Forget the age of “irrational exuberance,” a phrase coined by then Federal Reserve chairman Alan Greenspan in 1996, and later popularized by economist Robert Shiller in a book bearing the same name.
Instead of irrational exuberance – the notion that assets like stocks and homes move in only one direction, and it ain’t down – we are witnessing the era of ”rational apathy,” according to Denver real estate broker Tom Cryer.
“Here’s my prediction for the next decade: Think Affordable, Think Self Sufficiency, Think Homegrown, and Think Down the Street,” Cryer, a broker with the Kentwood Co., wrote on his blog, explaining where he is coming from with the two-word description of an age in which McMansion envy will seem so 2006.
I was in Santa Fe last week, and after talking with about the S&P/Case-Shiller report (yes, the same Shiller who made irrational exuberance a household phrase), Cryer said that we need to come up with another moniker to capture the new direction of the housing market and economy.
“Rational apathy” born
Moments after we got off the phone, the CFL light bulb went off in Cryer’s head, and the phrase “rational apathy” was born.
“That’s a very cute idea,” said Tom Clark, executive director of the Metro Denver Economic Corp., when I told him about it.
“I think that rational apathy absolutely covers all the bases,” Clark added.
Jim Haynes, president of Behavior Research Center Inc. in Phoenix, said that his company has not specifically looked into data addressing Cryer’s thesis.
“But I think there is no doubt that most of the signs, including the stuff you read and anecdotally from people being interviewed on talk radio and things, there was a hard lesson learned and a lot of people are taking it to heart,” Haynes said.
He doesn’t know if rational apathy will capture the public’s fancy, as irrational exuberance did.
“But probably in many ways it is fairly descriptive,” Haynes said. “If it makes you not interested in doing what your friends and neighbors and brother-in-law tell you to do, that is probably a good thing. I think it may have many applications.”
Apathy? Who cares?
Economist Patty Silverstein, principal of Littleton-based Development Research Partners, doesn’t like the word “apathy,” in Cryer’s word-duet.
“When I heard the word apathy, I think of not caring,” Silverstein said. “But I agree with the premise of spending within our limits.”
Jeff Bernard, a broker associate with RE/MAX Alliance and principal of Bernard Analytics, also liked the idea behind the words, but felt strongly that apathy doesn’t capture the mind-set of consumer’s in today’s economy.
“It captures your attention pretty quickly,” Bernard said about Cryer’s creation. “But I would say people are not apathetic, as much as they are pragmatic. But “rationally pragmatic” is a bit redundant.”
After giving it some thought, Bernard sent me an e-mail describing his own short description of what he thinks the future holds.
“Perhaps merging two famous quotes from different times by changing Alan Greenspan’s “irrational…” to “rational” and then using Dr. Mohamed Abdulla El-Erian’s now famous quote “new normal” gives you a ”rational new normal.” Bernard said.
On the fly, Silverstein coined her own two-word catch phrase.
“I guess it is more of a new frugality,” she said. “I think that is what would characterize where we are heading the next few years.”
But whether you call it “rational apathy” or “new frugality,” Silverstein is not sure the concept has legs.
“People will be much more frugal for a few years, but you have to wonder how long it will last,” Silverstein said. ”It’s human nature to figure out the “new greed” once again.”
Now there’s a two-word phrase that is more economical way of saying that “greed is good,” the mantra of the Monopoly money go-go days following Michael Douglas’ portrayal of slimy tycoon Gordon Gekko in the 1987 movie Wall Street.
“I have to agree with Patty’s take on that,” Clark said. “I do not think we can make it through a decade of frugality.”
Contact John Rebchook at JRCHOOK@gmail.com or 303-945-6865.< class="related_post_title">Related Posts:>