But first a story about my six-year-old inventing a sandwich, to keep the mood cheerful and prevent any middle-class amateur investors from jumping out of windows (as for the stockbrokers, they can all jump as far as I’m concerned):
On Thursday at lunchtime Graham asked for a PB&J and some goldfish on the side (the cheesy kind, not the swimmy kind). I said “You have that every day at school. Why not have something hot, since you’re home today?” (It was Yom Kippur, and we’re in a very Jewish town.) His response: “Yeah, but I don’t have it with goldfish. Goldfish make it better.” Then he went away and I kept working on something for a minute or two. Then he came back with a loaf of raisin bread and said, “Can I have it with raisin bread?” “That’s a good idea. Sure. Do you want the bread toasted or untoasted?” His demented, absolute genius response to this was: “How about one side toasted, and the other untoasted?”
Could there be a more perfect six-year-old lunch invention than a PB&J on raisin bread, half-toasted? If I ever open a restaurant, that’s the first item going on the kiddie menu.
Now, on to less important matters:
“All Signs Pointing to Panic” is also the headline on today’s Chicago Tribune newspaper. And that was before the markets took another huge dive this morning (now recovered somewhat, at 12:22 EST but who knows if that will last).
A smaller sidebar (but still front-page) headline from a few days ago in Investor’s Business Daily said “U.S. Lost 159,000 Jobs in September”. That one, understandably, is getting buried under the trendier news reports and panicky “don’t panic” advice articles plastered all over newspapers, the internet, and television. I don’t rightly know which is more important: job loss or a very large market drop (and yes, they’re related… obviously). But I know why the market panic angle gets more play: it’s sexier.
The financial crisis is like some spectacular Hurricane Katrina/Armageddon/Poseidon Adventure/Great Depression/Bruce Willis/O.J. Simpson blockbuster with lots of starring roles for big, deeply flawed characters and maybe a hero or two (eventually), whereas unemployment, trade deficits and other wonky policy issues are like an artsy Sofia Coppola or Ingmar Bergman film, all ambiguity and mess, where nobody’s got any answers and they’re all rather mopey about it.
It makes me wonder how much, in the era of the 24-hour news cycle, such downward spirals, and especially the reporting on them, are like a modern self-fulfilling prophecy. If we could rise above the fray, we might look at the middle class in America, Europe, and Australia and see an emotionally fraught hungry beast eating itself out of dread, and years of denial now brought to light, leading inevitably to blame, then shame over poor choices, and ultimately to personal regret. Now that I think about it, maybe this period is like our own National Yom Kippur.
It’s also like a mass response that’s following the classic Kubler-Ross stages of grief [denial, anger, bargaining, depression, and then acceptance]. So now instead of being on Orange Alert, we’re in the midst of a painful bargaining process with ourselves over what values we hold most dear, on the precipice of depression as we’re forced to admit one can’t have it all, and perhaps a few years or decades away from a full acceptance of the consequences of whatever it is we’ve killed through our irresponsible behavior.
And yet, these are not dark days for everyone. It does not work that way. Never has.
As things have gotten bad in the current panicky economy, I have found myself thinking of one of the classic portrayals of the Great Depression and the crash of 1929, in Frank Capra’s film It’s a Wonderful Life. I’ve even heard cable and PBS pundits cite portions of that movie recently to make their point. But the line that keeps coming back to me is deliverd by a very persuasive George Bailey, telling all his savings and loan customers not to go crawling to Mr. Potter to sell their S&L shares at 40 cents on the dollar.
“Don’t you see? Potter’s not selling, Potter’s buying!” shouts the great Jimmy Stewart from atop the counter. And in the presence of such sound and caring leadership, most of his customers listen, and stop panicking, and make sacrificial choices that, while still in their own best interests, maintain some concern for their neighbors and community.
The article in the Tribune today ends on a similar note:
Chicago market strategist Paul Foster also is pessimistic about the market’s direction over the next month. He is predicting severe volatility for several more weeks. But for all of Foster’s outward gloom, investors can only hope there are more like him. Saying he couldn’t resist the opportunities he saw, Foster spent the last half-hour of trading Thursday purchasing some 20 stocks for his retirement account.
While it may be hard to see the forest through the trees right now, especially in the absence of a trusted and wise leader like George Bailey, it’s still likely that the worldwide economy is a zero-sum game. That means somebody’s gotta be winning, if there are this many losers. (China, for one, is winning big.)
Maybe the best idea is to live like the Amish, or like subsistence farmers throughout the Third World, and not even play the game at all. As for the rest of us… we’ll hunker down and try to wait it out. And we’ll get rid of Mr. Bush, the new Herbert Hoover, quicker than you can say “Zuzu’s petals”.