Monday, October 13, 2008

What it is

This photo, one of mine, does not have an obvious connection to my topic today. I titled it "improbable sunset," thinking of my sister-in-law Diane's comment that sunset is often so gorgeous that if you painted exactly what you saw, it would look patently artificial. This is a real sunset, untouched, and viewed from an ordinary spot, a parking lot, as you can see.

A contrarian thinker, Edward Hadas, writes today in the NY Times, ". . . in comparison to real human calamities---natural disasters, epidemics and wars---messed up markets aren't a big deal."

He is right about that, and it's a good perspective. The fact is, if the house burns down and you manage to get out with the cat, you will be very grateful just to be alive. Granting that, we need to be careful about minimizing the probable effect of what's happening on our own small lives. For those who don't have much in the way of investments, it may all seem irrelevant. So far.

What's happening? The consumer economy has died. The death bell of No More Easy Credit is continuously tolling. Sometimes it is obvious; it tolls over the body of the sexy, crazy American automobile industry, for example. Whoops, no one saved money to buy the next car, you could always get a loan and cash back too; now you can't even get a loan. If you do have enough cash to buy a car, you don't want a gas hog, having seen what the price of gas can do. Auto dealerships with row after row of big, shiny SUV's are closing all over the country. General Motors---can you believe it?---is in big trouble. It is affecting every economy on the globe.

But some of it is yet to become obvious, the part about you. We're all in this together. The news will go something like this . . .

Shoppers spend less on groceries, buy fewer prepared foods, eat out less, start choosing the cheaper entrees. That means the checker at Giant Eagle and the guy at MacDonald's are going to be let go, along with the waiter at the sit-down restaurant, the dishwasher there, the guy who does valet parking. The restaurant begins to cut corners, stops buying produce from the local organic gardener, say.

Every job lost means governments bring in less revenue. Taxes, that is. On the local level those taxes have been supporting the infrastructure of civilized life: police, fire, road maintenance, sewer and water. Then there's the second tier of "essential services:" the schools, the parks, the library, the arts. When there isn't enough money for all that, what do you think will be cut? Whose job?

Then there are the nonprofits, including churches, which provide another level of services that maintain the social order. They are already seeing the electric bill go up; most were already operating on pared budgets. If church members lose their jobs, will they pay their pledge to the church or NPR or The Nature Conservancy? Not if it's pay that or buy groceries.

The message is not Be Very Afraid---fear is not a very good guide. The message is, be realistic. While this is not a calamity, it is much more than a speedbump on the hilarious theme park ride we've been on, which now (here's the connection) looks as improbable as the sunset in my photograph.

This is a big fall. We will land in a different economy. As the shock waves hit every home, every city, the experience is going to be not unlike the alcoholic's "hitting bottom." It had to happen to get us into recovery. And whatever anyone tells you, recovery's not a party.

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