Last week I had a client ask, ”what do you think caused the recession?” What a lead in for letting me get on my soapbox—it’s the exact reason I’m writing this blog!
I’ve been a CPA long enough to remember other recessions and our reactions to them. When we’re in thick of it, we bemoan our fate, think deeply about what they did wrong and swear we’ll never be so stupid again. During the energy crisis of the 70s when we were shocked by rising energy costs, we switched to the smallest cars possible, turned off our lights and even gave up daily light savings time to cut our energy usage.
Thirty years later, the giant gas-guzzlers we drive are a testament to our escalating energy consumption. Likewise, we forgot the real estate crisis of the early 90’s and once again bought bigger and bigger properties and drove up prices and mortgages. We knew we were heading for trouble, but closed our eyes, held our noses and jumped anyway.
Why do I think this happened again? Because we never take the time to really talk about money or to examine the beliefs behind our behaviors. It’s much easier to make a few mechanical changes, keep on moving and hope it doesn’t happen again. But little by little, the troublesome behaviors return because we never really understood why we got there in the first place.
We will get out of this recession. But, if we don’t want to end up back here again (next time in worse shape), we must talk about more than the mechanics of money. We need to really understand the money beliefs that drive our own financial choices. Because once we start living our true beliefs, the world will shift around us.
It’s not about them, it’s about us. Living our own examined beliefs will straighten out the world’s finances. Because really—is accumulating more and more and buying bigger and bigger things really what’s important to us?
I could go on and on… What do you think?
5 thoughts on “What do you think?”
I think you hit the nail on the head, Jane. But I am skeptical about the possibility of that examination happening in our capitalistic culture. I do think that there will have to be a serious shift in government policy to help. And if humans have been obsessed with money and material possessions this long, I wonder how much longer it will be before we evolve out of that preoccupation.
Jane, You are so right! We need to take responsibility for ourselves and our own finances. We need to look at why we get ourselves into the situations we get ourselves in,learn from them and turn them around. It all starts with self awareness and examing our beliefs and transforming the ones that no longer serve us. Great Article! Judy 🙂
I say focus on owning rather than renting. I mean, when you so call “buy a house” with a mortgage, you truly don’t own it until you pay it off. Also, don’t speculate on your home – the east and west customers leveraged their homes for other things, so much more than where I come from. A 100% HELOC, what fools! Too much leverage and too long in debt has never been a good model for anybody.
Right on Jane. OR…perhaps… it is not being effected enough to remember. I remembered The Depression and the effect it had on me! I have enumerated many times all the things, the repetitious things we had to do and eat; the things we did without… and my very first impression of money. Indelible impressions. I had to learn to separate those fears from reality… with your help. Otherwise I would have been too fearful to step forth into the future. So I urge you to remember and build from it, not fear it.
I think our behavior has some impact on the financial system but our current recession was forged in large measure by the easy money Wall Street investment bankers and hedge fund operators created by selling “safe” mortgage backed securities to surprisingly unsophisticated foreign investors. The immediate effect was the creation of huge short term profits for the Wall Street elite while the average American scratched their head and knew something was wrong with the run up in house prices. We suspected that there was a bubble but could not understand the real reason. While cheap credit and consumer spending reinforced the economic growth, fundamentally I believe Wall Street is to blame and this shows the need to regulate these industries. I would like to think my personal spending/saving habits carry weight but in the end our individual efforts are a mere drip in the ocean of global finance. We need a governmental partner capable of seeing these issues for what they are and step in before the “too big to fail” crap allows these criminals to escape. I believe the year I graduated from college (1983) over a third of Yale’s graduating class immediately went into investment banking according to Harper’s Index. Hmmm. One could interpret this cynically to mean that a liberal arts education teaches greed is good. Or that the “best and brightest” really are irresponsible, self-centered hedonists who use their degrees and connections to line their own pockets at the expenses of others. Either way, I hope future generations learn from our mistakes and place the planet and other people at the same level as profit generation.