In what I can only describe as gratuitous advice, Logan Jenkins of the San Diego Union Tribune suggests that the only way to save the economy is to open up your wallets and start spending:
We showed the terrorists by taking to the skies
– and taking vacations. We expressed our courage by going out to
restaurants, enjoying the good life.
Despite the dot-com bubble, we spent our way
back to economic, if not emotional, well-being. (Thank goodness for
cheap credit and the equity in our ever-appreciating houses.)
Well, that was then. In the wake of the subprime
foreclosure epidemic, Wall Street's credit freeze and the nervous
breakdown of the stock market, it's a million jobs and the portfolios
and 401(k)s of millions of Americans that have been hijacked.
Okayfine, Mr. Jenkins. I respect President Bush for telling Americans that we have "nothing to fear but 
fear itself". What the President was saying is that we shouldn't let a terrorist attack prevent us from living our lives as we always had but something got lost along the road to Baghdad. We violated one of the first tenets of governance inasmuch as it relates to macroeconomics; you can't spend money on guns and butter; that's exactly what we did. We mounted an expensive war on terror on two fronts while enacting a tax cut and passing the largest medicare increase in history. Imagine a Reagan Defense Department, with a Laffer-esque taxation policy, and a LBJ Great Society. Throw in a Milton Friedman induced Fed, lowering interest rates and printing money and you have a recipe for stagflation.
The American Consumer, the ultimate narcissistic adolescent, rushed out and took cruises, bought fake boobs, and stuck a Mercedes in their driveway...all of it from the newfound equity in their inflated home. In Mr. Jenkin's article, he quotes Mercedes-Benz of Escondido's Angelo Damante. Mr. Damante remarked that times are so bad that even the liars are bitching about their financial woes:
This market downturn is unlike any other he's
seen, Damante told me. No one, not even his annual new Mercedes
customer, is immune from the clammy fear of the future.
“This is the first time in my career where
people whose egos would never allow them to even say they were feeling
the crunch – they're admitting it. That's the scary part.”
Mr Damante, however, reminds us that his product is a reward for success and should not be a symbol of conspicuous consumption :
Both a practical philosopher and an
impractically generous philanthropist, Damante likes to describe the
purchase of a sleek Mercedes as a well-deserved reward for success in
life.
Let me interpret that for you. Don't buy a Mercedes unless you can afford it.
While I agree that fear is hardly a paradigm from which to operate, this pregnant economic pause should beget the question, "What should I do now?"
The economy is shifting. We're at the pinnacle of the shift away from the industrial age and towards the information age. This means that traditional businesses of making and pushing product are giving way to gathering, interpreting, and using information. We no longer make paper but push gigabytes in the new economy. If you haven't figured that out and positioned yourself properly, it's gonna get worse for you, regardless of how much you spend.
Why would Mr. Jenkins offer such irresponsible advice? Even he admits that his personal fortune took quite the hit this year:
Well, that was then. In the wake of the subprime
foreclosure epidemic, Wall Street's credit freeze and the nervous
breakdown of the stock market, it's a million jobs and the portfolios
and 401(k)s of millions of Americans that have been hijacked.
The other day, my wife and I ratcheted up our
courage and took a look at our life's savings. Big mistake. Our nest
egg has been scrambled, diminished nearly 40 percent.
Aha! Methinks I smell a motive. Mr. Jenkins is a leading-edge baby boomer, some short years from retirement...
...if YOU take his advice. Okay, Mr. Jenkins...you go first.
We'll spend our money when we're ready.
Photo Credit: www.worth1000.com
