I find a strange melancholic amusement to learn that many of these investment banks’ CEOs and boards of directors — people being paid millions of dollars every year to purportedly know what their own companies are doing and how they make money — didn’t have a clue as to how deep their companies were into questionable financial practices. It’s like Enron all over again, except this time on a much more disastrously large scale.
Now they turn to the U.S. government — the taxpayers such as you and I — to “rescue” their firms, all the while receiving large payouts (severance packages) and continued bonuses. And will any of this affect their ability to score a new position in a year’s time? Not one bit. These things will simply be chalked up to an unfortunate series of unforseeable events. “Ah Bill, sorry to hear about Morgan Stanley. A hell of a time to be running that firm, but we understand you had nothing to do with all of that… So welcome aboard!”
None of this is likely to help you or I feel any better as our government scrambles to restore investor confidence in the market, not just here in the U.S., but abroad as well. What we face are the results of many of these same executives’ very poor and very greedy decisions to put people in homes with no money down or adjustable rate mortgages that carry crippling balloon payments in a few years. We now face a virtual halt in the ability to obtain a mortgage (sorry if you’re in the midst of trying), or other significant credit. If you’re trying to start a business with a bank loan, you may as well put that on hold for a few months. And simply forget about buying a new home unless you’re independently wealthy and have no need of a mortgage.
So what’s a person to do in such trying economic times? Adding insult to injury, the American public has to endure the empty rhetoric of political candidates vying for the Presidency. Yeah, all of those feel-good speeches make me feel so much better when I sleep at night!
But our emotional states do indeed affect our stress levels and our ability to sleep at night. If you take comfort in the assurances of a political candidate (or even a current Administration official), you could actually be helping your mental health during these uncertain economic times.
Studies done by Christopher Ruhm, a professor of economics at the University of North Carolina at Greensboro, have found that as we enter a recession, health-related problems go down. As our economy plumets, the population’s physical well-being improves (as a whole). We smoke less, drink less and drive less, findings that are counter intuitive, since you’d think that if we’re feeling more stress, we’d do more of those less-healthy behaviors to cope with it.
When we’re uncertain about the economy, however, we’re less likely to spend significant amounts of money on “luxuries,” which includes things like alcohol and cigarettes. And with $3.60/gallon gasoline (which I’m sure will hit $4 again soon), we cut back our driving to only what’s needed. Instead of making 3 trips, you combine them all into one trip and cut out errands that aren’t really necessary. Less driving equals less stress and less changes of getting into a crash or accident, reducing your risk of serious injury from an automobile accident.
“Sure, doc, all of that’s great, but how does that help me right here and right now? My 401(k) is tanking and there’ve been rumors at work of more layoffs!”
First, focus on the long-term picture when it comes to things like retirement and your career. People who check their 401(k) balances every day, every week, or even every month should stop. A 401(k) or retirement fund is not there to check up on in that sort of regular manner, because most returns on such funds are measured in decades, not months or weeks. The only thing you can proactively consider for your retirement funds is to move some of your investments into more bond funds if you find your portfolio is stock-heavy and exposed. Otherwise, while you shouldn’t ignore those monthly statements, you also shouldn’t put much weight into them. Financial markets run in cycles, and this just happens to be a particular bad down cycle. It will recover in time.
The same goes too for your career. You only have control over what you have control over. Okay, I know that sounds obvious, but too many people stress and fret over variables or things they have no control over. If layoffs are inevitable, all you can do is to be pro-active in getting your resume’ updated and start looking for a new job now, and make sure your boss knows your contributions and value to the company. Being prepared for the worst means that if, by chance, it does happen, you’ll be ready with a list of jobs lined up and perhaps even an interview or two.
That idea of being in control is important. You and I can do nothing about the government bailout of the investment banks and what-not. So why worry about it? Trust that our elected officials are doing all that they can to keep things stable and moving forward, and that confidence will be restored in due time. Instead, focus on what you can control and change in your life. Scale back on planned financial commitments if it’ll make you feel better (like a new home, a big vacation, or a big purchase). Putting such things off a few months likely isn’t going to be a significant difficulty for most and can give a person added peace of mind when they go to sleep at night.
Uncertain economic times are also a good time to reconnect with your family and friends — the social relationships that bind us all together. Such connections remind us of the value of life, and are things we can influence and enrich. Consider this a good time to volunteer some time at a shelter or food kitchen, give blood, or find some other way to give something back to others. Usually when we give of ourselves in this manner, it reminds us of those who need our help — and that we can actually help out, locally, on our own. It can be a very empowering feeling.
Soon, this crisis will be over and in a few weeks’ time, we’ll have elected a new President. Until then, take heart in the hope that our government won’t allow something like this to happen again in our lifetimes. And with a new President, the economy will likely pick up once again in the New Year.