The Crisis: Crossing a Worry Threshold
Something changed for me today in the way I view the financial crisis. I’m sure I’m not alone; the stock market losing nearly a thousand points in 36 hours can have the effect of, as Samuel Johnson would put it, focusing the mind wonderfully. Johnson was referring to the prospect of being hanged. After today, I’m not sure I’m seeing all that much difference between the two situations.
Of course, we’ve been reporting on this collapse for over two months now, so maybe I’m a little late to the pity party. But I suspect this week, with the plummeting dow and the existential threat to the nation’s auto industry and the predictions of doom for retailers, has brought a lot of people to the realization that we are in very, very serious trouble, and heading into deeper trouble..
Reaching that conclusion feels slightly un-American to me. Sure, we have crises, but they’ve always felt to me like missteps on the ever-climbing road to success. Like a broken bone; sure, it’s a drag, it’s going to take some time before you’re fully up and about, but even in the depths of your pain, you know it’s going to heal. That’s the way things work, right? We go from worser, so to speak, to better. It’s a law of nature. Energy crisis? There’ll be so much cheap gas in a few years, we’ll all be driving unimaginably large SUV’s. The Iran hostage crisis? Horrible for those poor people, but they finally made it home after a year-and-a-half.
That’s partly why The Great Depression stands out so much in our history. It hit just about everybody, and it lasted for 13-years, which must have felt more like forever. Is it any wonder it shaped, forever, the worldview of our parents (if you’re around my age) and our grandparents? But in the decades since, even The Depression came to be seen as something the country successfully overcame, and, more to the point, something that could never possibly happen again.
I’m not saying it IS happening again. But then again, when the Secretary of the Treasury says we are experiencing something now that could only happen once or twice a century, as Henry Paulson said today, the comparisons don’t feel too off the mark. I certainly don’t have the financial expertise to give you graphs and charts showing how it might or might not be true. I’m just talking about the way it feels. Everybody said the stock market had reached its bottom last week. Everybody was wrong. It’s starting to worry me, and it’s starting to feel like its going to be part of my worldview for a long time.
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Comments: 1
Hey Jim, I prefer not going first, but o.k.. If you want responses, I suggest blogging on Hillary and her nomination for State, and watch the comments pour in! Now on to your "worry threshold" blog.
What I liked especially about your commentary is how it describes the evolution of a feeling without expressing a political opinion or policy recommendation. Reactions like "Something just doesn't feel right about this one!" or "Might this be the real deal?" pretty much sum it up for me. In the immediate aftermath of 9/11, I felt uneasy about my country's physical safety and thus my own, and of course it was a feeling that came all of a sudden rather than evolve. Since the Lehman Bros. collapse, I find myself caught up in a growing worry for my country's economic survival - and by linkage, my own. What concerns me today is that I had interpreted yesterday's events as a kind of quantum decline even BEFORE I read of your similar take on them. That suggests that if enough consumers and investors share that reaction simultaneously, the result might be that proverbial self-fulfilling prophecy! Now I'm posting this response after Friday's market close, but with very little revision from last night's draft; that's because today's bounce is probably of the reflexive, or the "dead cat", variety.
Throughout this episode, however, I remain sustained by the belief that if we do emerge fully recovered in, say, less than half of the time it took from the Great Depression, and without the catalysis of a World War, then the 21st will indeed become the second consecutive "American Century" - and the Chinese will just have to get in line for the 22nd!