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Facing Our Fears

October 7, 2008

 

 

“I gain strength, courage and confidence by every experience in which I must stop and look fear in the face…I say to myself, I’ve lived through this and can take the next thing that comes along.” Eleanor Roosevelt

 

The baby boomer generation never had to face a real gut-wrenching financial crisis. But look at these headlines: “It’s a Worldwide Crash” (Jim Cramer, thestreet.com, Oct 6, 2008.) “A Financial Ice Age Dawns” (Business Week, page 020, Oct. 13, 2008.) This is after the president, Fed chairman, Treasury secretary, Congress, and two presidential nominees spent two weeks hashing out a $700 billion bailout of the financial markets. They yelled and blamed others about the “worst crisis since the Great Depression.” After a horrific week in the stock market, the Senate, House, and then the president signed a huge, bloated bill with $150 billion of added pork “sweeteners.”

Just add more government debt to the already massive, growing debt burdens our children will face throughout their lifetimes and see what happens: more panic. If we think our children don’t notice our fears, we’re deluding ourselves. My 13-year-old daughter wrote for her school assignment that she prayed the “Bush bailout” would save our economy. It’s heartbreaking enough to live in Michigan and view signs like the one on Orchard Lake from a painter “desperately needing work.” It is beginning to remind me of the movies of the Great Depression but rather than “Brother, Can you Spare a Dime?” it’s “Brother, Can you Spare Three Trillion?” for Fannie, Freddie, AIG, Lehman bankruptcy leftovers and for the government to spare bad bank investments that were packaged with over-priced, under-financed mortgages mixed with other toxic financial manure.

Nothing will save us but ourselves. The lack of calm confidence from our “leaders” is mirrored in ourselves. 75% don’t trust the president and even more people distrust Congress and the financial markets.

We watch credit markets deteriorate while blame is scattered everywhere. Was it the greed-obsessed landscape of no-money-down lending, mortgage-backed security loans or credit default swaps? Was it the naked shorting of financial stocks or the absurd credit risks that investment banks and mortgage companies took? Was it the massive volume of borrowing and buying from the United States and its citizens on mortgages, Chinese goods, stocks, and other products on highly-leveraged credit cards and IOUs?  All of these things eventually brought down Fannie Mae, Freddie Mac, Lehman Brothers, Bear Stearns, Washington Mutual, Countrywide Financial, and ruptured AIG and Wachovia, to name a handful.

Each day brings a stunning new surprise. How much will this all eventually cost us taxpayers? Who is the next financial institution to be saved by the Federal Government? Maybe Ford and GM will get their requested loans from a government that is wallowing in a staggering amount of debt.

            The new documentary movie, “I.O.U.S.A.” being shown around the country, paints a grim picture that an economic disaster will befall our nation if the federal government’s $53,000,000,000,000 is left to continue to grow. Warren Buffett, viewing the premiere of “I.O.U.S.A”, commented, “I do not regard our national debt as unduly alarming. We’ve overcome things far worse than what is going on right now.”

            I’m glad the world’s richest man isn’t worried. He has always been able to make money for himself in good times and bad. But while he and a few others show calm confidence, Ben Bernanke, Hank Paulsen, and George W. Bush move desperately from one panic-driven moment to another.

There are real reasons to fear. But what good does it do to experiment with one financial device after another and then plead for more money to buy out bad loans that banks made to one another? Now, no one trusts anyone else. Banks won’t lend to each other. People are dumping their stocks and bonds and are afraid that their money market funds will become worthless.

After the horror of 9-11, our president didn’t ask Americans to pitch in and help the country. He said, “Do your business around the country. Fly and enjoy America’s great destination spots.” The message was for us to keep shopping and buying. We have had that message drummed into us for decades: Buy with credit and keep our economy strong. And now, after years of continued buying, U.S. shoppers finally have cut spending (NY Times, “Full of Doubts, U.S. Shoppers Cut Spending,” Oct 6, 2008.)

So here we are, drowning in debt, our house values and retirement funds plummeting, paralyzed by fear. The worry about terrorists seems so benign when the localized panic about losing our jobs and savings is so powerful. And that’s the irony: terrorists struck Western democracy and capitalism and we fought back with borrowed billions in Afghanistan and Iraq while we kept borrowing and buying more and more. We became our own worst enemies with new, exotic weapons of financial mass destruction.

Who’s winning now? We may fear another Al Qaeda attack or whether Ahmadinejad’s Iran will get nuclear weapons and worry that Israel is as leaderless as the United States. We can fear our next president and whether he will be too weak or too strong in foreign affairs or if either has a clue about what will fix our financial mess.

None of this fear will help our economy or us. Somehow, we need to keep living and stay positive, no matter how gloomy things look. We must focus on improving our own lives. We should pray for our “leaders and advisors” and then listen closely to the words of Adele Brockman: “Use your imagination not to scare yourself to death but to inspire yourself to life.”

Amen.

 

Arnie Goldman is the president of a small business in Southeastern Michigan and is trying not to be “scared to death” for his company, its employees, and his country.

 

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