What To Do When the Economy Is Hurting

Before giving advice on this important subject, I want to step back and get a bit of perspective on this economic "meltdown." As I write this (Oct 21, 2008), I've heard more times than I can count: "this is the worst economy since the Depression!"

From October 9th through the 16th, I went on vacation with my wife. We decided to take the ole SUV and drive north! We live in central Florida and so we wound our way through Florida, Georgia, South Carolina, North Carolina and Virginia. We spent a fair amount of time on the Blue Ridge Parkway, which at this time of the year is quite spectacular, but we also went through a number of good-sized cities.

With the United States experiencing the worst economy since the Depression, what did we see as I drove through five different states?

We saw nothing whatsoever different from the last time we made a similar trek (two years before). No, I take that back. At a few of the gas stations, they had run out of the Plus and Premium Grades.

But that was the ONLY thing out of the ordinary. We saw one retail establishment after another open and operating. We saw huge malls flourishing with TONS of people shopping. We saw thousands of tourists along the Blue Ridge Parkway. The shops on the Parkway were open and doing a brisk business.

We're in the worst economy since The Great Depression? My images of this tragic time are: long bread lines, shops closed all over the landscape, more than 25% unemployed, countless images of DEPRESSION.

Is that happening now?

Yes, credit has tightened. Yes, several major investment firms have either gone under, been bought out or bailed out. Yes, Fannie Mae and Freddie Mac have been infused with gov't capital and put more under gov't control. And yes, AIG needed bailing out.

But when people pound and pound on the airwaves that we are experiencing the worst crisis since the Depression...well, there's something missing that kind of bothers me. That "something" is the complete collapse of our economy with enormous unemployed, shops closed, an economy come to a grinding halt.

Maybe I'm being superficial and I should thank my lucky stars that it hasn't come to that. Okay, I've done that. But what if this whole gig is not really what it's made out to be? What if a group of powerful folks wanted to convince us it was perfectly okay to spends billions, now potentially trillions of dollars, to bail out an economy that...well...didn't need all of that money going in that direction?

What did this powerful group of people have to do with the problem to begin with? Hmm. That's an absolutely fascinating question. You gotta love when politicians call hearings to place blame when those very politicians have so much to do with the bad scene.

I don't pretend to know the inner workings of mortgage-backed securities (those financial "instruments" that poisoned the financial markets), but I do understand when you pressure banks to give out improper loans to a TON of people, that eventually those loans (called "sub-prime" in today's vernacular) will come back to bite a lot of people. Follow the string on that and you'll find the bad guys.

Okay, enough politicizing. I just wanted to offer another perspective on the economic scene. I was going to give some advice on how to operate in this kind of climate, but this post is long enough already. Stay tuned, and I'll post on this very shortly.

Comments

[Stefan Töpfer]

Interesting

[Rachael]

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