into the teens, unemployment soured past double digits, and the stock market spent a full decade running downward and sideways.  American airliners were hijacked almost weekly and blown up in the Arab desert, Iran held our hostages, and we were powerless to change a thing.  THIS we knew was the result of American wealth and power being drained away by oil, as Sheik Yamani of Saudi Arabia stood higher in respect and was more feared than our own American President Carter.

 We have already felt the sadness for a dying age.  And we knew, WITH CERTAINTY in 1978 that the markets would only go lower and lower, fuel shortages would only increase, prices of gas and oil would skyrocket past all ability to bear the cost.  Rodale Press published The Cornucopia Project, with long essays proving that food prices and transportatin combined with water crisis and soil erosion would soon result in massive price increases in food prices.  The price of Diesel and fertilizer would destroy the national food production system.  We knew that if all of this did not happen by the 1980's, it would surely happen by 1990.

For those of us old enough, and who paid attention, we have seen post peak.  We have seen "The End As We Knew It."
It was 28 years ago.

No one could imagine then that we were preparing to enter what even the greatest cynics would come to call "for most people, these really are the best years of their lives."  (Pat Buchanan, in reference to why it was almost impossible to stage an upset of his arch nemesis, Bill Clinton...in a shocking moment of candor by Mr. Buchanan).

But this time, it really could be different.  Like the economists who proudly proclaim that they have predicted 6 of the 4 recessions, sooner or later, we will run into hard times.  Sooner....or later....

Roger Conner  known to you as ThatsItImout