Silver Lining

I know this is anecdotal as well, but what the heck. During these tough times I am seeing some good things happen. I am seeing family helping out family. There are several instances in my own extended family where family members have worked together to help out those in economic (and other) need on a much greater scale than in the past. This may or may not be a bonding experience in the long run, but it is nonetheless rewarding to see it happen. Times like these are times when you need family.

The same can be said for neighbors. A bit more limited here than family as your neighbor is not about to pay your mortgage for you, but neighbors are still helping out and sticking together. Well, at least where I live.

Now I realize not all families are like mine or neighborhoods either, but I do have a glimmer of hope that these hard times are bringing out the best in people. Eventually it may lead to the other end of the spectrum, but for now I am seeing some positive things in terms of people coming together.

I would be remiss not to add the another silver lining here. We have been acting truly stupid over the past decade or so. Spending well beyond our means, building debt and expecting tomorrow to fix it all with higher real estate values. We are now, finally, coming back to reality. We are now doing what makes sense. We are spending within our (more limited) means and perhaps even saving a smidge. Guess what, this is normal and sustainable. We can live this way. Not all the existing businesses and financial institutions can live with this reality, but we can. Government needs to wake up to the fact that this is a good thing that is happening - no matter how painful it will be for a while. Please write your Congress people and ask them to do what they can to allow this correction to correct. Spending trillions to prevent it will only make it worse and kick the can down the road. Don't agree, let me give you a two-plus-two lesson.

Point one: over the past few years savings was nonexistent and Americans actually spent more than they made. Now there were numerous enablers for this; easy credit, the housing bubble, our trading partners, low interest rates, mortgage securitization and the like. They all enabled us to spend more than we made for years and now most of these are all disablers. The housing bubble has popped big time, credit is dried up, our trading partners are in severe pain and securitiztion is a word that will exist only in history books. These are all facts, not fiction. If you disagree, time to read another blog.

Point two: how do we cure a decade or so of debt-laden over-consumption by trying to inspire consumer spending through the government taking on massive deficits? I can wait here while you ponder. Take your time. We have a lot of time, so consider the answer well. Done? If you gave this some serious thought you only have one answer. The government taking on more debt to "stimulate" us to spend more money is perhaps the most idiotic move imaginable. Okay, on a short term basis, this may ease the pain and buy some time, but are we really looking for short term gain here. We need long term solutions. If those smart folks out there can explain to me how fiscal stimulus makes sense in this environment, please enlighten me. Seriously, I want to know. This is just befuddling for me.

Disclosures: None.