Are you feeling it?
2 years ago, I never paid attention to my 401K. I did not watch the NYSE. I could have cared less about CNBC, stocks, bonds. I never even really liked math or economics.
Now - I'm a CNBC junkie. I check Moody's to see whose debt has been downgraded. I read Krugman, Roubini, and email a close family member (who was on the front line of a major investment bank until early 2008) stories every day asking for economic interpretation.
My anxiety really began with a conversation with my grandmother back in the 80's. We were studying the Great Depression and the sociological effects in one of my college Sociology classes. I asked my grandmother, who lived through the Depression, about the effects on our family and her perspective.
She said, "You have to remember that in the 1930's, much of the U.S. population lived on self-sufficient farms. Unless you were hit by the Dust Bowl, you were still able to eat - even if you had to sew your own clothes and buy shoes once a year. Neighbors worked together and shared what little they had." The time in which my grandmother described was also a time of "extended families." In fact, all my relatives lived within 10 miles of each other.
Christmas 2007, the close family member who was then working for the investment bank told me, "Banks are having a lending problem." (Another reason I think Paulson and Bernanke cannot honestly say they did not see the crisis coming.) This statement didn't register with me, though. I had just bought a new car on credit. I had negotiated the interest rates down on all my credit cards, was getting credit limit increases, and tons of credit cards offers in the mail. What was he talking about? I shrugged off the comment.
My educational background is in Psychology and Sociology. My career life is entrenched in consumer spending. Until the summer of 2008, I noticed only slight effects of Wall St. relating to Main St.
Now, I see massive changes in the Retail industry. Some driven by a collective consumer aversion to spending. Some changes due to retraction of credit lines. Whatever the reason, the forecasts for 2009 are dismal.
Which bank is going to fail next?
How many retailers are going to fold in Q1 2009?
How many more companies are going to layoff?
How high will unemployment rates go?
When will we feel the effects of state and local governments going bankrupt?
What will happen if the dollar falls and the U.S. cannot finance the national debt?
What are the effects of deflation reversing and we see hyper-inflation due to all the $$ the Fed is printing?
When I ask the family member what he foresees, the answer is always the same, "U.S. citizens are going to see a contraction of credit. Obama will decide if it's hard and swift or slow and extended. In the end we will emerge a more economically healthy nation - but it will be a painful journey from here to there."
I suppose in a worst case scenario, I can always move back to the farm.
Update:
Anxiety causing links:
2009 Economic Predictions
Roubini
Global Food Crisis
Krugman
CNBC
And just in, companies are unable to forecast 2009 earnings
From Reuters:
Instead, as the U.S. economy has entered the uncharted territory of its worst downturn in decades, CEOs across many sectors find themselves unsure what to expect -- other than things are going to be ugly for a while.
Well, it's a small comfort that only unfounded anxiety is classified as neurotic.