On Irrational Despondency

March 10, 2008 § Leave a comment

Downturn Tests the Fed’s Ability to Avert a Crisis
In the last seven months, policy makers have cut interest rates, injected money into the banking system and approved a fiscal stimulus package in an effort to keep the economy from slipping into a recession. Often, the moves seemed to work at first, only to be overtaken by more bad news.If the housing boom was a manifestation of irrational exuberance, some say it has swung too far in the other direction, to irrational despondency.

I have a theory on this, this irrational despondency.

There is something inherently romantic about pinching pennies — there is challenge, there is drama, there is danger, there is hope and there is hopelessness.

Can a mortgage that’s $50,000 underwater can feel more valuable than one with that much equity?

The answer is yes — because it’s an opportunity to show fortitude, for those of us who have never, in our adult lives, really been tested.

We can reuse plastic bags.
We can forgo bottles of pinot noir.
We can use the library.
We can eat leftovers.
We can tighten our belts.
We can dream up our stories.
We can visit parks and museums.
We can walk.

Making ends meet — there is romance in such a predicament. And there is freedom in unsurmountable debt.

Look, I’ll be the first person to admit that I’m a classic consumer (yes, just two posts down I’m oogling Marc Jacobs dresses). But this movement toward irrational despondency is to me like the flip side of the coin (a much smaller coin) for people who haven’t found fulfillment through luxury goods, through fancy vacations, through equity in their homes, through having and spending money at will.

So what will the irrationally despondent learn?

The conclusion is foregone — why, that they best things in life are free, of course.

It’s simple … almost too simple, and too obvious, but that’s what makes it so brilliant, and so right on time.

We’ve been so wrapped up in the rat race, in acquiring and in investing, in buying bigger and bigger cars and pricier and pricier handbags, that we’ve forgotten our center. This is a chance to be grimy, strong, solid, steely, creative and clever — and those are things we can’t do or be when we have everything we need within reach.

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