My sister called me this morning and asked me if I was okay. I told her I was fine and asked why she was asking. The answer was that she suspected I had quite a lot of money in the stock market, and as we all know, the stock market’s not exactly a happy vale of ponies these days, and as it turns out, especially today. I assured her that notwithstanding our 401(k)s and IRAs, we were not, and as far as those retirement accounts go, we were no worse off than anyone, and still had three decades to go on them anyway. So in the short run, at least, we were fine, and indeed probably better than many, since I’m getting a lot of foreign sales recently, and they’re denominated in Euros. She was relieved. As am I, come to think about it.
Which is not to say I’m sanguine about what comes next after this. Over at MSNBC, Howard Fineman suggests that we’re at the dawning of the Obama era (whether Obama wins or not, which is a neat trick, really), in which a new set of economics more in line with Obama’s will come into play. I’m not sure I buy Fineman’s police 100%, as Marge Gunderson might say, but I do think today’s bailout bill failure pretty much wraps it up for the Bush administration, in terms of its ability to influence the continuing political life of this country, and certainly does look like the death knell for a certain brand of economic theory that states that free markets are best until their own stupidity gets the principals of that market in trouble. This does not imply that we’re in an “Obama era,” since the bailout plan was largely scuttled by conservative Republicans who view the bailout not as the creeping sort of socialism but the sort that gallops, and is here for your daughter. No; at the moment we’re in a “WTF?” era, in which no one seems to know what comes next.
Which leads back to my sister’s question of whether or not we’re okay in this time of financial uncertainty. In the short run we are. First, I can’t be fired, since I work for myself. This certainly lowers my stress level. Second, thanks to the amusing nature of book accounting, especially “reserves against returns,” I know I have book royalties coming in for the next year, even if I don’t sell another book between now and whenever (which seems a silly proposition, but we’re looking at a worst case scenario). Third, thanks to the awesome financial stewardship of my wife, we’re one of those rare American households that has actually managed to save a fair amount of money — enough to help us scrape by for a fair amount of time even if everything well and truly goes to Hell.
Fourth, we don’t have significant amounts of consumer debt: Our cars are paid off, we don’t keep balances on our credit cards, and while our mortgages aren’t insignificant, they’re well budgeted. We’re also ready to pare down the frivolous expenses (read: the ridiculous sum we pay for satellite TV, etc) if necessary. Finally, and thank God, all of us are healthy, with no chronic health issues to sap us economically. So short of having barrels of rice and beans and lots of crossbow bolts down in the basement, we’re as well positioned as anyone can be in case of a worst case scenario.
Do I think it would come to that? I don’t, really. I suspect if things get bad, my family will find a way to get through it more or less successfully. I don’t suspect other people and families are as well-insulated as we are if things get as bad as they could get. And, truth to tell, we don’t even know how bad things really could get. I want Obama to be the next president, but I certainly don’t envy him (or John McCain, should he win) the economy he’ll have inherited. Whoever gets elected had better hope for two terms, because any pet projects they might have are likely to have to wait for a second term.
(I’m sure there are a few conservatives, anticipating an Obama administration, who would say this is a feature, not a bug; the only possible response to this is to say it would be nice if the conservatives could conjure a way to achieve the relatively minor objective of keeping a lid on a possible future Democratic administration’s initiatives without resorting the major disaster of imploding the global economy. If ever there was a canonical “killing a fly with a nuclear bomb” example, this would be it. I’m not laying this all at the feet of conservatives, mind you; there’s blame enough to pass around. But on the other hand one party was in the majority the majority of the last eight years, so blame, while shared, needs to be proportioned out correctly.)
I’m pretty sure this post sounds more pessimistic than I actually feel at the moment. On the other hand, at this very second the Dow is down 777 points. Maybe I’m not pessimistic enough. I do know we’re in for interesting times, both in the short and long run. In the short run, I know I’m fine. In the long run, well, we’ll see. I guess we’ll all see.
How are you set for total economic collapse? And do you think it’ll come to that? I’m interested in your thoughts.