Funny about Money

The only thing necessary for the triumph of evil is for good men to do nothing. ―Edmund Burke

What to Do, Financially, to Weather the Coming Disaster?

Our country — and by extension, your finances and mine — is in deep trouble. We are about to inaugurate as President a man whose mental stability is questionable; who announces his petulance in wee-hours tweets; who gropes women and brags about it; who exploits hatred and fear to gain power; who is at odds with the country’s intelligence agencies; who denigrates the disabled, the female, and the brown-skinned; and who “owes one” to the corrupt, thuggish leader of a nation that has been our enemy since shortly after the end of World War II. He is backed by a phalanx of extremists who want to reverse not just the ACA but the entire New Deal, which has been in place for almost 80 years.

The New Deal, we might point out, came into being in response to the Great Depression. Part of its purpose was to prevent a repeat performance of the Depression.

I believe that, in the near future, we are going to see a recession that will make the Bush Recession look like a cakewalk. The reason is that the dominant economic thinking among the doctrinaire right wing riding Mr. Trump’s coat-tails is simply wrong. It was proven wrong by the Great Recession, as it was proven wrong in earlier recessions.

Since 1948, this country has seen 11 recessions. Seven of them — 63.6% — were presided over by Republicans (Eisenhower, Nixon, Ford, Reagan, Bush the Elder, Bush the Younger). Some of the economic downturns were precipitated by factors over which we had little control, such as rises in oil prices. Others correspond with rises in interest rates by the Federal Reserve or with monetary tightening in pursuit of a balanced national budget. Most egregious, from a political point of view, was the Great Recession, which was brought about by deregulation of financial institutions (a mainstay of voodoo economics). The Great Depression of 1929-33 was largely aggravated by “extensive new tariffs and other factors [that] contributed to an extremely deep depression.”

The pendulum swings. As we all know, things go one way for awhile, and then they turn around and go back in the other direction. For the past few years, we’ve seen a roaring economy. We can expect that it, like any hot economic period, will cool down. But I think the pendulum is going to swing, all right: waaayyyy in the opposite direction.

It would be good to position your investments in a balanced portfolio to include variable rate bonds and variable rate preferred stocks that pay decent income and aren’t as sensitive as stocks are in a downturn. In addition, some financial planners make it a policy to sell certain exposure to the market should it turn down below a certain level. This doesn’t protect from losses should the market sell-off, but should help cushion further losses in a market meltdown. Now is the time for you to speak with a financial planner about steps to take in managing your savings.

Additionally, you should be prepared for a period of unemployment. During the Great Recession, 10% of Americans were put out of work, a rate beat only by the Reagan recession (10.8%), the Great Depression (24.9%) and the subsequent 1937/38 recession (19%). That means having at least six months’ worth of living expenses in cash savings and possibly taking on a side gig now, not later, so that you’ll have something to fall back on should you lose your main livelihood.

Remember that many of us were never able to get jobs comparable to the ones we had before the Bush recession — large numbers of Americans are still unemployed or underemployed. After you become discouraged enough to give up seeking full-time work, you no longer register in the government’s unemployment figures, and so most of us in that category are simply not counted.

In addition to building cash savings, pay down debt and avoid racking up new debt, especially on credit cards.

Now more than ever is the time to live not just within your means but below your means. Good luck to you, folks. We’re all gonna need it.


Author: funny

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  1. I’m hanging on for the ride….it’s going to be interesting. I wonder who will be blamed??? Surely, not Trump!!!

    • Probably not… Ultimately, I imagine it comes down to an educational system that has failed to prepare at least two generations of adults to distinguish between falsehood and fact and between fallacy and logical thinking. In any con game, the victim is probably as much to blame as the grifter.

  2. Wise words, but I sure hope you’re wrong. I never recovered from the last recession.

    • Me neither.

      Fortunately, I had money in investments managed by the guy who uttered the words in the paragraph starting “It would be good to position your investments in a balanced portfolio to include variable rate bonds and variable rate preferred stocks that pay decent income and aren’t as sensitive as stocks are in a downturn.” That money has come back. Obviously, though, there’s nowhere near as much in those funds as there would have been had I been able to work, as planned, to age 70.

      But I have never gotten another job. My son and I have only barely recovered from the bath we took on the downtown house — though “recovered” may not be the operative term. He remains underemployed; he’s so discouraged and pessimistic that he probably always will be underemployed, for the rest of his life.

      Men, it is said, are more profoundly affected on a psychological level than women are by job losses and other kinds setbacks brought on through economic recession. If I were to compare myself to him (which I don’t…), I would say that’s true: I don’t take economic forces personally.

  3. I have to say that I’m pretty much hunkering down and just hoping to survive the ride for the next 4 years. Before November 8th, I felt pretty confident in my plan to pay off the house in the next 4 years – but now I’m wondering if I should keep my focus on that, or slow down on that goal and squirrel money away into the stock market – if things start to completely melt down, that’s the time to BUY stocks, according to Warren Buffett 🙂

    Personally, I’ll probably still try to pay off the house, because if the house is paid off, my monthly expenses will trickle down to a number that I *could* live for a good long time if I lost my job and wasn’t able to find something else right away.

    The other thing that I have going for me in this round of economic upheaval and recession – I’m now the holder of a valid US passport, instead of a work visa that is tied to a particular employer. So, I’m now eligible to work for ANY company in ANY position – which means I can go learn how to make half-caf iced fraps if need be 🙂

    I’m crossing my fingers that the overall economy won’t actually go down the tubes – Trump and his cronies are ALL ABOUT big business and the policies that come out of Washington are going to be very friendly to making the rich richer – which *probably* means that the stock market will be fine.

    It’s the social safety net that is going to be gutted.