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What I’ll tell my kids about the Great Recession — Pop Economics

What I’ll tell my kids about the Great Recession

by Pop on February 11, 2010

Post image for What I’ll tell my kids about the Great Recession

If you’re visiting from the Carnival of Personal Finance at Len Penzo, welcome! I’m really glad you’re here. Remember to subscribe if you like what you see!

Sometimes we forget we just lived through history.

Or I should say, sometimes we forget we’re living through it now. I read a post on Get Rich Slowly a few days ago that reminded me of that. Twenty years from now, kids are going to ask us what it was like to live through one of the worst recessions in American history, just the same way I asked my parents what it was like to live during desegregation and they asked their parents how it felt to fight a World War.

One time, at a circus, the performers brought me out of the audience to join in their crazy antics. I’m told I did really well. But looking back at the event, I really had no idea what was going on. Clowns danced behind me. Bright lights shone in my face. I knew the crowd was there but couldn’t see it. A performer whispered instructions in my ear seconds before I had to follow them. I was so focused on performing, that I took very little of it in.

I kind of feel like that now. I have almost no perspective on the recession and what it’s meant to my life. But I bet that very soon, we’re going to realize that we’ve lived through extraordinary times. And maybe when we’re all old and retired, our grandkids are going to want to know what it was like to be here, right now.

A few days ago, in a comment on that Get Rich Slowly post, I said that I didn’t think I’d have anything interesting to say. So far, at least, I’ve been really lucky and haven’t been directly impacted by it. However, I don’t think that’s going to be a good enough answer. This is a first draft of history if there ever was one, but this is what I think I’ll tell them.

Nobody thought it was their fault. But it was everyone’s fault.

No one admitted that they helped cause the recession. And if they did, they only did it in the context of laying blame on someone else. We heard bankers say, “Yes, we granted mortgages to borrowers who couldn’t afford it, but they chose to take on that debt.” We heard foreclosure victims say, “Yes, I took a mortgage I couldn’t afford, but I figured they wouldn’t give me a loan if I couldn’t handle it.”

But we all contributed to the crisis. Our family, too. Though they could afford it, your grandparents bought a house that was clearly overpriced. I didn’t bat an eyelash when the appraiser just happened to hit the exact value your grandparents needed to get the mortgage approved. At the time, I shrugged it off as standard practice. If an appraiser did that nowadays, we’d call it fraud.

The next time a home on their street was for sale, the sellers probably looked at how high a price my parents paid and tried to one-up it. And so the housing bubble rolled on.

That was just our family’s small contribution. The kindling for the Great Recession was a million little missteps stacked on top of one another. So when something finally did create a spark, it all went up in flames.

There were no soup lines. The worst of the pain stayed hidden. But it was there.

For me, it didn’t seem so bad. My investments were cut in half, but I knew I had decades until I had to worry about retiring. I didn’t see soup lines on the street like your great grandparents did or scores of newly homeless people crowding into tent cities.

But there were little signs of the pain all around us. Every once in a while, I’d drive down a street and wonder why I hadn’t seen a car in a particular driveway for a while. A few days later, I’d see dozens of garbage bags piled in front of the house. They held the family’s belongings. I’m not sure if the police would do that or if the bank sent a crew to clean it out. But that meant we had one less neighbor.

I didn’t lose my job, though I was always in fear of losing it. I did know several people who lost their jobs. Even if they didn’t have an emergency fund, most of them had families or friends to help. They didn’t starve. But the real toll was emotional. They’d start a job search with optimism. A few months later they’d cry at night. For so long, we measured our self-worth by the strength of our careers. Not having one felt like a personal failure.

We went from feeling like we could control our own destinies to feeling like our destinies controlled us.

For a long time, politicians and economists wondered why a certain strata of poor, lower-class Americans strongly opposed taxes on the rich. Our best guess was that even though they were poor now, they believed that some day, if they worked hard, they could be among the ranks of the wealthy. America offered that kind of upward mobility.

But after the crisis started, many of us stopped believing that hard work equated to increased wealth. It seemed much more random. Workers near retirement saw their investments drop by 25% or more. So they had to work for several more years even though they followed all the standard financial advice. The advice wasn’t wrong. It just didn’t prepare us for the outside possibility that something so bad could happen.

What I hope I can say:

We started to see wealth as a way to make us happy, not as an end in and of itself. And we realized we were more than satisfied with what we already had.

We stopped blaming each other for what had already happened, and instead worked together to make it better.

I started an award-winning blog that now has more than 20 million subscribers and launched the career of a generation-defining pop artist (just kidding).

What would you say? What are you hoping you can say?


{ 12 comments… read them below or add one }

2 Cents February 11, 2010 at 9:31 am

I would agree with almost everything you put forth here, except for your choice of the past tense. I don’t think we’re through this thing yet. We may only be in the eye of the storm. The clowns and bright lights are still waiting in the wings. Oh boy. I went overboard with the metaphors. Great post though.

Rob Bennett February 11, 2010 at 11:07 am

Nobody thought it was their fault. But it was everyone’s fault.

Bless you for saying that. That’s the most important message that needs to be put forward today.

I have an optimistic take on how it will turn out. I believe that things are going to get so bad that there is going to come a time when we will simply have no choice but to acknowledge The Realities That May Not Be Spoken Today. Once we start talking about things realistically, we are going to discover that we have an ability to take things to some wonderful places that we never even imagined in the days before the economic crisis.

We all have heard stories about people who lost a job and thought it was the end. But then they were forced by circumstances to try something different and it ended up changing their lives in a very positive way in the long run. That’s what is going on here for our entire economic and political system. We are going through growing pains. We know within that there are better ways but we have been afraid to try something different because we have had it so pretty darn good for so long. This economic crisis is God’s (or nature’s, if you prefer) way of letting us know that we need to cut that umbilical cord once again and get out there and take some chances and move on to more exciting and enriching stuff.

We’re learning how to ride a bike and we are falling down and skinning our knees. But it is going to be fun when we figure out how to keep our balance and peddle. It will seem easy to us once we figure it out.

It’s scary. But all growth comes through pain. It’s something we have to work through.


Mike February 11, 2010 at 12:12 pm

@Rob Bennett
“Nobody thought it was their fault. But it was everyone’s fault.”
Right on.

Pop February 11, 2010 at 8:41 pm

@2cents: I have no doubt that you’re right. I almost felt like I jinxed myself by writing that I kept my job. *crossing my fingers*

@Rob Bennett: Thanks for the thoughtful comment. The idea of taking our lumps now so we have a better tomorrow resonates with me. Though next time, I hope we can find a way to a better tomorrow without the lumps. ; )

Trent Hamm February 11, 2010 at 10:01 pm

Unless this recession gets worse, I imagine it’ll be a blip in history books for our kids, much like the early 1980s recession is a blip today (even though it looked nigh apocalyptic at the time).

Pop February 11, 2010 at 11:46 pm

Thanks for stopping by Trent.

It’ll be interesting to see if you’re right. Times that look apocalyptic can either be (a) overblown or (b)actually apocalyptic. It’s probably too hard to make that call right now.

Ken February 15, 2010 at 1:13 pm

I’ll tell them that their mom and dad were lucky (crazy) enough to build a home right in the middle of it….we’ve taken a couple hits (job salary cuts) but we are moving forward…I will also tell them this was the era that their mom became a Coupon Diva (did I say how much I love my wife :-) )..we’ve learned to live life leaner….I will also tell them dad was lucky to keep his job while some close friends were not so lucky. Good post!

Jeff February 17, 2010 at 2:48 pm

I will say that it was truly the worst of times and the best of times. For most of us, the greed of Wall Street and the incredible arrogance of Government trying to manage the economy and our lives, led to fear. A fear that everything that we worked for would be washed away but worse the sacrifices of Americans before us were for naught and the dreams we have for our children are twisted into nightmare. But it was a fear that acted liked a forge to rework us into the people we could be, it took us back to basics. I will tell them that the strong America they live in was a result of the lessons we learned from living through this time.

Taylor February 23, 2010 at 1:54 am

“For so long, we measured our self-worth by the strength of our careers. Not having one felt like a personal failure.” —This is so true. We are identified by our careers in America. It is usually one of the first topics of conversation when you meet someone for the first time. If you don’t have a job, it is hard question to answer.

Marty February 23, 2010 at 7:44 am

I’ll tell my kids and grandkids that the way the system works is “they” the powers to be (elite)…grow the economy….and shear it back….every so often to keep this system and people in check. Keep people hungry and working hard with nose to the grind stone.
The derivatives in the creative housing market was just a ploy and a wonderful timely excuse to ride on while the shearing took place.
Why do things have to get sheared? Easy, the agenda was to formulate and develop the one world government and one world money system that you’re living in today. Back in my day we actually had forex exchange where currency of different countries could be traded.
Grandpa…was it painful, were you hungry?….no kids, I had seen a loophole and invested heavily in physical silver….so I did fine, rather well indeed.

Steve D February 24, 2010 at 9:26 am

So far I don’t see much indication of a fundamental change in attitudes. For example, Marty above seems to think keeping your nose to the grindstone is something “they” make you do, rather than something you owe society. How many people have vowed to pay off credit cards immediately? How many people are determined to pay cash as much as possible? How many people are determined to put off purchases until they can afford them? How many people have decided their personal welfare is their own responsibility rather than society’s? How many people have decided to keep things until they wear out rather than toss them whenever something new comes along? How many people have firmly decided that generic sneakers and jeans are just as functional as the designer jobs, or that a compact gets you places just as effectively as a Hummer, SUV or Lexus? If we pull out of this recession soon, people will go back to business as usual. In fact what separates this recession from the Great Depression (which my parents lived through) is that the Great Depression deeply marked the society. In the present recession, people seem more anxious for it to end soon so they can get back to living the good life.

K Smith February 25, 2010 at 11:38 pm

If all the fish are swimming in a lake full of poison, it is not their fault when they get sick – it is the fault of the person who poisoned the lake.

That is what we have. Our political leaders and economic experts have created a financial system that insentivizes debt and devalues our currency, while our politicians make trillion dollar entitlement promises that are impossible to keep. They were actually on TV today talking about another one – a health care plan that we can never pay for. Social Security will go broke this year. Medicare is not far behind.

The Fed is attempting to print our way out of a financial crisis, but we can’t fool those who buy our debt. When they stop buying, whatever is left of people’s life savings will be wiped out as the dollar goes into freefall. Our children and grandchildren face lives of impoverishment.

What we face is not our fault. It is the fault of those who hijacked our financial system by establishing the Fed, and those who perpetuate it today.

There aren’t any soup lines.


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