I’ll make this Friday post short and sweet.
We are most likely headed for a Depression or a lost decade like Japan had. At least you will hear these references more and more in the coming months and probably years ahead.
Our bubble is being deflated, both economically and mentally.
So much is wrapped up in our consumption lifestyles that it is no wonder this change in the course of events does not bode well for us.
To me, it seems we are angry about what is being taken away from us, but we aren’t too enthusiastic about it.
You would think there would be protesters in the streets asking for justice to be served. For the people who stole billions of dollars from the American public to be put in jail. Instead our own money is not being used to save us, but to help save the very institutions that helped get us in this predicament.
There is a time and place for personal responsibility. In fact, you should always take responsibility for where you find yourself. However, we should not stand idly by and let things happen as they are without speaking our mind.
My mind is made up…
We can not spend our way out of this mess. We must solve the root problems and correct them there. And I truly believe fixing the root problem will cost a whole lot less than dumping money into a wound that can not be healed.
I firmly believe that we must speak out about the way the government is spending our money. And how they will force us to pay it in the future. Basically robbing future generations for an ease of our pain today.
This makes me think back to the American Revolution and the Boston Tea Party. A government exploiting their own people for their own gain.
The protests have begun. The new Tea Party has started. People are waking up. They refuse to be depressed. They have gained their enthusiasm back and are becoming angry.
The winds of change are whipping violently in the land of the free. And not all of it promises to be good change.
It is becoming too easy to be jaded by our politics. I hope and pray that true leaders will emerge in this crisis that will lead with integrity and in common purpose to promote the welfare of the people…
Tags: depression, Economics
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Amen! Pete and I are planning to attend the Chicago Tea Party in July.
Betsy Wuebker’s last blog post..ON THE WINGS OF EAGLES
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Very interesting post, Jeremy. I think you said it best with these words: We can not spend our way out of this mess. We must solve the root problems and correct them there. And I truly believe fixing the root problem will cost a whole lot less than dumping money into a wound that can not be healed.
So true!
Michele -
I agree with you fully except on one point; I think that since we have woven such a complicated and tight economic web over the past century, fixing the root problem would cost us a whole lot more than simply dumping money. It’s easy to dump money; it’s much harder and more expensive to actually fix the problem.
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We can not spend our way out of this mess. We must solve the root problems and correct them there. And I truly believe fixing the root problem will cost a whole lot less than dumping money into a wound that can not be healed.
That’s an awesome quote you made there, Jeremy. I love it! You sound very wise.
Michele’s last blog post..Confessions from an Amish Farm
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@ Betsy – You will have to tell me all about it.
@ Michele – Thanks!
@ Jason – It might have a huge “opportunity cost” or other costs, but more taxpayer money might not really be needed. Even if it is deployed with the utmost wisdom. I’m saying that laws can be passed to reward things that benefit the economy and punish things that hurt and destroy the economy. I think I might eventually write a post or a series talking about how we can solve these problems.
Cheers,
Jeremy -
Jeremy,
I have to say that this is one of your best posts. It’s nice to see someone take a stand instead of just sitting back being miserable. I was struck by your last line because when this mess first started I said something similar to my friends, but not as elegantly as you did:
“I hope and pray that true leaders will emerge in this crisis that will lead with integrity and in common purpose to promote the welfare of the people…”
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I must part with your assumption that “we are headed for a Depression.” How do you define Depression? Anger without enthusiasm? If that were true, every recession would be a depression. Economists would say a Depression is a 10% decline in GDP. Have you asked anyone who actually lived through The Great Depression how this recession compares? Did you know that this current recession is still not worse, with regard to job losses, than the recession in the early 80′s?
I believe that all of the mainstream media, and unfortunately some in the blogosphere, feel as if they must use the D-word. It’s nothing more than sensationalism, because it’s simply not true.
If you were with a group of people you loved and thought you were going to die, would you say, “We’re going to die!”?
Certainly, if we get anywhere near a depression, it will be partly because of all of the sensationalism with regard to our economic condition that we get from the media (and bloggers).
Nearly 50% of all employed workers are afraid they will lose their jobs. We are already at 8.1% unemployment now. Even if we hit the worst that economists are saying now, which is 10%, then more than 90% of those people worried about losing their jobs are worrying more than necessary.
Do you know why they are worried? It’s not just because their neighbor lost their job. It’s also because you can’t go anywhere without seeing or hearing a headline with some sensationalized word, such as Depression, tragedy, bleeding, dead or panic.
I also must firmly depart with your assertion that people have “gained their enthusiasm back.” Which “people” are you speaking of?
The one phrase in your post I strongly agree with is that “I hope and pray that true leaders will emerge in this crisis that will lead with integrity and in common purpose to promote the welfare of the people…”
“True leaders,” in my humble opinion don’t say “we’re headed for a Depression,” even if they thought it were true. Have you heard of self-fulfilling prophecy?
Fear is what is killing our economy and telling people that the sky is falling only compounds that fear.
Jeremy, you don’t need to tell people to spend and you don’t need to conceal the truth. Just give people a reason to hope and you might be able to become one of those leaders that you are hoping and praying for.
“All we have to fear is fear itself.” ~ Franklin D. Roosevelt
Kent @ The Financial Philosopher’s last blog post..All We Have to Fear is Fear Itself
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Hi Kent,
First I want to say thank you for your lengthy reply. It has made me think a little more deeply about what I said. Now to answer your questions.
I would define a depression as economists define it. By using the phrase I did I wanted to compare economic depression with mental depression.
Our current recession is actually the same as the recession in the 80s in regard to job losses. It just depends on how you look at it. We had 12.5 million unemployed in 1982 and we have the same today. It’s just that the percentage is different. (a 10.8 peak in 1982 vs. 8.1 now. who knows where it will peak out this year? In January of 1982 we started out at 8.6 unemployment so we will see…) Sources: BLS -http://www.bls.gov/news.release/empsit.nr0.htm Misery Index – http://www.miseryindex.us/urbymonth.asp Financial Forecast Center – http://forecasts.org/data/unemploytrnd.htm
I dislike sensationalism just as much as you do. But we only have two choices here. Let come what may or do something about it. Politicians have used sensationalism to charge the taxpayer TRILLIONS of dollars that could be put to much better use than bailing out failed banks, investment firms, and insurance companies. Give me a break. If sensationalism is what works I will use their own weapon against them!
You say people shouldn’t worry, but some people have a legitimate right to worry. And they should take the next step and use that worry to motivate themselves to do something about it.
When I speak of enthusiasm I am speaking of all these people who are having “tea parties” across the nation. I included the link to the news article in the post. Its worth the read.
I would argue that greed is killing our economy and we should fear the power of the few people who control our largest institutions. These monopolies need broken up. The government will attack Microsoft with a vengeance. Why not attack Citigroup who is one of the main culprits in our state of affairs. Answer me that riddle.
Im not telling people to spend and I am not concealing the truth. Yes, to some extent, I will agree that fear is exacerbating the problem, but it is not the main cause.
Truth be told, when bad money comes out, good money goes into hiding. Likewise, you should never chase bad money with good money. We are using good taxpayer dollars to bailout bad financial institution money. Bad idea!
Yes, some of it is being used for good, but a vast amount is being used for bad. We must be less hasty and more discerning in how we solve this problem.
My reason for hope? I believe in the people and their power. I believe the vast majority of people have a great capacity for doing good. I think this situation we find ourselves in will make us stronger and bind us closer together than ever before. Thats if we let it. There is a lot of good in people. We have to stop hiding it. To a certain degree you are right. We must end fear! Once the fear is gone or at least lessened the good will come out of hiding and we will all be better off.
Thank you,
Jeremy -
Jeremy,
Don’t get me wrong, you certainly had some insightful and inspirational things to say in this post (not that you need me to verify that fact). To tell you the truth, I took out some of my recent frustration, over what I consider irresponsible and self-serving media communications, on you.
This post’s second sentence, “We are most likely headed for a Depression or a lost decade like Japan had,” closed my mind to anything else you had to say from that point forward. Upon a second read, it appears as if you were setting up the post for that element of “anger” that may be the element required for motivation or even a revolution of sorts among U.S. and world citizens.
Regarding spending and truth, my comment was that leaders don’t need to tell citizens to spend their money and leaders do not need to conceal truth (or take advantage of fear). They need to inspire hope through quiet confidence and dignity in the most horrific of storms.
In the event of a fire in a large building filled with people, the fire and smoke will kill less people than what takes place (panic) after someone yells, “Fire!!!”
The greatest leaders (in my opinion) are able to inspire without use of fear. These leaders give reason for people to hope. They do not conceal truth but they realign perception; they do not command attention with noise but they are quietly confident in the most dire circumstances.
Imagine a quarterback coming into a huddle just before the last play of the Superbowl as he surveys the field, the first words from is mouth are, “Hey guys, it looks like we’re headed for a loss. There’s always next year. Let’s muster up some anger and make a great play.”
Do you think think that quarterback increased the odds of winning the game with his words? What if that quarterback said, “We’re going to win this game because we’re the best team on the field. We have the time, the skill and the guts to make this happen now. We’ve done it before and we’ll do it again — right here and right now.”
Which of these scenarios do you think gives the team the best odds of winning the game?
If anything, Jeremy, you are able to inspire thought with your words. I appreciate feeling welcome to share mine — even if those thoughts differ from yours…
“There is a time to take counsel of your fears, and there is a time to never listen to any fear.” ~ George S. Patton
“Many of our fears are tissue-paper-thin, and a single courageous step would carry us clear through them.” ~ Brendan Francis
“There is much in the world to make us afraid. There is much more in our faith to make us unafraid.” ~ Frederick W. Cropp
Kent @ The Financial Philosopher’s last blog post..Finding Beauty in Ugliness
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Hi Kent,
No problems. I know you recently made another comment on one of my other posts about sensationalism in the news. I drew the conclusion pretty quickly that that was your main frustration.
I think we both know which QB will win. Its the one that rallies the troops. I have no problem rallying the troops. But don’t forget to at least think a bit about which play is going to win the game. A well executed play would probably increase the likelihood of them winning the game more than just getting fired up.
I think that’s where we are at. We have rallied the troops (some of them at least), but we aren’t executing very well. Maybe I’m judging too quickly, but I am tired of band aid fixes (even if they are extremely large band aids). I also don’t like it when people don’t accept reality.
You know, I may not know for sure (who does?), but I think the answer to our problems is going to look a lot differently then it looks now. I really don’t think it looks like us robbing from the poor to give to the rich. Government acts like we can’t live without our big institutions that are such a big part of our modern lives. Yet, if we lived without them before we can certainly live without them now.
Those are my thoughts at least. Kent, know that I appreciate your thoughts more than you know. And yes, you are always welcome to share them here.
Cheers,
Jeremy -
Thanks, Jeremy, we are certainly arriving at common ground with this dialectic. With regard to the football analogy, a well-executed play is certainly a key ingredient to winning the game; however, it becomes difficult to execute well when fear is pervasive.
The play that worked all season could fail without the existence of confidence.
Perhaps we can agree that success does not often begin with fear and anger, although those emotions are often motivating — for better or worse.
All the fiscal stimulus in the world will not work without confidence. I would argue that the economic crisis is largely a crisis of confidence. Banks don’t trust banks; people don’t trust the government; and the government only trusts their own judgment.
While hope is not a plan, it certainly is powerful — and arguably more powerful than the $1 trillion already released by the federal government. Arguably, this spending creates more fear — truly a tragic paradox.
Hope breaks the chains of inertia and allows for forward movement. Once this forward movement occurs, the crisis of confidence will slowly erode. While somewhat of a denial of the weight of economic struggle, I believe that those with voices to be heard should use them to instill hope — not negativity, even if the negativity is warranted or appropriate in context.
“If you want to build a ship, don’t herd people together to collect wood and don’t assign them tasks and work, but rather teach them to long for the endless immensity of the sea.” ~ Antoine de Saint-Exupery
“Hope is like a road in the country; there was never a road, but when many people walk on it, the road comes into existence.” ~ Lin Yutang
“Keep your fears to yourself but share your courage with others.” ~ Robert Louis Stevenson
Kent @ The Financial Philosopher’s last blog post..Finding Beauty in Ugliness
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Hi Kent,
I think I have to agree. What matters more is a bit subjective because they are so intertwined. The only easy answer is that they are both needed. The good play and confidence.
Courage is needed in the face of fear. I just wrote an article that I will post next week about fear that I think you will enjoy immensely.
I have to agree with you point that all this spending is creating more fear. It really is a paradox but makes more sense when you think about it. If the government is fearful enough to spend so much money to make things right, well then, that fear trickles down to us. If the government took lesser measures than I think there would be less fear. And if the news groups would do their jobs better.
Hope truly is powerful. And Lin Yutang’s quote inspired me to find out more about him. Thank you for introducing it to me because now I plan on reading some of his works.
Cheers,
Jeremy -
Unfortunately the more we curb our spending the more markets decline. It is a downward spiral of contraction. Spending does in fact cause markets to expand, but only if spending is rooting in consumer confidence. Just because the government is spending doesn’t mean people will invest in the stock market or real estate markets, and until there are more buyers, sellers are feeling the pinch. Very thoughtful article though.
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