Jen Gerson: Enjoy the summer — it might be the last good one, for a while

As all of our crises begin to compound on one another, are we about to confront another 2008-style timebomb? Or is my gloom a hangover from the last two years?

There is a funny little aspect to note about the nature of predictions; they are never actually about the future. Rather, predictions are a feature of the present. No one can truly guess at how the future will be. At best, we are projecting our current sentiment forward into our own imaginations.

A prediction, then, tells us less about the future than it does about how we are really feeling, right now, about the future. It is the product of a lossless and ever-changing present. 

I make this point, almost as a caveat, as we at The Line prepare to move to a few weeks of quasi vacation. Matt and I have been running this magazine for two years. When we started it, at the height of the summer of 2020, he and I had parallel insights: that the foundational roles served by our institutions were failing in ways both obvious and subtle. We couldn't do much about most of it, but as newspaper people by trade, we could try to carve out a new little institution in the midst of managed decline. A little oasis, an island, that held on to some crucial values, and of ways of looking at the world.  

To be blunt, we also went into The Line understanding that it probably wouldn't work, but was worth trying anyway. 

Not only has our experiment, our hedge against decline, worked, it has prospered. Our subscriber growth has ensured that Matt and I can continue to do this indefinitely; and at our current rate of growth, we suspect we can continue to expand this institution in coming months and years. 

Does this make me more optimistic about the future? The answer to that is both yes and no. I am grateful that I have found a life-raft, and hopeful that Matt and I can slowly convert it into a proper sea-faring ship. 

The rains we feared would not come here in Calgary came this month, and came in spades, and will prove a welcome relief for farmers. The grass outside my window is tall and lush and a shade of green I don't often see here. My peonies are finally starting to crack, and the air smells rich with late-blooming lilacs. It's still cool, but I sense it will be a good summer. 

And, frankly, we all need it. We all deserve it. 

The last two years have been hard in a big and collective way that few people my age who grew up in the First World had ever experienced before. I'm not sure we've come out of any of it better or stronger, or smarter, or wiser. But we have come out of it. We all need the exhale; a pause, a moment to gather ourselves and relax and have a little fun and travel.

If you are reading this column, may I suggest that you do all of those things? Get out and do all of those things right now. Because, not to be a downer, but I don't think things are going to get any better than this, as they are, right now. 

So ring up your credit card debts; go on spontaneous trips, quit your job and blow off your responsibilities. 

Because September is only 63 days away, and the bill for everything is about to come due. 

That inflation problem isn't going anywhere; by the fall, we will have a better idea of whether or not central bank rate increases will lead to recessions, or asset crashes. By harvest time, we will start to see the impact of Russia's war on Ukraine; how many fields failed to be planted, and whether or not the warning of a looming famine rings true. 

There are ominous portents of a serious stock market correction and, of course, if another disaster does come to pass, we now lack the same degree of fiscal capacity to handle it. 

I look at Canada's omission from a recently announced Indo-Pacific deal — only the latest snub; I see chaos in passport offices and airports, Air Canada has cancelled many of its summer flights; yet another burgeoning scandal, this time between the PMO and the RCMP,  and I see a government and bureaucracy that seems spent, totally unable to fully face the scale of the challenges we have ahead of us as a nation, and a world.

I see Germany reverting to coal power to keep the lights on (too bad about those nuclear power plants), and America depleting its Strategic Petroleum Reserve. It's one thing to ignore high natural gas and oil prices in summer. What happens when it gets cold? And then, you know, there's climate change and drought and all the implications of a weather cycle that is obviously growing more difficult and violent with each passing year. 

And then there's politics. Oh man, politics. The American midterms are in November, and you'd think the radical overturning of Roe vs. Wade, and the Jan. 6 hearings would give at least some of them pause about handing the house and the senate back to an increasingly unhinged set of Republicans. 

You'd think. 

I dunno, man. I just don't know. My everyday life feels just fine, but when I look at the board, all I see are red indicator lights flashing red. I just don't see any way to pull out of the trench in time. The leadership of the entire Western world just seems blinkered and overwhelmed; so they retreat into petty culture wars, or make incremental changes to non-problems because the big issues are just too big to think about, much less deal with. 

Meanwhile, most of the rich world, secure in our food supply, is doing what I'm doing; staring out the window, sleeping in a ray of sunshine, sauntering into the last big party of the Golden Age. The last good summer. 

And, damn, who can blame us? Of course I don't want to meditate on how doomed and useless it all feels. Of course I just want to get out and vacation and party for a bit — presuming I can grab a passport and ease my way through the airport. Of course. I'm human. Like every other human, I, too, am going to sleepwalk into the void. 

I just finished re-reading The Big Short by Michael Lewis, the brilliant and accessible book that catalogued the 2008 financial crash. I am not even sure why I picked it up, to be honest; just some premonition, some instinct that the collapse of the world financial system would be a good thing to remember. I'm sure it is not helping my general sense of melancholy. 

What struck me about reading the book with the benefit of 12 years of hindsight is just how little we did to address the core issues that led to that catastrophe. I mean, sure, yeah, the U.S. certainly passed some reforms via Dodd-Frank. And those reforms make it seem less likely that the financial system would fail, or at least fail in exactly the same way. 

But there were two major lessons that I think we failed to learn after 2008; the first is that we all suffer from status quo bias. We discount the possibility of dramatic short-term change, both good and bad. 

The second is that I don't think we eliminated the problem of moral hazard. In 2008, when it was clear that a massive bailout of banks would be required to prevent total system collapse, governments addressed the impending recession by massive quantitative easing. That worked, and the world didn't spiral into hyper-inflation back then — the lesson, of course, is that this is how we deal with temporary shocks. So when COVID hit, we pumped a ton of money into the economy in the form of direct relief; the Bank of Canada also bought massive amounts of bonds that are now sitting in banking reserves. The former has contributed to inflationary pressures, as have major disruptions in supply and demand. (The latter sit on the banks' books as a kind of inflationary time bomb, hopefully to be tempered by increased interest rate hikes that, also hopefully, don't drive us all into recession.)

Also from 2008, we bailed out a bunch of Wall Street banks to prevent economic collapse. While the banks made good on that bailout, what was the lesson of all that? Even the individuals who lost billions of dollars for their institutions on wildly irresponsible bets went on to become fabulously wealthy as individuals. 

What we did, as a society, was to tell a clever hedge fund manager that if he can come up with some byzantine gamble to generate short-term profits, allowing him to enrich himself with exorbitant bonuses and salaries, he will take that bet. Every time. Regardless of how irresponsible such a bet may be to the system as a whole. What are the odds that some sociopathic Princeton-educated trader with 50 IQ points on me hasn't figured out a way to put the principles of moral hazard to his advantage? 

As all of our crises begin to compound on one another, are we about to confront another 2008-style timebomb? Some catastrophe that everyone will say was obvious after it goes off?

Or is all of my gloom just a hangover from the last two years? 

Honestly, I don't know. As I said above, predictions are a mug's game; they are a reflection of our feelings in the moment, the now, the only place we can live. So I'm going to go and enjoy a Good Summer, while I can.

---

The Line is Canada’s last, best hope for irreverent commentary. We reject bullshit. We love lively writing. Please consider supporting us by subscribing. Follow us on Twitter @the_lineca. Fight with us on Facebook. Pitch us something: lineeditor@protonmail.com