2012: A Year of Choices (2)

I should note that in spite of the rather dark tone of this introduction, I remain an unabashed long-term optimist. History shows that these periods end and new periods of growth and prosperity emerge.(去杠杆化的过程一定会结束) While for the moment the situation is stressful, the trick for individuals is to make the best possible choices, given the circumstances, with a view to that moment in the future when risk will once again be something to be wooed and willingly accepted, rather than avoided as much as possible.（接受和回避的前提各自是什么） For nations, it is preferable to make the choices that will bring about a new equilibrium, even if doing so requires some pain. The longer that difficult choices are avoided, the greater the pain will be when the choices are either taken or forced upon us.

That being said, so many choices are made by people and nations who happily blunder forward into what proves to be a disaster, swept along by the tides of emotion and rationalization, thinking that by avoiding the consequences of the real problems, things will somehow turn out OK. I am reminded of the times when I told my children to clean their rooms before they went out to play, and was cheerfully told, “I did,” as they poured out the door, only to have Dad find that they’d stuffed all the detritus that was on their floors into the closets, drawers, and under the bed. The appearance is that there is order and calm, while in the shadows and cubbyholes lurks the sad reality.

To be able to make wise choices means understanding and dealing with the real problems and not just the symptoms. In the US, the old joke was that doctors routinely told their patients to “Take two aspirin and see me in the morning” (which simply shows that I am old enough to remember an era when everyone had their doctor’s home phone). And that was often the best advice, as most things do eventually take care of themselves, one way or another.（事情会自己搞定）

But if you are lying in a ditch bleeding on the side of the road, you need more than aspirin. The European interbank credit markets are screaming that the system is at risk of a cataclysmic failure. Think Bear Stearns and Lehman. On steroids. We are rapidly coming to the point where we can no longer stuff the dirty clothes and toys under the bed. There is no more room. We are going to be forced to actually deal with the mess. That means that we will have to put “playtime” off for a little bit, but Mr. Market is going to stand over us and force us to clean the room. Better to get on with it.