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Up until recently, I don't think I fully appreciated the words of Franklin Delano Roosevelt when he said "We have nothing to fear but fear itself." The statement is technically not 100% accurate. We have other emotions to fear besides fear. But, it makes a good point. Lately, I've seen our country get into a whole heap of trouble based on letting our emotions run amok. Greed caused the real estate pricing bubble. Greed caused the banking crisis (predatory lending practices). Herd mentality causes dollars to chase dollars creating stupidly wild swings in our markets (real estate and stock markets). When stocks are on the way up, all stocks rise- regardless of the merit (or lack of merit) of particular companies. People can't pour their money into the market fast enough. Same with real estate, as people were buying and "flipping" properties sight unseen. When stocks are on the way down, we trample each other running for the exits. Some great companies' stocks are "on sale" right now, beaten down by the lemming-like exit from the market. Fear is exacerbating this crisis as we all are holding onto our wallets tighter now (where just a few months ago we were all spending like drunken sailors on shore leave). Banks, who were giving loans to anyone who could fog a mirror, are now afraid to lend to anyone, including each other.
Last night Obama touched on another emotion that we need to be careful of as we navigate through this crisis. That emotion is anger. I hear people saying we should not reward those who got us into this mess, implying we should allow the banks to go under to punish the stupid, incompetent and greedy managers who ran them into the ground. I hear people saying "Where's my bailout?" when they hear we are going to help people stay in their homes. What we cannot lose sight of is that no matter what the reasons were are in this mess, we are all in it together. There's no place for anger when it comes to working on solutions. Sure, we're tempted to let the banks that made stupid decisions go under. But, what happens to our credit system when too many of them fail? We all suffer. Of course, we don't want to help out the guy making $50,000 a year and living in a $500,000 home. But, if we allow too many homes to be foreclosed on it hurts all of our property values and we all lose.
Fear is an emotion I am all too familiar with. For many years fear had me in its grip. I have largely overcome fear by the use of one technique- living in the moment. What I finally realized is fear is all about the future. Fear is anticipatory. It's never about what is happening, it's about what could happen in the future. Part of the solution to this crisis is to stop the hand-wringing and the worst case projections and get on with our daily lives. The media has been complicit in this fear-mongering. Every night on the news we hear about how bad things are and how there is no bottom in sight. The reality is most of us are still employed, still living in very nice homes, still live one of the best standards of living on earth and are in no real immediate danger of starving or being homeless. Sure things are bad, worse than they've been in a long time. But, as a friend of mine often says "It ain't Auschwitz". Let's keep things in perspective. "Bad" is a relative term. Compared to to the best of days, these ain't them (economically). But things could be a whole lot worse. And, if we keep living in fear, it's likely they will get a whole lot worse. Housing prices are falling at a record pace. But, no one seems to remember they were rising at ridiculously high rates just before that. Even a non-economist like me could see several years ago that home prices could not keep rising at double digit rates every single year forever. Whose going to be able to afford the homes? (BTW- did you catch the fact that the personal savings rate has shot up to higher than it's been in six years?). Economically, for every downside, there's usually a corresponding upside. Higher savings rates means more Americans are living within their means which means they'll be better positioned to spend at a sustainable rate in the future. Housing prices had to (and must) adjust so real people can afford homes. When home prices get back in line with what people can really afford (without gimmick mortgages based on prices continuing to rise), then we'll see people buying homes again. Lower home prices means more people will be able to afford homes.
While fear thrives on living in the future, anger thrives on living in the past. I love the saying "Forgiveness is giving up all hope for a better past.". There is no point in pointing fingers now (except to make sure we don't fall into the same traps again). While we're in the midst of a crisis and working on getting out of it, withholding help that could be beneficial to all of us to spite those we feel got us into this mess is the very definition of cutting off your nose to spite your face. Yes, some of the economic stimulus and "bail outs" will reward those very people whose greed and short sightedness created this crisis. But, what is the alternative?
I think Obama did a great job last night of laying out for the American people why we are where we are and what we need to do to get out of it. One of the things I really admire about him is his "cool" and I hope the American people follow his cue. This is not the time for fear. This is not the time for anger. This is the time for taking a sober assessment of exactly where we are now and what we need to do to make tomorrow just a little better. If we can all do that, we will pull out of this stronger for the experience. That is what I choose to believe.