The best way to predict the future is to create it.

Peter Drucker

Stormy defines me as “often wrong but never in doubt.” He’s probably right. What follows is my best and most confident attempt to explain “what happened” to cause our recent financial meltdown.

Our parents and grandparents took a country distressed by World War I and the Great Depression and built it into the greatest military and economic super power in the history of the world. Today we appear to be backing into another depression.

• In the post-depression world - people had “nothing” and appreciated everything. Today most have “everything” and appreciate nothing.

• The greatest generation was made up of survivors. Today too many believe we are all victims.

• Most in the past sought only opportunity and freedom to pursue it. Today many feel entitled and expect guarantees - rewards without risk.

• Our parents and grandparents had earned the wisdom that is delivered in scar tissue. They provided and even demanded that we develop our brain tissue first and sought to protect us from being scarred.

• They lived on the survival and security rungs of Maslow’s hierarchy of needs. We were blessed with positioning at the upper reaches of Maslow’s social and self-esteem ladder. We were more protected than we were practiced in the fine art of survival.

• They delayed or denied their own satisfaction. We demand instant gratification. They took the long term view in relationships, investments, plans, etc. We operate in the immediate and short term.

• They grew up in and through a philosophy that articulated clear parameters of right and wrong. We were more enlightened and “split hairs” using moral relativism. Over time the X Commandments have become more akin to the X Suggestions.

• Yesterday was a “pay as you go world.” Today we “go first” and “pay later.” Unfortunately this model has let us over-acquire for ourselves and over stimulate the economy. Now we have trillions of dollars of debt, limited sustainable assets, a backlog of supply, and no longer the liquidity or credit to create or sustain a demand.

• Yesterday’s communities were built on relationships - high touch. We knew who we were dealing with and so our word became important. Everything was personal.
Today’s world is driven more by transactions - high tech. We often aren’t subject to personal scrutiny in doing a deal and suffer limited embarrassment if we fail. Today’s world is faceless - not personal.

• There was historically a sense “of too big to fail.” We are evolving into a cadre of businesses and industries “too big to succeed.”

• We were a melting pot culture that blended immigrants with Italian or Greek or African or Cajun heritage into Americans. Today we’re fragmenting this common bond into a mosaic of hyphenated Americans where our common values and shared experiences and language are becoming secondary to our ethnic uniqueness. A house divided…

• In yesterday’s communities, bankers knew you and lived with you. They lent money first on your character, then on your credit and finally on your collateral. Today money is lent on collateral, often without knowledge of character or acceptable or even scrutiny of your credit.

• In the days gone by - bankers kept the risk they took with most if not all loans. Today they often sell off these loans and so the risk they took is someone else’s problem. They no longer have “skin in the game.”

• Yesterday everyone maintained a rainy day fund. Today many believe government can stop rain or bail us out from the damage done by rain.

• Yesterday there were objective rules and officials to enforce these rules and accountability to the rules. Today - the rules are less rigid, officials seem to be easily influenced, and all too often are subjective in their interpretation. Right and wrong now are subjective.

• Yesterday the regulators, auditors, and economic officials were believed to be above reproach. Today there are too many examples of “referees” being bought, auditors mismatched to the individuals / organizations they are auditing, or watch dogs too easily distracted from their task.

Next week - with the same “ignorance” provided by “over confidence” I’ll provide my best guess on what needs to be done from this point forward. Until then I’ll close with the story of Boudreaux and Marie driving down the highway.

Boudreaux was positioned squarely under the steering wheel and Marie was leaning against the passenger side door. A teenage couple drove past them with the young girl nearly sitting in lap of the young boy that was driving. Marie pointed to the couple and remarked, “Look how romantic.” Boudreaux smiled and responded, “I didn’t move.”

Has America “moved” from the foundation that our greatness was built upon?

Copyright - Michael G. Manes (October 2008)
All rights reserved

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