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Sunday, October 10, 2004

Survival of the Fittingest

George Santayana is credited with saying, "Those who fail to learn from history are doomed to repeat it."

Lest we all get energized to go out and study history now, I would like to point out that the "facts" of history tend to get written by the winners... not always... but quite often. Ask a Turk if the Armenians were "massacred" and he will respond that the rebel insurgents were defeated by the brave and honorable soldiers of Turkey who themselves suffered greatly from the deadly attacks by those scurrilous Armenians. Of course, in this case, there were enough of the "defeated"... survivors... to make their historical case against the "victors".

But when whole cultures disappear over time, the lessons of their histories may no longer be available or relevant for us to learn... although they may be interesting to some as the study of ruins and relics. Some cultures thrived and became dominant for so long that they affect us today, long after their demise. China's great empires dominate eastern Asian culture. India's culture dominates the Asian subcontinent as it has done for 5,000 years. The Greeks, Romans and Ottomans had their turns in the Mediterranian and Middle East. Eventually all of them influenced the Western European rise to great power and are now being influenced and dramatically changed by that new Western culture. Hong Kong may have the food of China, but it has the culture of the West... with a Chinese twist. Most of the world has adopted the Western scientific/business model while maintaining traditions of their earlier cultures.

The point is that history doesn't have absolute lessons for us. It has a litany of surprises which can inform, entertain and astound us, but doesn't necessarily prepare us for the future. What was strength may become weakness. America's industrial wealth and high standard of living may be the undoing of American industry as the nations with access to our technology and information create their own industrial machines using far cheaper labor and manufacturing costs. Just as it was easier for the Romans to conscript the Goths (a lot of them available and they worked for practically nothing) into the Roman army than use Roman citizens, it is easier for American companies to outsource research, development, manufacturing and support to "less developed countries" such as China and India. Soon, China and India will insource American management and do everything themselves.

I guess America could have learned something from the Romans and Goths.

Let's go back to the idea of survival.

Charles Darwin wrote of the "survival of the fittest" in his Origin of Species. But given the variety of species and the incredible life forms that have become extinct, one might argue that it is not fitness as much as fit that assists survival. As environments changed over time due to movements of tectonic plates and overall climate change, species rose and fell with seeming randomness. There was, of course, the dynamic of predator/prey. Some species of predator became so specialized that they became extinct when their specific prey was wiped out. But others survived because they were able to fit into a variety of environmental and ecological niches. The most spectacular success of survival of the fittingest is homo sapiens.

Modern man separated from other apes somewhere between 100,000 to 1,000,000+ years ago (depending on interpretation of fossil records). Regardless of the timeframe, these modern or near-modern humans had several distinct advantages over other species: hands with opposable thumbs (grasping paws of other animals are not quite as adaptable to using tools) and forward-facing eyes (a common trait of tree-dwelling animals) in combination with vocal chords and a tongue capable of producing a complex array of sounds (language) plus a large brain to allow more complex integration of information. Rather than reacting to their environment or being programmed into a static model of environment forming (such as ants or termites), homo sapiens were able to shape or control their environment in countless variations.

Mankind moved beyond survival of the fittest and survival of the fittingest to survival by mastery.

Certainly, modern humans face challenges from extreme environments such as the arctic/antarctic, Sahara and tropic Africa, and the Amazon basin... but even in the harshest of environments, man has learned or is learning to shape the environment to his own needs. Man still has organic competitors, but he is no longer bound to stuggle against them with muscle or simple tools. Modern technology is eliminating one threat after another to mankind's existence... except one: himself.

It is interesting that the territorial imperative we covered earlier is primarily within a species. Animals fight within their species for territorial rights to resources that will allow them to survive and reproduce. In a few cases such as dogs and humans, dogs will become part of the human pack and become territorial against "outsider" humans. But for the most part, one species will ignore another within its territory.

Now that mankind generally has been relieved of the constraints imposed by predators and environment, survival is threatened mostly from within; mankind is mankind's greatest threat to survival.

The rules of survival have changed and mankind is trying to adapt to the change. The question is can mankind overcome the most basic survival instinct, inbred over millions of years by countless species to survive, by using the same advantages that provided increasing mastery over the earth?

I have tried to set the stage for further discourse by covering two basics: what is truth (or what is true or real) and issues of survival. My conclusions, to this point, are: truth is elusive and subject to revision; the rules of survival have changed for man.

Looking forward: right and wrong and more.

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There is always an easy solution to every human problem—neat, plausible, and wrong.
Henry Louis Mencken (1880–1956)
“The Divine Afflatus,” A Mencken Chrestomathy, chapter 25, p. 443 (1949)
... and one could add "not all human problems really are."
It was beautiful and simple, as truly great swindles are.
- O. Henry
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FEDERAL RESERVE & HOUSING

SEARCH BLOG: FEDERAL RESERVE for full versions... or use the Blog Archive pulldown menu.

February 3, 2006
Go back to 1999-2000 and see what the Fed did. They are following the same pattern for 2005-06. If it ain't broke, the Fed will fix it... and good!
August 29, 2006 The Federal Reserve always acts on old information... and is the only cause of U.S. recessions.
December 5, 2006 Last spring I wrote about what I saw to be a sharp downturn in the economy in the "rustbelt" states, particularly Michigan.
March 28, 2007
The Federal Reserve sees no need to cut interest rates in the light of adverse recent economic data, Ben Bernanke said on Wednesday.
The Fed chairman said ”to date, the incoming data have supported the view that the current stance of policy is likely to foster sustainable economic growth and a gradual ebbing in core inflation”.

July 21, 2007 My guess is that if there is an interest rate change, a cut is more likely than an increase. The key variables to be watching at this point are real estate prices and the inventory of unsold homes.
August 11, 2007 I suspect that within 6 months the Federal Reserve will be forced to lower interest rates before housing becomes a black hole.
September 11, 2007 It only means that the overall process has flaws guaranteeing it will be slow in responding to changes in the economy... and tend to over-react as a result.
September 18, 2007 I think a 4% rate is really what is needed to turn the economy back on the right course. The rate may not get there, but more cuts will be needed with employment rates down and foreclosure rates up.
October 25, 2007 How long will it be before I will be able to write: "The Federal Reserve lowered its lending rate to 4% in response to the collapse of the U.S. housing market and massive numbers of foreclosures that threaten the banking and mortgage sectors."
November 28, 2007 FED VICE CHAIRMAN DONALD KOHN
"Should the elevated turbulence persist, it would increase the possibility of further tightening in financial conditions for households and businesses," he said.

"Uncertainties about the economic outlook are unusually high right now," he said. "These uncertainties require flexible and pragmatic policymaking -- nimble is the adjective I used a few weeks ago."
http://www.reuters.com/

December 11, 2007 Somehow the Fed misses the obvious.
fed_rate_moves_425_small.gif
[Image from: CNNMoney.com]
December 13, 2007 [from The Christian Science Monitor]
"The odds of a recession are now above 50 percent," says Mark Zandi, chief economist at Moody's Economy.com. "We are right on the edge of a recession in part because of the Fed's reluctance to reduce interest rates more aggressively." [see my comments of September 11]
January 7, 2008 The real problem now is that consumers can't rescue the economy and manufacturing, which is already weakening, will continue to weaken. We've gutted the forces that could avoid a downturn. The question is not whether there will be a recession, but can it be dampened sufficiently so that it is very short.
January 11, 2008 This is death by a thousand cuts.
January 13, 2008 [N.Y. Times]
“The question is not whether we will have a recession, but how deep and prolonged it will be,” said David Rosenberg, the chief North American economist at Merrill Lynch. “Even if the Fed’s moves are going to work, it will not show up until the later part of 2008 or 2009.
January 17, 2008 A few days ago, Anna Schwartz, nonagenarian economist, implicated the Federal Reserve as the cause of the present lending crisis [from the Telegraph - UK]:
The high priestess of US monetarism - a revered figure at the Fed - says the central bank is itself the chief cause of the credit bubble, and now seems stunned as the consequences of its own actions engulf the financial system. "The new group at the Fed is not equal to the problem that faces it," she says, daring to utter a thought that fellow critics mostly utter sotto voce.
January 22, 2008 The cut has become infected and a limb is in danger. Ben Bernanke is panicking and the Fed has its emergency triage team cutting rates... this time by 3/4%. ...

What should the Federal Reserve do now? Step back... and don't be so anxious to raise rates at the first sign of economic improvement.
Individuals and businesses need stability in their financial cost structures so that they can plan effectively and keep their ships afloat. Wildly fluctuating rates... regardless of what the absolute levels are... create problems. Either too much spending or too much fear. It's just not that difficult to comprehend. Why has it been so difficult for the Fed?

About Me

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Michigan, United States
Air Force (SAC) captain 1968-72. Retired after 35 years of business and logistical planning, including running a small business. Two sons with advanced degrees; one with a business and pre-law degree. Beautiful wife who has put up with me for 4 decades. Education: B.A. (Sociology major; minors in philosopy, English literature, and German) M.S. Operations Management (like a mixture of an MBA with logistical planning)