The Next Great Depression Is Here... If We're Lucky
Don't panic — this is just a speed bump. You want to ride this one out. Think long-term. It's a marathon, not a sprint. Keep your money where it is — trust the market. The worst thing you can do is panic.
Reassuring words, which can all be traced, ultimately, to the same dudes who ringed our noses and walked us to the edge of this particular ravine in the first place. The Dow is literally in freefall as we speak, plunging beneath a five-year-low, with no bottom in sight. So here's my open question: Are you guys sure we shouldn't panic?
You know, not that we don't trust you absolutely anymore.
I, for one, think this is an excellent time to panic. I'm strongly considering curling up in the corner over there and rocking like a freaked-out autistic kid.
The challenges we face as a nation grow more complex every day, and every day, America's superstrength weakens. Our financial institutions — the only corner of industry we haven't already sent overseas — are imploding. Every day our political process grows more absurdly corrupt, while our watchdog media slumbers, dreaming of Britney. Our families are virtually all fractured; our prisons are teeming; our schools are churning out violent morons.
How bad does the state of the nation have to get before we will be advised it's okay to panic?
Collectively and individually, we are already enslaved to a diminished future by decades of unrestrained gluttony and greed. And we are getting fatter, stupider, and more indebted by the moment. I'm not being judgmental; that's just a sober read of the stats. One in five Americans today believes the sun revolves around the earth. One in four read no books at all last year. One in three believes in UFOs.
Kind of makes you wonder who we are, anymore. I think we've been bellied up just a little too long at the all-you-can-eat buffet of the world. You probably think I mean that figuratively. But one out of five Americans is overweight now, and one in four of us is clinically obese. Yowsa! One in four!! We are not just the fattest people on Earth, we're the fattest people in the history of people. We're so fat our favorite color is gravy. We're so fat that when our beeper goes off, other countries think we're backing up.
But I digress.
Time to put two and two together, people, whatever THAT adds up to, and take a good hard look at what we've let ourselves become. Not too long ago, America led the world in things like energy production, automobiles, cotton, hope. Today we lead the world in substance abuse, incarceration, bulimia, and serial killers. America's #1 export today is — this is true; can anyone guess?
Debt.
As esteemed philosopher Dean Wormer of Faber College once noted, "Fat, drunk, and stupid is no way to go through life." Yet here we are, living that immature dream, inspiring nobody.
When you're driving as fast and recklessly as you can, a 'speed bump' is quite sufficient to wreck a car. I say it's time to panic. And rejoice. Because things are going to get a hell of a lot worse before they get better. And that may be exactly what this country needs.
The Great Depression was no barrel of laughs, by all accounts. Poverty, despair, unemployment, hunger, and hopelessness are harsh mistresses. But in retrospect, they raised us right. The Depression built character on a national scale, taught us virtues like self-reliance and sacrifice and compassion, brought families together. Roll your postmodern eyes at the quaint earnestness of it all, but it truly did make our nation strong.
And just as the Great Depression brought out the best in us, our postwar prosperity has surely brought out the worst. Our blissful blinkered indolence has left us thoroughly unprepared for the challenges of the new millennium, challenges which couldn't be more immediate or acute. Iran is twenty-two seconds from becoming a nuclear power. Russian warships are steaming toward Venezuela, literally, as you read this. And here, right at the moment when we could really use the Greatest Generation, we find ourselves armed with...the Me Generation.
D'oh!
I modestly propose that a new Great Depression is exactly what America needs to wake ourselves up, put some moral fiber back in our diet, and give us some breathing room so we can catch up to the rest of the world again. We got ourselves into this mess, and it's high time we got ourselves out, by deliberately provoking a painful and protracted worldwide financial calamity. We did it to them in 1929, and by God we can do it again.
It shouldn't be that hard... These are fragile times, and information moves at the speed of light, and we have the herd effect on our side. Does anything seem unsinkable this week?
Consider this scenario: A local TV pundit half-jokingly suggests, after some next bit of bad financial news, that maybe we'd better pull our money out now, before all the ATMs stop working. A few people take him seriously; they tell their Facebook friends. A news chopper films the line forming outside some local bank; Fox News picks it up for the national feed, and next thing you know your spouse is calling you at work, saying 'Honey, they are closing banks and there's cops everywhere..."
The FDIC 'insures' your $3 trillion in consumer deposits with just $45 billion in assets...that's just one and a half cents per dollar. Won't take much to empty that box — WaMu alone was projected to cost the FDIC $24 billion, so you do the math. Math is hard! The FDIC will have to take the collection plate to Treasury, who'll have to go to China, who'll tell us to screw off. Or to turn the other way while they take Taiwan out back for a beatdown.
There's no question in my mind that America can be strong and resourceful and self-reliant again. But it's going to take an actual catastrophic system failure to drive those lessons home. Sure, maybe we can heed this 'dress rehearsal' warning and wise up and put ourselves back on track, but the smart money's on no fricking way. You know us; we're going to fall right back into our crack-addict habits as soon as the credit lines open up again. There are just too many suits in cahoots working to keep us spellbound, too little in the way of countervailing force. Brace yourself to resist the messaging this winter, as retailers try to shore up The.Worst.Christmas.Season.Ever.
You know what'll probably make you feel better about this whole thing? A new iPod Touch. Click here to buy it right now, and make no payments for the first six months!!
I'm not saying a new Great Depression is definitely coming, I'm just saying put what's left of your money in a mattress, plant apple trees in your backyard, and buy a gun. And bullets — don't forget bullets! To be first in line for the run on a bank is irresponsible to your country. But to be last in line is irresponsible to your family.
Don't let anyone tell you to relax...That's how they walked us off the cliff in 1929. Embrace your fear. Fear makes you smart; fear makes you strong. It's the only proper mindset to face the coming storm. In fact, why not practice? As an experiment, try to live within your means, just for a week. Buy only some things you absolutely don't need, and try eating only 50 or 60% more than your body can possibly process. Put a couple of dollars in a box and see if they're still there at the end of the week. Try it! Just for fun!
The only thing to trust is fear itself. Because the reality is, if we all choose to get a little leaner and hungrier, it might not hurt quite so bad later this year or early next year, when that choice is taken from us.
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fear also makes us crazy
Keith,
The only problem with your post is that everyone putting their money in the mattress will make things worse, not better.
The politicians have pushed this spending, debt, and job exportation by stupid regulation and tax policy coming out of Washington DC for the last 50 years. Tax write offs for interest on loans, and taxing income from savings accounts doesn't promote saving.
The really sad part is that Obama and McCain both seem to be the wrong man to lead this country to a better place. Both only offer more failed policies of the past.
I'm sorry for the double posting, either I suck or the posting system runs funny. Or both ;-)
Keith,
Great post. I think more Americans need to speak up like you do, even if it's not very popular. I noticed that most Americans don't accept their way of life and their nation to be criticized. Negative words about America are even more rejected when they come out of foreigners. Hence different opinions and perspectives don't make it through the collective consciousness of America. I've been told here to shut up because nobody cares about Europeans. Okay, I admit we're some arrogant lesson-givers and pompous pricks ;-)
But some things are obvious to an outside eye. It seems to me that Americans are brainwashed into thinking that their way of life, which is based on a never-ending accumulation of material goods, is the only way to reach happiness. This brainwashing that starts at their very birth prevents them to question their society and to wonder about their personal needs and aims.
Hence the storages all over America : when the house is too full up, crap goes into the garage and the SUV is parked outside. When the garage is too full up, crap goes into the storage. Do you know that a company built storage places here in France, and they're renting at 1 euro a month now because their space stays desperately empty.
Hence the storages all over America : when the house is too full up, crap goes into the garage and the SUV is parked outside. When the garage is too full up, crap goes into the storage. Do you know that a company built storage places here in France, and they're renting at 1 euro a month now because their space stays desperately empty.
After having gone to America some times, I felt sorry for the people there. Americans appear to me as victims. They've been made believe on purpose that consuming is how to attain happiness : the world gets rich thanks to the sacrificing of a whole people who work hard to consume hard. As buying this doesn't make one happy, so one buys that. And then that. And then this. It's an endless race. And while Americans spend their leisure time in the malls, oblivious of what getting cultured, getting emotional, taking care of their family, could bring them, foreigners read, love, and cook for their family.
But it's so inherent to the American mind that their way is the best one in the greatest country on earth that it won't be easy to have them understand, or just consider, that there might be some other ways of life that might perhaps bring more fullfillment.
I appreciate what you are saying and do not take offense at your comments. My family has been penny pinching a lot more than we used to throughout the Bush years. We were never extravagant. Before I was married, I could fit all of my worldly posessions into 3 small rooms. There was a genuine relief involved in downsizing to the more essential things in life. I learned that I require a lot less 'stuff' than the marketers and sales-people lead me to believe.
Oddly you mention reading and cooking. These are my two great hobbies. I have been a reader throughout my life. And, in tighter economic times, I can rationalize spending money on wholesome home cooked meals more than on dining out in chain restaurants replete with fatty and over processed foods. I spend much of my life in the kitchen cooking for my family and it does give me a sense of purpose and well being.
My husband and I, although nowhere near as deprived as the Depression Generation, have learned that we are happiest spending quiet time together talking, watching a movie at home and spending time with our daughter. There are positive lessons to learn in harder times. It may be a small silver lining, but it is true.
loril,
You might have some european genes from some ancestors ;-)
Spending time with your family and building bonds with your daughter must bring your much happiness.
Moreover these bonds and memories might help a lot when she'll be a stubborn teenager keen on opposing you ;-)
I like your post. It's full of kindness, generosity, and humanity. You might feel sometimes to have such an ordinary life far from the hype one can see in movies, but movies are full of imaginary crap in which ladies wake up after a late night with perfect make up and in which guys always find some space to park the car right in front of the posh restaurant ;-)
The path towards happiness might be to apprehend the imperfection of life and of people, and to accept these flaws in both, and nevertheless love both.
And does the world at large really want the Americans to stop consuming ? After all, we all get rich on your backs, and then we can live our way thanks to your way.
I'm not sure that this crisis and a recession, or depression, can change the American mind. It seems to me that education and traveling abroad might be more efficient. And making good informative programs on TV (since not many will read any book nowadays), organizing more student exchanges between foreign universities, flying Americans to foreign countries, is expensive.
I hope I don't sound as condescendant or insulting, because that's not my purpose. Obviously I'm sterotyping : it's not all black in the US and all white outside the US. What is needed in America is an intellectual offer for everyone to open one's mind and look at other ways of living.
How "Un-American"! Obviously, you want Americans to suffer! Michelle Bachmann has something she'd like to say to you!
yeah, and the terrorists live in caves...
Great post Keith. But FYI it's impossible for one in four to be obese it only one in five is overweight.
Good pickup
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I replied to this earlier, but somehow it didn't go through. The one in four figure is from the CDC, the Center for Disease Control in Atlanta, a pretty good authority on such things, as quoted in the Wall Street Journal here: http://blo
In the larger scheme of things, it seems possible that what we are witnessing is the end of capitalism itself. It may take 5, 10, twenty years but as someone here already pointed out, a system dependent on growth can't go on indefinitely. (Not to mention a system dependent on oil-- another subject altogether
Yeah, I've never understood the relying on growth thing. Isn't it enough for McDonalds to have EVERY hamburger eater in the world? They have to start making salads and coffee to keep growing and growing and growing to stay competitive? Why? I say once you have every hamburger eater -- you WIN! Call it a day! Open a flower shop and try to get all the flower buyers!
Great post! The whole country needs this fun but yet so truthful view point glued to their fridges. But I'm guessing we've given away our capacity to think and manage our money like our parents did. Save for it then buy! Not buy and then try and pay. The baby-boomers need a good dose of reality, along with the Me generation. If we let the marketeer's and snake-oil salesmen tell us what we need or should have we will forever be chained. Bring it on the Depression Bomb, maybe I'll get to know my neighbors and share a meal or two. Fortunes were made without putting a nickel into the Wall-Street drain-pipes by millions who were more like the turtle than the hurried rabbit. Where did this notion come that all retirement money Must be invested in the market? Please!
Kieth, that was the most accurate and prescient piece I have read, to date, concerning the comming global financial meltdown. And IT WILL COME.....s
Good article. Makes sense.
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Hey there guys...wri
1) To Hopefulinfl: I'm not trying to slam Generation Me, but I don't think it's going too far to suggest that the current generation might be just a little bit softer than the one raised in the grim survival struggle that was the Great Depression. The times make the man. And I do accept my generation's portion of blame in producing this indolence. And I hope very, very sincerely you kids can come up with some good ideas to fix this country, now that you have been stuck with our bar tab.
2) pdubya, JBS, and Rich_Misty have it exactly right IMHO: I'm talking about instinctual fear, not propaganda
3) Sorry to those who think it's irresponsible to suggest all's not well. I can't toe that company line, that everybody has to just act confident and the market will get back on track. Is it too much to ask for an economy with strong enough foundations that it can withstand critical scrutiny? "There is no cause to worry. The high tide of prosperity will continue." — Andrew W. Mellon, Secretary of the Treasury, September, 1929.
Keith, your words carry a lot of truth. For years US citizens have more than willingly become a part of the debt funded spending spree. Consider them the herd. The leaders of the herd are in fact the folks on Wall Street and other financial wizards who have one basic goal: to separate you from your money!
Interestingly the "leaders" of the herd started drinking too much of their own KoolAid a while back and actually believe much of their own propaganda regarding investing, markets, and our economy (oh, let's not forget a negative savings rate too).
What you suggest is to split from the herd. Some of us have already done that to some extent. I believe it is a worthy goal. One big problem with doing so is that we humans are hardwired to go with the herd. We are also socialized to go with the herd. I think you are correct in that PANIC may well serve as a psychological tool of sorts to "cut the cord" and leave the herd to what ever extent an individual needs and can tolerate.
Keep up the train of thought. I look forward to further words from you on this site.
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