Musings on Our “Economic Downturn”…

As a meteorologist, I’m trained to recognize patterns. If a list of variables goes a certain way, a particular outcome is likely to occur. For instance, if a cold front is moving into an unstable atmosphere (high amounts of warmth and moisture), then rain and storms are likely to occur. Chances for rain will be high. If you add wind shear to the mix, the storm are likely to be severe with damaging winds and even tornadoes possible. All of our weather results from cause and effect relationships. This is what makes it predictable (for the most part).

Pattern recognition has always come naturally to me. Even though I’m not always right, I’m constantly analyzing and looking for patterns in everything from my family life to my own health to the health of this country. I don’t believe in pointing out problems or creating them when they’re really not there. I believe too many times we create our own self-fulfilling prophecies by focusing on the negative rather than highlighting the positive. With that said, here are a couple of recurring issues and patterns that I see facing our country right now…

1. There are a lot of lost souls in the stock market right now. The market is everywhere. One day it’s up 200 and the next down it’s down the same. I’ve always been fascinated by the markets and by business in general and I try to pay attention to what’s happening on both Wall Street and Main Street. These two factors alone will influence the health of our economy more than any other. The fact that the market is up and down every day means that traders, hedge fund managers, mutual funds managers, investment banks and individual investors have no idea what is going to happen next. The current overall trend of the stock market is for there to be no trend. That’s not good. There are many, many frustrated traders and investors right now who are just waiting to see what will happen next. There is much uncertainty not only in the stock market but in our economy as a whole. Everyone seems to just be anxiously looking for some sort of sign to act upon but it’s just not coming. So, aside from day traders trying to make a quick buck on the daily ups and downs, Wall Street basically just sits and waits…

2. There is more pain to come from the mortgage fallout. The losses from bad mortgages keep piling up in an unprecedented fashion. It was stupid for banks to make such risky loans and there were way too many Americans who took the bait and signed mortgages that they were almost certain to default on. There was a lack of regulation by the Fed, irresponsible lending by the banks and bad judgment by those who took out risky loans that all led to this mess. More banks will fail in the coming months. Most experts agree on that. Now, many homeowners don’t have access to easy money (through home equity loans) to buy all of the things that were artificially keeping our economy booming for those housing bubble years. This will keep consumer spending dropping which will, in turn, hurt more of the weaker and highly-leveraged retail companies (i.e. Steve and Barry’s, Linens ‘n Things and Sharper Image declaring bankruptcy). To compensate in the short-term, many people are turning back to credit cards. As expected, CNN did a story recently about the skyrocketing credit card debt. That’s where Americans are turning now to finance their lifestyles. That will lead to more bad news down the road when people can’t make their minimum payment and are so far deep in debt, they’re drowning. That’s coming – you watch. If you’re in this situation, figure out a way out, TODAY. Change your plan. Do a budget. Spend less than you make. If you have to, make DRASTIC changes in your lifestyle. Don’t be afraid to do it. Don’t keep waiting for things to get better; make them better by making changes yourself. Also, more and more local governments are feeling the pinch with reduced tax revenue as people quit spending. There are lots of stories in the news these days about state and local governments grappling with “unexpected” deficits.

3. Social Security, the national debt, the mortgage bailout, the cost of military action – all totaling TRILLIONS of dollars, will lead to so much debt that we may never be able to overcome it. Huge changes have to come about to fund all of these things with any amount of solvency but no one in Washington is willing to figure out a solution. We just keep adding string to a huge tangled financial mess hoping that it will somehow sort itself out. For instance, there are projections that the national debt will eventually decrease to reasonable levels 10 or 20 years from now. But these predictions hinge on our economy roaring back so that we can pay it down. Our economy probably will come roaring back, but how long is it before that happens and how big will the debt be then? It simply may be too much to overcome. Trillions of dollars of our debt are being bought by countries such as China and from many in the Middle East but they expect some return on investment. If there is ever a time that it becomes apparent that there is no coming return, who will buy then? If there’s no one to buy, then it’s BIG trouble (ask Bear Stearns about that). We have never faced that situation before but are we closer to that now than ever before? I feel pretty sure we are. Will it actually happen? Who knows. It’s worth watching though. It is certainly a new financial era we have entered with respect to the scale of money we owe. We can’t keep borrowing at these levels forever and continue thinking it’s going to be alright. One day, it may not be. Washington has to act to reduce the debt. You and I are already going to pay for the mortgage bailout. What else are we going to be on the hook for?

These are going to be just some of the issues facing our country for the next few months and years. One thing’s for sure, there has to be substantial change in the way we do things if it is going to be fixed. We know many of the problems, now it’s time to really work on the solutions. How do we put Americans back to work? How do we teach Americans to live within our means? How do we get Washington to know that we’re ready to move forward with progress and really fix what’s wrong? Finally, what should we do in our own households to make sure we’re not adding to the problem? We shouldn’t be scared but rather proactive in figuring out solutions. Some people are raising their hands and proclaiming they have possible solutions. That’s good. It’s a start. You might have seen T. Boone Pickens presenting his plan to fix the energy crisis. Whether you agree with him or not, we should all be more engaged in finding options and possible solutions to the problems facing our great country. A group of Silicon Valley renegades formed Tesla Motors to show Detroit and the rest of the big auto makers that electrical cars can be a viable alternative to current gasoline-powered cars. A new breed of architects is emerging that actually design smaller but more functional homes that Americans can actually afford and enjoy (not every new home needs to be 3000 square feet to meet our needs comfortably). We have the power to solve our problems. I think we’re ready. Ready to stop the nonsense. Ready to end the excess. Ready to make us lean and mean again. Washington needs to know we’re ready…

Here’s what’s great about America: Every time we’ve faced a crisis, it’s made us stronger. Every time we’ve faced a challenge, we’ve met it head on with our ingenuity, creativity and sense of responsibility. Even in the worst of times, we’ve always come out on top in the end. I’m sure we can do the same now. But, we can’t wait for this stuff to work itself out. We have to do it. We have to change it. If not, it will change us…

What do you think?

P.S. I found a good article that addresses some of these issues on

5 Responses

  1. Charlie,
    You are right on track! I am in total agreement!!

    Someone needs to step up to the plate and hit us
    a “home-run” without expecting personal gain
    from doing this.


  2. I think you should run for president…

    I was gripped to this post. Thank you. And I’m so interested in hearing more about the smaller homes being designed with more efficiency and lower costs. Where? Sign me up….seriously…where did you read about that?

  3. Melissa,

    Thanks for the very nice response. I’ve seen lots of stories over the past year or so on these architects. Here’s a link to one of these smaller, very efficient homes in Maine:
    With the rising cost of construction and energy, these things will become more popular. Here’s another story about a whole community of them that was in the Wall Street Journal not long ago – although these particular homes are very expensive…
    There have been several articles in science magazines about the small home movement as well. Enjoy!

  4. Thanks Charlie!

  5. […] wrote about this not to along ago here.  Follow this simple […]

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