The Financial Crisis and What We Can Do About It - The Affirmation Spot for Thursday September 18, 2008
Even in the face of great difficulty we have within us an ability cope, overcome, and succeed.I've written a number of articles recently about going beyond positive thinking and happy thoughts on to empowered thinking. Empowered thinking includes being informed among its three elements. Being informed is about honestly assessing a situation - not candy-coating it - so that you can make sound decisions and take strong actions to deal with it.We are quickly approaching a moment when being informed means looking honestly at the economic situation we are facing and recognizing that we must engage the other two aspects of empowered thinking - positive thinking and committed action.The SituationThis evening a Wall Street Journal article declared the current financial crisis the worst since the 1930s. While the signs of trouble have been apparent for a couple of years, such statements can no longer be considered hyperbole against the backdrop of recent events.
- Share prices plummeting
- Home prices plummeting
- The dollar plummeting
- Companies exchanging debt and bets on debt and counting it as revenue on their balance sheets
- Financial powerhouses gone in a day.
- Great American corporations like GM and Ford hanging on for dear life.
- A government already trillions of dollars in debt and borrowing every day to fight wars around the world acting as though it can bail everybody out.
The bottom line is that the people we elected to protect our interests have not done so. Companies we trusted to be responsible with our savings and our investments have not so either. And, we have all been guilty of thinking that perpetually rising home values and easy credit are a norm.Let me be clear. Wall Street turned into Las Vegas over the past few years while both parties in Washington turned a blind eye and even poured gas on the fire. Bluntly, Wall Street bet our collective house and lost. Now they are coming to the government (the American taxpayer) and saying, "You have to save us because the whole ship will sink, if you don't".So far the bailout has nearly doubled the stated federal government debt and its not over yet. When the federal government owes money guess who that means really owes it - yep the taxpayers.Some in Congress are finally responding against the move by the Treasury Department and The Federal Reserve to rescue the financial giants. That is a good, if belated, thing. After all, The US Constitution clearly gives only Congress the power to appropriate government funds. Here we have the executive branch and the central bank overstepping their Constitutional authority. Congress needs to act and act swiftly to stop these actions.What We Can DoBeing informed allows us to use positive thinking and committed action to create change. There are several things we can do right now and several things we can learn for the future from this situation.
- Don't panic - markets are all about human psychology - i.e. "the herd mentality". In good times, the herd grazes until it is full. In bad times, the herd gets spooked and does things as stupid as running off a cliff. When panic takes over a bad situation becomes a spiraling cycle of negativity. We need to stay calm and carefully consider our moves.
- Demand Congress assert itself - Congress has the Constitutional authority to appropriate funds - not the executive branch and not The Federal Reserve. Congress has direct responsibility to the people and they need to reassert that Constitutional authority.
- Demand oversight - we probably thought our government was doing due diligence in overseeing the financial markets. Purely and simply it was not. We need to demand a return to sensible oversight of the markets and not double-talk from politicians beholden to those markets.
- Reduce or eliminate debt - with markets and credit tightening, it is not going to be a good time to owe people money. We should all do what we can to reduce or eliminate as much debt as possible.
- Demand justice - people who have been irresponsible and even criminal in bringing about this crisis need to held accountable.
- Decentralize the economy - this is paramount. The keys to our economic fate lie in too few hands and in hands that do not have the peoples' best interest at heart. This must change. I've had recent dialogue with a number of people promoting a new wave of entrepreneurialism. The idea of independent business ownership has given way to giant box stores and massive government and extra-governmental organizations (i.e. The Federal Reserve) managing the economy. This has taken peoples' economic destinies out of their hands and given it over to these entities.
- Control what we can control - we cannot control the macro situation, but we can do everything in our power to make things better as we can affect them. Evaluate your own situation and take positive steps forward towards expecting the best and preparing for the worst.
- Focus on the best possible outcome - we can align our thoughts with the best possible outcome for ourselves and the nation. We severely underestimate the power of our individual and collective thoughts to alter the reality we receive. If we focus on the best possible outcome that is what we can expect to experience.