The Latte Free Depression

I'm officially calling the current recession the "latte free depression". Understanding that it's the biggest period of job loss in 16 years and we have 7.2% unemployment and the economy shrunk 6% in the last month, but have you noticed? People aren't freezing to death. They're not starving. Sewage isn't flowing freely down our streets. In fact, besides some minimal disruption, is this what a "semi depression" feels like? I suppose if you can't afford your latte, it's quite a change in your lifestyle.

Most of us did not have the disfortune of living through the Great Depression, but our parents did and our grandparents did. I can remember my grandparents telling me stories of keeping cash under the mattresses or grandma stuffing it in her bra. They lived through it. They survived. They changed their behavior after and we're frugal and smart with their money. And created a huge transfer of wealth to the baby boomers. Here's some of the facts that they lived through in the Great Depression for a largely manufacturing and farming based US economy:

• crop prices fell 60%
• people lived in Hoovervilles - cardboard boxes
• In 1933, 25% of all workers were unemployed and 37% of nonfarm workers were unemployed
  
• Estimated 12 million people died from starvation
• Successful people became beggars and migrant workers

Last I checked and looked out my window, I didn't see any of this. Have you? We have a stronger and more global economy that is so much more diverse than manufacturing and agricultural. Sure, it's consumer driven and we are more oriented towards a service based economy, but it's larger and harder to move the needle one way or the other. May this recession last longer than others we have seen? Sure, it already is proving to be that way. But think about the scale and size of the Indian and Chinese economies for a moment. If and when they get moving again, we could also see quicker turnarounds. History is somewhat irrelevant in this latte free depression. Should we respect and learn from history? Absolutely. Should we count on history to repeat itself - not exactly. The inputs are completely different than they were some 70 years ago. And again, we haven't seen people starving or hopping trains yet to try to find jobs. We've only seen them cutting back from their Starbucks to heaven forbid by a cheaper latte at McDonald's.

Information and technology is ubitiquous and it wasn't in the 1930's. The very newspapers that people depended upon receiving their news in are not the victims of the latte free depression, but their inability to stay relevant with the technological advances. So the same people that survived the Great Depression and their children are now the ones retired off their pension plans (that we will never see) and their Social Security (that we will never see) and their 401ks ( that indeed we will see and benefit from). As they are retired and wearing their "don't forget my senior discount hats", they sit there and watch CNN and Fox News and read the NY Times online about this latte free depression. Then they call their kids (like me) and say "my god - I cant' believe how bad it is out there!"

Out there - in this world, this economy that we are still producing goods and services and airplanes are flying regularly and steel mills are open and WalMart is thriving and the New York Yankees are signing over $700mm worth of free agents and people won't make eye contact because they're glued to their Blackberries and the lines are still wrapped around in Starbucks and DisneyWorld is packed and and and and.... I respond to them - my god it's horrible! Wretched! Wicked bad! I can't imagine what it must have been like for you to be hungry in your childhood and have to survive today on your highspeed internet cable while watching CNN on your 50" plasma HDTV calling me on your cellphone. Are you sure you are ok? Do I need to send FDR over to help you craft a New Deal for you or Hoover to put a chicken in every pot? I'm not sure what to do here.

Seriously folks. It hurts once and awhile to go through a downturn. But let's keep this in perspective. Let's learn from our mistakes - giving financial institutions too much freedom, outbidding each other for unrealistic real estate prices, taking interest only mortgages (did you really think that was going to work out for you), chasing investments that weren't real. Let's learn, let's stimulate the economy. Let's work a bit harder because we have to. Let's live the real lessons our parents and grandparents taught us - perseverance creates prosperity, making wise choices and working harder to make a difference.

John D. Rockefeller said about the Great Depression that "These are days when many are discouraged. In the 93 years of my life, depressions have come and gone. Prosperity has always returned and will again."

He's right you know....but in the mean time good luck navigating the perceived sewage ridden streets of America lined with people out the door living in cardboard boxes starving to death.

Doughboy