American and World Financial Crisis Continues

During the past three years years of writing this blog, I have been a prophet of doom about the American (and World) financial situation. (See my post "A Hard Rain's A-Gonna Fall" in March 2007 and many subsequent posts). I keep hoping that my observations are based on poor digestion and I will be proven wrong by a huge economic recovery; alas, that is not happening.

Although stock markets and commodity prices have recovered considerably from their lows in 2008 and 2009, the fundamental ills of the economy have not been solved. Personal income and employment have not recovered at all. Trade deficits remain immense. Unprecedented government spending has lessened the feeling of impending doom, but I wonder how much has actually been improved by the trillions spent.

See this week's article by Niall Ferguson A Greek Crisis is Coming to America. My wife and I will traveling to Greece and several other Mediterranean countries in March. Already there are widespread strikes due to severe government spending cutbacks. I knew this situation when I planned our trip. However, to avoid all economic crisis zones, we would need to stay at home.

I wish I had some brilliant insights to offer of how to avoid this continuing storm. On a mass scale, the die is already cast. Governments will reap the consequences of deficit spending in the near future.

For individuals, we can protect ourselves to some extent by embracing the values of our ancestors who nearly always lived in precarious times. We need to spend less than we earn and to become even more frugal. We need to focus on our jobs, however humble, and scramble to earn enough to live. We need to look after our neighbors and the least fortunate people in our communities. We must abandon hope that governments can rescue us; they seem unable to even look after themselves.

I don't think this crisis will last indefinitely, but it will stay longer than most of us have patience to endure. My hope is that we will relearn what our grandparents knew.

For Christmas I gave my wife the book From Dawn to Decadence by Jacques Barzun. His title could well be the epitaph of our Western Civilization, unless we reinvigorate our approach to life, money and work.

However, at heart I remain a stubborn optimist. I believe humanity has the metal to survive even worse storms as we demonstrated during the great wars in the first half of the 20th Century. We will need to change our ways.