Concept Z3r0
By Sylvia Martinez-Medrano | Editor-In-Chief
Webster’s defines complacency as "Smug selfsatisfaction" and there is probably no better word to describe the current state of the economic and financial malady.
I had an interesting conversation the other night about this and the person I was speaking with had an overriding belief that we cannot suffer, economically, simply because the current generation is not prepared to deal with it. While I certainly agree with the latter assertion, the former continues to baffle me. I am not prepared to deal with a lengthy hospital stay as a result of a car crash, but that alone does not cloak me in immunity from having an accident.
Here is a little bit of deja vu for you, compliments of Wikipedia: "In the 1920s, Americans consumers and businesses relied on cheap credit, the former to purchase consumer goods such as automobiles and furniture and the latter for capital investment to increase production. This fueled strong short-term growth, but created consumer and commercial debt. People and businesses who were deeply in debt when price deflation occurred or demand for their product decreased often risked default. Many drastically cut current spending to keep up time payments, thus lowering demand for new products. Businesses began to fail as construction work and factory orders plunged."
Sound familiar, anyone? See any price deflation going on? The Wilshire 5000 has only lost about 2.5 TRILLION dollars in value. What about the loss in home equity? About another trillion or two. But I think you get the point. Were those folks any more prepared for the Great Depression than we are today? I would argue that while they were perhaps a bit better equipped to provide for their own sustenance, they were as complacent as we are today.
The other morning, there was news that the Institute of Supply Management reports our economy undergoing a significant contraction during December. Even still, a trip past the local mall provides a busy scene. People are streaming in and out, carrying boxes and bags of imported trinkets to their imported cars. They will then use imported gasoline to drive to their home, the mortgage of which is likely to be owned by a foreign investor. Yet the average American citizen sees nothing wrong with this picture. Or could it be that they do not notice the picture at all?
House Speaker Nancy Pelosi on the $168 Billion tax rebate says, "We are making history. What has passed the Congress in record time is a gift to the middle class and those who aspire to it in our country." while the middle class is spending their Wal- Mart Christmas gift cards on food and other necessities. And they are making history all right. Shame it will end up being the WRONG kind. How can we ever hope to focus the population on the urgency of our current predicament when our leaders are willing to make it worse by handing out freebies, bailing out those who willingly make poor investment choices and telling us everything can be ’free’ if we will only pull their lever on election day? Or am I putting the cart in front of the horse?
A different opinion might be that our leaders are giving the public exactly what it wants. In either case, I am sure that our state of unprepared-ness will not constitute a free pass from the negative effects of a recession or a retraction of any of the financial excesses we have enjoyed over the past few decades.
Comments(9) 
Jun 03, 2008
