Being Realistic in Unreal Times…..

Listening to what is being said from myriad sources (even Warren Buffet, our financial role model/icon has just admitted that he got caught in this downturn) I keep thinking that part of the problem is that it all seems surreal, like we might wake up tomorrow and find out this was the nightmare of the American Dream and it’s over and everything is all right now. Yes, we are watching the headlines, encouraging our political and economic leaders to face today’s challenges, yes, we all know what is going on.

But this isn’t the America we grew up in! This isn’t the world we imagined for ourselves!

Why? I grew up in the 50s when we “ducked and covered” to be prepared for nuclear war. Talk about unrealistic! Why did anyone ever imagine that hiding under a desk with our arms covering our ears would be a form of protection? But we were dutiful students, lining up, being quiet, behaving properly (for the most part), so we could get it over with and go out and play.

Then in the 60s we rebelled and tried to do things differently. We succeeded to some degree. Forty years later we have a black president, a female secretary of state and a very different world. So what did we leave out? How did we also get into the worst financial crisis of our (I’m speaking for the 60 and under crowd) lifetimes?

I think we got here by being unrealistic. I think we still made up stories that the people who ran the big companies knew what they were doing. I think we expected the government to somehow take care of things when we weren’t doing it for ourselves.

Instead of a debate among almost violently opposed pro- and anti- big government advocates, why weren’t we looking around asking really important questions, things like:

“Do you really think it makes sense to live beyond your means expecting a house to carry you into the future?”

“What are the odds that this financial house of cards we’re building will fall down around us one day?”

“Do we really need that new ____________ (fill in toy, car, dress, house, trip, fantasy life style) or are we forgetting to save for a rainy day?”

I am not actually that surprised that the Madoffs and Stanfords of the world are now being exposed, because they are the furthest extreme of the Ponzi scheme mania. How different from creating a Ponzi scheme was CitiBank to take investor dollars and put them at such great risk, with no true guarantee of a return?

Isn’t anyone pissed off at these people? But aren’t we all also responsible for their behavior? Haven’t we all been acting like it would last forever?

I don’t think fear is such a bad thing. If these people making these decisions had been more fearful, they might have thought their strategies through more carefully, taking into consideration worst case scenarios.

I’m learning to embrace fear right now. I have a fairly secure financial situation that I am now being even more careful to evaluate and protect. I’m single, I’m in my early 60s, I have what looks like several more years ahead of me to enjoy being on this planet, so I’m feeling very serious about what that could look like and how I can create more security for myself.

Isn’t that the responsibility of every individual on the planet?

No, I’m not berating and wanting to punish people who bought into the “dream” and extended themselves way beyond their means. One, they are paying a dear price for that in their current situations; and two, they were also modeling themselves after iconic figures flashed before them through all sorts of media (stage! screen! television!) convincing them that they too were invincible and somehow invulnerable to the consequences of the basic laws of finance.

No, our whole society is guilty of this–and our whole (now global) society is paying the price.

So, how do we be realistic in unreal times? I think asking those questions above is a start. I think making sure we go back to basics is the next step. I am asking myself about each and every expenditure–do I need it? How important is it? If I saved that money instead, what would be the benefit?

I’m not becoming a paranoid miser hiding out in my house out of fear and self-protection. I am actually spending money on things I value. I am also saving money. I am also paying attention to what is going on in my current investments. I am making no assumptions about anything.

Facing the problem is the first step. What we do about it will be very interesting to see over the next three to five years, which is how long I believe it will take to fully turn this problem into something we reflect back on as the best learning opportunity of the 21st Century.

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