Amid all this chatter of whether our economy is in for another Great Depression, whether we face fast recovery or 10 years of gloom, it's occurred to me that the really great depression may be that this stuff is just ... depressing.
The fourth step in the Kubler-Ross model of the stages of grief is "depression," and current economic events are enough to induce a grief reaction. Maybe it wouldn't be too much to ask that, if the government stimulus plans have to exist, they include a company like Merck (NYSE: MRK ) spiking the water with antidepressants. Hey guys, if you want us to stimulate the economy, give us all a reason to get out of bed in the morning!
Of course, I'm kidding. I don't believe in government intervention and certainly don't want them amping our entire population up on mood enhancers. But this stuff is rough, since a lot of it seems to point to the death of the things that are good about our economic system, not to mention people's sense of accountability and incentive for achievement.
Perhaps we've entered not a bubble era, but an era where any degree of incompetence or failure is not just ignored, but amply rewarded. The simple psychological idea that there should be rewards and punishments for doing the right thing or not is being ignored. And folks, that's not only a depression in the true sense of the word, but it just won't work.
A big case of the blahs
I used to be so spunky, so sassy! But here lately, I seem to have lost the will.
It's been a while since I accused just about everybody of a collective (metaphorical) pants-soiling. Or railed about how the government's responses to our crisis meant so many hard-working people who always did the right thing were going to be sucker punched. Or pointed out that as much as so many people are excited about our new leadership, they shouldn't forget the possibility of hyperinflation or the idea that our deficit is frightening, our government might be insolvent, and maybe Obamanomics had to be stopped. And it's been a long time since I've attempted to terrify and amuse by talking about the zombie apocalypse that could consume our economy.
I'd like to think people are learning from our mess, but the fact that General Motors is still trading at over a buck a share even though it has gone bankrupt (granted, it's an odd interpretation of the concept, given the whole government handout component), tells me that people are not yet much the wiser.
A culture poisoned with disincentives
Although I railed about some of these things months ago, more and more experts now seem to be admitting concerns about serious inflation, even hyperinflation, as well as questions about our government's debt burden as tax revenues shrink precipitously. It's also becoming clear that the government's expectations for a recovery this year seem awfully overly optimistic.
Meanwhile, a recent poll shows Americans seem to be experiencing increasing unease about the soaring deficit and the amount of government intervention into our economy.
There are all kinds of calls for new regulation, but this ignores the fact that highly regulated entities Fannie Mae (NYSE: FNM ) and Freddie Mac (NYSE: FRE ) helped get us into this mess, as did government and Federal Reserve policies that turned the American Dream of home ownership into a nightmare. Government bailouts and assistance to AIG (NYSE: AIG ) , Citigroup (NYSE: C ) , and Bank of America (NYSE: BAC ) point to an increasingly pervasive culture of bailing out massive blunders.
In another example of this mind-set, those of us who have no credit card debt or maybe struggled to pay off balances are watching as companies like Bank of America and American Express (NYSE: AXP ) forgive people huge hunks of their delinquent balances. I hope those folks will feel appreciative and learn a lesson about too much debt, but the truth is, they might not feel so bad considering the knowledge that massive entities have gotten rescued and there's doubt whether they learned any lessons at all.
Yeah, rewarding bad behavior seems to be a prevailing theme these days, and it seems poised to get even worse. I have to say, it's downright depressing.
Acceptance? Forget it
They say "acceptance" is the last stage in the grief process. And I've been fairly quiet lately when it comes to ranting about the macroeconomic situation, as I felt we were in the eye of the economic storm. I've been spending more of my free time than I'd like to admit on Facebook trying to distract myself, and I just realized that spending an awful lot of time decorating a virtual pet's habitat in that joint may actually be a cry for help.
It's time to snap out of it, ditch the depression, and avoid the resigned acceptance. We need to realize that our economy needs to correct from the artificiality of a massive bubble, that government intervention is unsustainable and maybe even harmful, and that what we need most of all is to get our entrepreneurial spirit back.
I hope many of the unemployed folks out there look to bulk up their skills, maybe even start new and exciting ventures of their own, birthing companies that address market needs and will in turn become solid job creators. And we investors must ditch the speculative mind-sets that helped blow up the residential real estate bubble and invest in the forward-looking opportunities, searching for the best companies that can succeed for the long term, the ones that are well managed and rely on true competitive advantage, not government aid.
Business and entrepreneurship, after all, are what provide real growth and tax revenues for government to run on in the first place. Government creates nothing. Given the way things are going, this could be the end of the long delusion or the beginning of the biggest and most dangerous delusion of all.
Things may be depressing, but I think it's time to wake up.
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