Welcome To The New Normal
So I was having a conversation yesterday with a friend, comparing our “great recession” battle scars and talking about how we are moving forward. After laying out my plans for the next five years, I asked what his plan was and what he said just floored me.
“I am just keeping my head down till all this passes over and we get back to normal”.
Readers, if you think like my friend does I have some news for you. This IS the new normal. In fact, we will be lucky to maintain the level we are at.
This was never a normal recession brought on by supply and demand forces. This was brought on by shortsightedness and delusion on the part of business, government, and individuals. It is what happens when Money acts like a demon and masters its handlers rather than the other way around.
I remember in 1999 when the Glass-Stegall Act was repealed at how giddy the business world was. My boss at AIG however was not happy. He explained to me the implications as best he could ( I was just a tech) and I replied “It sounds like Gambling“. He said “It IS gambling. The only difference is that a Casino is better regulated than we will be, and they have to have the money to actually pay out if someone wins big.” He left the company shortly thereafter, but man was he right.
Since then, the financial world basically went freaking insane. people that made 40k a year were buying half million dollar homes, assured that they could “flip” them before their ARM rate went up. Companies became overleveraged to a laughable degree. Financial dealings became so complex that no one even knew what was bundled into what when they bought it. Companies became so de-regulated that they could basically do anything short of selling meth to make money. But even that was not enough, so a Shadow Banking system developed beyond the reach of any single state monitoring system.
Honestly, the very fact that we have a “Shadow Banking System”, should have been an indicator that something was terribly wrong. I mean, “The Shadow Bank” sounds like the antagonist in a James Bond movie.
But de-regulation and condoned irresponsibility were not enough. Oh no. Banks and lenders had to get predetory. Instead of marketing to people with good credit, Credit Card companies figured out they could make more in fees than they could in actual business, so they targeted people with bad credit or no credit. Banks followed suit and started manipulating the timing of deposits and checks to create overdrafts. When they got busted doing that, they just automatically signed people in to “overdraft protection”, so if you used your debit card to buy a cup of coffee and the funds were not there, rather than decline the card and give you the option of using cash, they would cover the coffee for a small fee of $35. People were racking up hundreds of dollars in fees thinking that if they did not have enough money on the card, it would just not go through.
It just keeps rolling on. Now we find that the Libor rate has been fraudulently manipulated not just by one bank, but by several. And, my personal favorite for the summer, JP Morgan Chase makes oodles of cash off of Food Stamps.
As bad as things are here, you know what? The US is actually a freaking bright spot in the world economy!
The Eurozone is just now figuring out that just because Greece and Portugal (and Spain, and Italy, and Ireland…) share the same currency as Germany, that will not magically make them as fiscally responsible as Germany.
You might think China is a bright spot with a booming economy, but by the time the Eurocrisis settles, the world is going to feeling the effects of Chinas economic slow down. They are running out of people to export to, and their domestic consumption is not going to sustain growth.
Couple all that with the economic burden of soon having 30% of the population past retirement age living into their 90s and 100s and I think you can see, this is not going to just perk up.
The message that I want to get accross is this:
1. You are living in the new economy. THIS is what you have to work with. Work with it now before it gets worse, because it can.
2. The people at the top are cheaters and liars and play dirty. You might need to do the same. Use magic. Invent something. Be clever and mobile if you can. Stash gold in Singapore and invest in businesses in Mongolia. Hustle. Christ, lie if you have to.
I know a group of people that formed a company that does nothing but pay for an address and an answering service that acts like you are calling a large office. They can put “VP of Marketing” on their resume, and when it gets a brief lookup, there is an address, a phone when someone calls, and other people that will return reference calls. Shared illusion.
Get clever and get cracking.
