Hello recession, my old friend
I’d braced myself for a wild ride. The collapse of Lehman Bros., the shotgun sale of Merrill Lynch and the bailout of insurance colossus AIG made a week of vertiginous Wall Street trading inevitable. On Friday, the Dow was down a mere 0.3% on the week -- but to get there, the Fed and the Treasury had to pump hundreds of billions into the global financial system. It’s pretty clear that the seizure isn’t over and that recession denial is no longer a growth profession.
I took this last week as an opportunity to mistily review all my past recessions. They say you never forget your first, and for me, that initial demoralizing downturn happened when I was 6, as the OPEC oil embargo of 1973 ushered in the so-called Malaise Era of stagflation. I have a vague recollection of sitting in the back seat of my parents’ Buick on the way to Florida as we waited in line for a precious fill-up. The Old Man was a three-pack-a-day guy back then; we might as well have been in a coal-fired locomotive. My brother and I still break out coughing when we talk about that vacation.
A few years later, when we lived in suburban Chicago, our local bank failed. I recall an intense desire to see “Star Wars” while my father -- whose deposits were restored by the FDIC -- defiantly asserted that he’d always known the bank was a feeble excuse for a financial institution. (The Force was with him.) Then he lit up and, a few years later, voted Republican for the first time in his life. My family enjoyed the 1980 Reagan recession all the more knowing that we had dispensed with malaise in favor of voodoo economics.
My college years brought 1987’s Black Monday, along with a gloomy pall that put a serious damper on tailgating and the spring break beer budget. I too started smoking.
When the next recession rolled around, in the early 1990s, Dad had cut back to a pack a day. I had left home and was doing nicely in New York on my $12,000-a-year publishing salary in the worst job market in decades. My father, who never officially quit smoking, died before the dot-com meltdown/Sept. 11 recession, although I suspect he observed the whole thing through a nicotine haze from the Great Beyond. On Earth, every single person I knew lost a job. And then we were attacked by terrorists.
The way I add it up, recessions are the signature pattern of my lifetime to date. And so I have developed a perverse fondness for them: the sky-is-falling hysteria, the gnashing mandibles on CNBC, the broad excuse to return to myriad recessionary survival tactics, otherwise referred to as vices.
The last few months have been high times for me, driving around Los Angeles in my car, burning through $4-a-gallon gas while listening to the economic doom patrol on the radio. Some might have rubbed their palms raw. Me, I’m wafting through life with a whistle and a smile as my old buddy Mr. R waltzes back into view. It would only be better if I hadn’t quit smoking during that mid-’90s economic upturn right before the “Asian Contagion” roiled markets.
Sure, we had a generational learning curve, but now we’re collectively accustomed to the drill. First, a few weirdo agitators on the fringes of the financial sector -- like Warren Buffett and John Bogle -- start to say, “Hmmm ... this whole runaway home-price thing, alongside stagnating wages and that vaporized manufacturing base -- plus $10 billion a month for a two-front war in the Middle East and $100 or more a barrel for oil ... jeez, it might cause some problems.”
Then we start to hear that there’s weakness in some sort of esoteric securities category, where short-sellers and hedge-funders and debt-aggregators use laser beams and Château Pétrus to reshape the laws of finance. Which is as it must be, because although plain old stocks are a great investment for average folks, their slender and predictable growth isn’t going to keep the Big Boys in private jets and seventh homes.
Finally, the know-nothing, do-nothing federal government fixes everything by raiding the Treasury, which in this latest case is actually empty, so the feds instead raided the treasury of China.
President Bush went on television Monday morning and told me -- for at least the third time in his tenure -- to remain calm. But I already was calm, as the natural order of my existence -- weathering recessions -- was restored. This will be No. 1 for both my kids, though, so the pressure is on to set a good example.
The blaring financial media have inculcated Americans with a fear of recessions, but as any card-carrying economist will tell you, recessions are as unavoidable as the change of seasons. Indeed, such financial cold snaps allow us to get reacquainted with our better and more industrious selves. I am at this very moment dusting off my recession skills. This afternoon, I plan to darn some socks. Later, I will be siphoning gas from other people’s cars. Next week, I’ll head to the golf course with a fishing net and try to recover balls from a fetid canal.
Through all this, my buddy, my lifelong pal, will be reassuringly by my side. A rock in a time of crisis. And that’s what friends are for.
Matthew DeBord is a writer in Los Angeles.
