The United States is facing some tough times.
If you’ve tuned into the news at all in the last week, you know the United States economy is on very shaky ground. And that might be an understatement. First there was the housing bubble burst. Then banks started failing. Now the politicians in Washington are scrambling to pass an economic recovery bill to head off bad times.
I’ll admit, the economy doesn’t look good right now. And I think all of us would be wise to be cautious in our money management in the near future. But as with the Great Depression, I believe that the United States will enjoy prosperous times again someday. But before we get there, I hope a few lessons are learned, so we don’t have to see a crisis like this again.
Integrity Matters
Honesty and integrity are important. This whole mess started with the mortgage industry. Banks were handing out loans they knew would go bad. People were taking on loans they hoped (but didn’t know for sure) they could afford. Real estate agents assisted home buyers in finding creative financing to make a buck.
Yes, there is plenty of blame to go around. But the lesson is that business should be done honestly. Banks shouldn’t offer loans that people have no hope of paying off. People shouldn’t take out loans that they won’t be able to afford two years down the road. Real estate agents should listen to consumers who tell them they’re only comfortable spending 25% of their monthly income on a mortgage payment. Let’s do business honestly.
Frugality Helps
I believe we are going to start seeing the frugal lifestyle enjoy a resurgence. Gone are the days of excess. Like the days of the Great Depression, though maybe not to that extent, consumers are going to have to cut their budgets to make ends meet. No more wastefulness. It’s time to focus on what really matters in life.
Resilience Will Prevail
When I was in high school, I interviewed my grandparents for a term paper I wrote. All of my grandparents lived through the Great Depression. The one thing that was really impressed on my young mind through those interviews was the underlying theme of hard work, wise use of resources, and simple fun in each of my grandparents’ lives.
Though times were tight in the Great Depression, each of my grandparents went on to prosper. They told tales of playing in creeks, hanging out with siblings, and just enjoying their families. They told stories of driving across the Dust Bowl in search of a better life. Though they lived through some of the hardest years in American history, it didn’t get the best of them. They lived to raise their own children and to teach their grandchildren important life lessons.
So though the economy may get worse before it gets better, I believe some good can come out of this, if we as a country are willing to learn from our mistakes. Sometimes it’s good to be humbled, and I believe that’s what’s happening to the United States right now. The important thing is that we learn from our failures.
Photo by Koshyk.
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Good article and very good point.
The important thing is that we should learn from a crisis, and re-adjust.
There is an interesting article by Richard Branson (admittedly, not the best example of humility) today called “In defence of capitalism”, but in any case within the article he does touch upon some of your same points (see article here:
http://www.dailymail.co.uk/new.....ccess.html – the publication is also not best known for humility, but work with me here!)
He talks about ‘entrepeneurship’, and the value of working on something in which you believe. And also, most importantly for me, he makes a distinction between self-interest and greed. The former is a neutral quality, and couple with integrity is a positive quality.
i do think things will get worse before they get better, but i also think they’ll get better. Self-improvement is the American way! in the meantime, i’ll keep reading this and other frugal blogs, cutting coupons and eliminating unnecessary spending. and one of the most important things i’m doing is not letting my kids think we are “poor” — i want them to have a happy childhood no matter what the economy is doing. that doesn’t mean spending money on them; it just means be attentive to their needs and letting them know we can take care of ourselves.
Well said, Lynnae. I personally feel that the government should get out of the way of this market correction and allow things to adjust down naturally, as painful as it might be for some. The bailout will only work to artificially keep housing prices higher, which could ultimately lead to much harder times in the future. The way I look at it, we might as well suck it up and pay for all this greed now, rather than set up a house cards that will fall on our children.
Nice reflection. I know that we’ve been seeing real people hurting for a while. When I think back to some of my past excesses, well, they seem really silly now. Nice image by the way; the FDR memorial is my favorite in DC!
I’ve been trying to teach my grandkids that we don’t need money to be happy. So far, it’s working, but they are still fairly young also. Friday night 2 of them will have a sleepover at Grammi’s – we’ll be playing some cards or games, talking about school, watching a short movie from the library all snuggled up under the fuzzy ‘movie blankets’, and then they’ll get to cook breakfast in the morning (supervised of course, but anything they want that’s in the house), and then we’ll go to a couple garage sales and check out the free boxes :) Then they’ll pick fresh veggies from our garden to take home for their supper.
The thing they love is the personal attention and time. Money doesn’t come into it.
Keep your blog going in high gear, as you and other frugal bloggers will have the info that the rest of America needs to get with the frugal program and learn that one can get by on just a fraction of what the Joneses have :)
Very well said and a good discussion item that we can share with friends, family and neighbors. We need to be cautious (and, yes, frugal), not panicky, in the weeks and months ahead. Thanks Lynnae.
This crisis has been a long time coming. My father worked in credit and at the end of his career, more than 20 years ago he saw the start of this trend – where the numbers on the balance sheets today overrode the fact that there would be future losses! He was an honest man, and his last days in the credit business weren’t happy ones – after many years of a prosperous career.
But yes, the U.S. will have to go on a money diet. I see around me people who still are having a hard time getting it – but I have scrounged for so many years, it’s just going back to my old lifestyle.
But what do we do about the purveyors of paper who are created great towers of numbers that are on shaky ground and making lots of money before it all tumbles, leaving us with the clean up?
There are these peculiar financial speculative instruments I have struggled to understand. But I do know that somehow the mortgages given to folks in housing developments in the outer suburbs of California which never should have been given AT ALL, because they couldn’t afford it – somehow got sold over and over until it impacted global markets which didn’t know that those housing developments EXISTED. Something is wrong with that. Unfortunately, I fear that the big wig number crunchers will still manouver around any damage to their own bank accounts, and let the government (i.e. US) shore everything up.
As I said, I am no financial wizard myself and don’t understand the selling and re-selling of this “paper” as mly father called it – but it’s sheer speculation – That has to be regulated and stopped before the economy implodes.
In the meantime, we have to take care of ourselves, and we frugal types are better able to do so.
The crisis is serious, but it is not nearly as bleak as the government is making it out to be. That being said, there is actually good opportunities out there for people who are smart and patient. And it never does hurt to be wise with your money no matter the economic climate.
I would like to share in your fundamentally optimistic outlook. Unfortunately, America now lacks some very significant advantages that we had during the Great Depression. Back then a significant portion of the population had a farm somewhere in the family. That meant that many people who lost city jobs could go back to the farm and survive relatively comfortably, if cash-poorly, until the economy recovered. We also had cheap sources of fuel back then. We don’t now. We had the potential for vast numbers of manufacturing jobs, which were soon created during the war effort. We now have few operational factories, and no cheap source of credit or fuel to build them with. Physical labor was much more the norm back then. Few Americans today are accustomed to actually *working*, physically, to provide for themselves. We’ve consumed a great deal more of our country’s natural resources (water, coal, timber, oil) than we had in the Depression era. And obviously, our collective debts, both personal and national, were absurdly trivial back then compared to what they are now.
I think we’re in for very tough times ahead. And I think as a nation, we’re ill-prepared to deal with a serious and prolonged economic downturn. In fact I think it will amount to a major “correction” in our unsustainable standard of living. I hope for the best, but I’m also trying to prepare for something much less palatable.
Another disadvantage USA has now is that back then people knew that if they didn’t provide for themselves there wasn’t any other way to survive, except charity. No government handouts (some charity) so one couldn’t just sit around and wait for a government check to bail them out.
I don’t think there is as high a percentage now of people who would actually rise to the occassion and get busy and take responsibility for themselves and their families, ie, those who are actually willing to do what it takes to survive, and not just sit and wait for the bailouts. And before anyone gets mad at that statement, notice I sais ‘as high a percentage”, meaning yes, there are those who will, those with personal fortitude, personal responsibility, ie, the backbone of America.
And I think that people are ‘too far out of the wilderness’ – the time frame is too long from the days of doing it all to survive, without all the modern conveniences – a lot of the survival skills have been lost thru the generations. That is a sad loss.
People “back then” knew how to take care of themselves because they had been, in turn, taught. We can learn again how to do it. The frugality movement is a sign that we are beginning to do so! Human beings are stubborn and often don’t respond except when really pressed – well – the circumstances are here now.
My parents and greatgrandparents were in the Depression and no, they didn’t live on a farm or anywhere near one! They were in Brooklyn, N.Y.
But with hardwork and thrift and grabbing educational opportunities, they bettered themselves. No, physical labor isn’t the trend of the day – MENTAL work is. That’s why education is so important! We need to be multi-talented and extremely flexible with several income streams (or potential income streams)and keep our ears to the ground. I have already contributed to my retirement to an extent with my social security payments, for example – so I deserve that back.
But I also know how much or little I am going to get and have to plan accordingly. The extravagent and frivolous lifestyles of the past 15 to 20 years will be a thing of the past for all but a precious few. But our lifestyle is still enviable. Watch those programs on the travelchannel!! So we have much to be grateful for, nevertheless.
Hi Lynnae,
Just heard your interview on NPR this morning, which brought me here. Thanks for writing this article. Thought you might enjoy my similar views on it in my short article titled: “Why This Scary Economy is … Good For Us?” http://thesucculentwife.typepa.....car-1.html.