Some silver lining is still there. Ideas on what to do now.

What is your response to this crisis? Mine is a (not cheerful) sigh of relief, and some suggestions

Summary:
While despair and other negative reactions to the ongoing financial and economic crisis are understandable, one can also see it as an opportunity or perhaps even a potential savior. Collectively, we were steamrolling ahead on an unsustainable path, with seemingly non-operating breaks, and many were doing the same individually as well. The crash causes a lot of pain and anguish, but it might save us from even bigger catastrophes.

 
    Layout of this long post —

  • * Introduction: How to respond, … relief, … suggestionsYou are here now

  •   Why listen to me? … take it as chest thumping if you want

  •   A few straight talking pundits

  •   Four useful avenues

  • Stock markets are down, we are in a recession, and arguably in the early stages of a perhaps lengthy economic depression. Most investors lost money in the last year, while a few (probably very few, but still: some) were and/or will be much luckier (mostly believed of course as due reward for their superior insight). The edges of the clouds are blurry, and we have no time or inclination to monitor them anyway for the metaphorical silver lining, while treading treacherous waters. There are a lot of negative emotions around – fear, anxiety, sorrow, anger -, thinly interspersed with the big hopes of irreparable contrarians or market timers (of either the sharp and smart or the simply dart-throwing daredevil types).

    One can see good reasons for any of these emotions, and one or the other affects me as well sometimes. Still, mostly I feel somewhat relieved by recent developments, and would encourage others to raise their glance high from time to time, because that silver lining is still there, on some clouds at least. It may sound strange, to say the least, so let me explain. In one sentence, this relief is there because I interpret what is happening in the world as a major enlightenment period, a transition from an often, and in many respects, completely crazy era to a perhaps somewhat less crazy one. It’s like the pleasure of being finally in the midst of a promising life-saving amputation; it must feel better than limping around wounded, hungry, and abandoned in the thick of the wilderness after an air crash, e.g. It simply fits my long-espoused philosophy of striving to face reality above all and fighting the lies, illusions, deceptions, and self-delusions we become so easily the victims of. I don’t think that the ongoing havoc will completely cure us of these, not even in merely the financial field, but I assume that some lessons will be learned by many, and a few will even transfer lessons to other areas of life, beyond investing. It has been high time to wake up, for whole societies and many individuals as well, from many miraculous dreams before doing even more harm to ourselves and our children. Our prospects, as a species, are not too rosy on this planet, and the next one is not at hand. Mostly, we’ve become victims of our own successes. We badly need different successes now, … and we may be able to deliver them if we learn to act more wisely, cooperatively and compassionately.

    I think we were, in a sense, lucky at the end even with the timing of the crisis. As an alternative, imagine it happening just a few months even later, … coinciding potentially with the inauguration of a different successor you know where, whose caliber, motivation, and embeddedness (whom and what he would represent) would not differ too much from those of the previous resident of that famous house. Who knows, it might have happened, had the party been possible to go on for five or six more months. It’s somewhat similar to how we are with our whole way of life, and level and patterns of our consumption: it hasn’t really been a secret for quite a while that we have to change in these regards, … but change is difficult, and we are too often incapable to actually and meaningfully enact it without being forced to by circumstances. It appears that there is and will be some force to help us now; again, it’s less painful and more sensible and efficient to be forced earlier and via our purses mainly, rather than later when the force promises to be even more brutal, I believe.

    I think these are deadly important issues that have many direct and indirect cause-effect connections to how we conduct our individual life, financially and otherwise. No doubt that merely stating them at such a level of generality sounds banal, irrelevant, or simply wrong for many people. Thus, I try to show evidence, and concretize and operationalize the lessons from them in my own life and work, … this post about my current position on life planning and investing at the current historic rough patch is being the next attempt. While I can understand why some see the current situation as potentially the biggest investment opportunity of a lifetime (especially for some young people), my ‘silver line’ view and hope is of a different kind. There is a NOW Magazine article, titled Upside of the downturn in the Feb 19-25 issue with which I agree a lot, … although I expect the coming out of this multifaceted crisis more difficult and less certain than suggested there.

    Since the post ended up being very long, it’s broken into eight segments. You can move to the next one by clicking at the button below, or you can have a quick look at the structure in the box of links on the top.

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    After weeks of brooding, post was finally published on March 8, 2009

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