Finally a small amount of time to be able to write something. I was back east for a meeting in Winnipeg and stopped in to visit my son and daughter-in-law in Saskatoon. It turned cold the day I left, well cold for someone from the west coast.
These past few weeks I have been hearing this phrase “self fulfilling prophecies” on the radio and TV as well as reading it in the newspapers. Interesting phrase. It is usually mentioned that during these difficult economic times our speaking about it not getting better serves the negative purpose of it being a self fulfilling prophecy. What is also interesting is that there doesn’t seem to be any quick fix. What was to be cleared up in 6 months has turned to be a year which is turning into 2 years and possibly longer. How long did it take to create the mess we are in? I would suggest it may take that long to get us out of it.
When things were going ‘great guns’ there was nothing but euphoric hype that it would never end. If there was ever a suggestion that it may end or we should maybe turn the tap down a bit, one was usually drowned out by the great economic champions of free enterprise. Now it is only a few months old and the same captains of industry are telling us to stop talking about it because it is a self fulfilling prophecy. Maybe we should talk about it in any fashion we want to. Maybe some are very upset over loosing a big chunk of net worth. Maybe those that are saying to tone it down should be told to shut up. We are still hearing from so many ‘experts’ about what will happen. These in large part are the same ‘experts’ that were telling us nothing would ever come down, everything would always go up.
Well that sound that you hear you have heard everyday for a while now. That sound is the toilet flushing. Toilets have to flush to get rid of certain objects that you don’t want around anymore. Our system is beginning to notice things that may need flushing. It isn’t a matter of fixing, or throwing more money at it, or saying it will get better. It is a matter of getting rid of toxic loans and bad credit decisions and God knows what else. That takes time. It will be painful and it will not be pleasant but we will pull out of it and sometime in the unknown future it will be better. Right now we are still trying to understand how bad the wounds really are. Besides medication, much of getting better happens over the course of time — a priceless and limited commodity for all of us. Much of how we get better is to give things time to heal. It may take longer than what we originally expected but given the resilience of our communities, neighbours, family and the democracies we all live in, I have no doubt we will survive. Those economic wounds we suffer are far from the heart that creates the meaning for our lives.
Tinfoiling 
An unsustainable economy built on a house of cards. There is deep healing ahead.
We didn’t talk our way into a boom and we’re not going to talk our way out of today’s problems, which run way deeper than superficial themes like “consumer confidence,” “attitude” and “perspective.”
Anyone who expects things to “return to normal” is expecting things to go from “worse” back to “just bad.” We were overextended by at least 2%, but probably more like 4-6%. If we are truly committed to rebuilding a healthy economic model — one based on thrift and needs instead of credit and wants — it’s going to take a lonnnngggg time to see things like equities markets and home prices back to where they once were. Getting things “back on track” and “getting banks to start lending again” are the last things we should be trying to do.
Last fall, the “economic experts” were saying we’d start seeing a turnaround in Q1 2009. Then it was Q4 2009. Now it’s “early 2010.” Phhhbbbttt… These peppy optimists are either in denial, ignoring our real problems, or hoping we restore a broken system.
Personally, I prefer a healthy dose of reality.
The idea that the economy will get worse/stay bad because people are talking about it is patently absurd.
I love this post thanks – kind of puts it all in perspective and looks at it in a more grounded way.
@Morriss Talking about it is not the problem. Using hyperbole to over or understate reality is. In America, 92.5% of the citizens have jobs. Instead of using that perspective, all we hear about is the 7.5% who have fallen on hard times. Delinquency rates on loans are up markedly. Still, at my credit union nearly 99% of loans are paid as agreed. That story isn’t heard either.
Don’t get me wrong – the economic environment stinks right now. But overuse and misuse of words “crisis,” “catastrophe,” and “meltdown” are equally pungent. A “dose of reality” is fine as long as it isn’t sensationalized and is rooted in fact. The sky hasn’t fallen, nor will it fall anytime soon. Things are never as bad as media will have you believe. Our goal, like Gene implied, should be to take this time to realize what’s truly important in life while remaining optimistic that brighter days lie ahead.
@cuwarrior You’re right on.
There may very well be a 7.5% unemployment rate in the US. But that does NOT mean that 7.5% of the citizens: 1) are unemployed, and 2) have fallen on hard times.
The rate applies to an estimate of what the workforce is. That number fluctuates with economic conditions. As an economy falters, more people enter the workforce, often looking to supplement their family income. With jobs tight, they can’t find one, and become a statistic. This does NOT equate to “falling on hard times.”
Furthermore, economists will tell you that there is something they call “structural unemployment” a concept that implies that at any given time, there is a minimum unemployment rate that exists, regardless of the strength of the economy. As a result, even in the best of times, the unemployment rate generally doesn’t fall below 2%.
In other words, 7.5% of citizens have not “fallen on hard times.”
I think the number one objective that our government should have is to restore confidence. The economy, the financial markets, etc. are incredibly complicated mechanisms. What makes them run is one thing: Confidence that the markets will work. Even if nobody understands HOW they work.
To that end, the new Administration is already failing miserably. Bill Clinton had it right: The role of government is to EXPAND the wealth of the nation. Obama believes its role is to REDISTRIBUTE the wealth. And worse, he’s sucking up part of the wealth in order to redistribute it. Three years and 11 months to go, and we’ll have a new president.
Just tink happy tots…
The problems with our economy have little to do with a lack of consumer confidence. In fact, you could argue that an overabundance of consumer confidence helped create today’s problems. People believed houses would increase in value forever. As long as that happened, everything would be glorious.
A lack of consumer confidence didn’t create the seizure in the banking industry, nor the problems in the credit market. The insurance industry’s problems aren’t connected to consumer confidence. Same thing in the housing industry. And the auto industry screwed itself. The fallout from these problems have certainly helped fuel an environment of fear (aka, a “crisis in consumer confidence”) affecting both the stock market and the retail sector.
But let’s say, for argument’s sake, that we can “restore consumer confidence.” Let’s say we can talk people into feeling secure about their jobs, make them believe their home values will increase, reassure them that their kids will actually go to college, that their stock portfolios will start growing, that their retirement will be okay, and that they won’t have to take care of their broke Boomer parents. Then what? Are we supposed to go back to buying/spending/borrowing at unsustainable rates?
Even if you boost consumer confidence, what are people going to buy? With what money? When one is upside-down in their mortgage and their credit card limits are slashed, where does the money to buy a couple of jet skis come from?
It’s easier to talk about “consumer confidence” as an abstract concept than as a personal experience. Look at your own behavior. Are you feeling confident? Who do you know that isn’t cutting back? Packing a lunch more often? Dropping that afternoon latte? Postponing a planned purchase? Trimming a couple days off that vacation? Having fewer fancy dinners with your spouse? Buying fewer $25+ bottles of wine? How about at work? Are you hiring? Who do you know that is? Did you increase your budgets this year? Are you building branches?
All the downbeat press and pessimism may not be helping things, but they aren’t the fundamental roadblocks holding back our economy. Our economy has a dysfunctional addiction to excessive credit and overconsumption. Until we start talking about how to fix that problem, we’re not going anywhere new or better — just different flavors of the same shit.
We just cut ourselves off from an economic heroin addiction. Anyone who has been through recovery from an addiction knows it is neither fun nor easy. It hurts, and it sucks.
Problems only get fixed when people know about them, understand them and talk about them. That applies to any problem – be it a crisis, meltdown, or whatever label you use to characterize it.
@JP: Don’t confuse (or interchange) “confidence” with “unrealistic optimism”.
The financial system — the global economy, in fact — is so complicated that unless there is confidence that the system will work, things fall apart.
And when governments come along and willy nilly do things like bailing out some people who have suffered something and not others, it shakes the confidence that people have (and I’m not simply referring to “consumers”) in it.