The Crisis; The Opportunity

Lynne Twist is the author of the book, "The Soul of Money". She has a very deep, connected and spiritual view of money and the world financial systems. She has also appeared in the movie, "The Money Fix", directed by Alan Rosenblith.

In this video, Lynne gives the different perspective of how to embrace this time of difficult transition; the bigger purpose, the larger picture, the current task of mankind. If you let yourself look at things through this perspective, even for just a hour or two, I think you'll find it to be empowering, spiritual, and matching with a sense of renewed community and a more evolved future. See what you think.

Podcasts that Help Explain What Happened

How did this economic mess happen? How could collateralized debt obligations (CDO's) be such a bomb, and yet have been rated as good investments to the funds that bought billions of dollars worth of them?

How bad is the crisis, really? Will the bail-outs work? What happens next?

There are a few sources that offer the real, human story side to all this. Digging in to research the crisis and the economy can overwhelm you with figures, complex investment references, finger-pointing and now world economic interrelationships and uncertainties. There's enough of that kind of information out there.

The podcasts listed here will give you an understanding from the human story side, a view of things from the perspectives of those involved. These shows are highly recommended. If you only spend a few hours this year learning to understand the crisis, spend them listening to these shows.

This Amercian Life: Another Frightening Show About the Economy

October 3, 2008 - so when they talk about the bail-out package, they are talking about the first one from September.

Ira Glass and his staff are excellent, and this show is a real gift. Thanks, Ira!

This American Life: The Giant Pool of Money

From May 9, 2008, Ira and his staff again show that they were watching this whole thing unravel and bringing us the stories from behind the scenes.

Planet Money: The Week American's Economy Almost Died

Sept 26, 2008. What is commercial paper, and why is it so important to our nation's economy? What happened that scared lawmakers and analysts into considering rushing 700 billion dollar bail-out packages through? Find out in this show.

UPDATE 03/09/09: Added this new podcast as well.

This American Life: Bad Bank

Feb 27, 2009. The collapse of the banking system explained, in just 59 minutes. This is the same team that came together to produce the above episodes. The first segment uses very basic banking examples to clarify the "rock and a hard place" that are stressing out the banks. You also meet business investors that are creating solutions for the home mortgage crisis, but you'll see that the scale at which they can work this solution is just too small to be the main fix.

In general, the Planet Money Podcast from NPR has been doing good stuff, well worth the time to listen and discuss with family and friends.

Transparency Requires Acceptance

President Obama and his team believe in transparency: the ability for people and society to be able to see the workings, activities and transactions that are going on in government, banking and business. This trend will also become a primary demand in communities and smaller groups over the next few years.

I can certainly see why this would bring benefits to society. With the amazing tools for information and team coordination that we have today, it is possible to "play the shell game" on people faster and with more "smoke and mirrors" than ever before, in whatever domain you pick. When a society allows individuals to make money, command power, and control people and businesses under hidden wraps, you get two things: people making bad decisions while thinking the decisions are just fine (being disconnected from others and society), and you get collateral damage in the form of wrecked and lost lives, destroyed businesses, or in some cases, destroyed economies.

Transparency brings us choice. If we can see what is going on, then we can make a choice about it. Maybe we alarm, or make new laws, or simply make the knowledge available to those who would be at risk. Or maybe we just choose to let it go on. The key difference is that now we have a choice, and that changes everything.

However, there is another component needed to actually be able to exercise that choice. It is a component of social maturity and personal dignity: the concept of acceptance.

If we over-react as individuals and as a society to new openings of transparency and start judging and restricting people's lives and actions according to our own religious codes, our own likes and dislikes, or our own ideas of what is right and wrong beyond the law, then transparency will operate as new chains of restriction and rejection, a new chilling effect,  imprisoning the very passions and the creative, exploring drives that made America the leader it has been in technology, business and economy. It is important that people are still free to follow their passions, try new things, push the boundaries, and be themselves, however unusual they be.

That's why transparency, from a social point of view, is more about seeing than doing. Each person will make the right choices for themselves about who to do business with, about what to invest in, about who to be friends with, as long as they can have the information, the transparency, to be able to make those choices. You make your choices, and let others make theirs.

Madoff's ponzi scheme would never have gotten off the ground if the transparency had existed to potential investors to see that it was a ponzi scheme. Risky credit default swaps and bad CDO's would never have gained demand or value if there had been full transparency for the investor. Caveat emptor has been proven once again, despite credit-rating agencies breeching their trustworthiness with their mistakes. Those are just the huge examples right now, there are thousands of others in various domains.

Helping each other see and understand the different things we know about, as they want to know or as it would affect them, is a simple way to personally support transparency. Choosing the path we know is right in our own lives and actions, the path that doesn't bring damage to others or cost society, over the path that is easy, or quick money, or other short-term gain, is our personal responsibility and an individual action to transparency.

Supporting transparency is great, but that is the easy part. The hard part is accepting the diverse and maybe strange things that we can see with our new transparency, and accurately assessing if they affect anything. Say you find out that the owner of the grocery store where you shop is - shudder - a __________ (fill in your choice of shocking religion, political affiliation, sexual oritentation, etc. here), and has even donated some money to his cause. While you might not agree with his choice of religion, political affiliation, etc., does it really affect his ability to be a great grocer? Does it affect the value trade of your money for his well-stocked, well-managed store of goods and services? Should it really disqualify him from the rights every American has?

(Do note here, I'm talking about accepting differences in legal things. Of course if we discover the grocer has been murdering people, or dealing drugs, or any illegal activity, then his American right becomes that of a fair trial!)

Practice acceptance. Recognize when feelings about one thing are smearing into your judgement on another, unrelated thing. America is all about the pursuit of happiness for all of us, and different things make different people happy. Transparency will bring out all kinds of new information about things that used to be mostly hidden. It is time to exercise maturity, tolerance, acceptance and (to be a warm winter fire) even find a positive delight in our differences, for it is that which releases the true power and benefits of transparency and choice.

Extra Patience Needed: Take the Long View

Lots of people will be going through rough times over the next few years. It isn't just financial waters, either. Stressful changes in business, climate, energy, learning and education, and more will be taking their toll. Change is happening rapidly, and change is stressful. Stress causes health problems, and healthcare is another problem area right now, which adds more stress.

We've got hot soup here we are all sitting in here these days, and people are going to be freaking out here and there. People will be stressing out, and they will be showing more fits of anger and upset, that many times may not fit with the character you know them to be. Some will burst forth earlier, others will later as years of stress wear away at them.

When this happens, keep your cool. Let them express, be angry, and have their say. No need to break up friendships,  disown relatives, write-off business partners or quit jobs because of it. Especially if their outburst or sudden change in communications puzzles you. It isn't you, it's them. Not everyone handles stress in the same way, and different people will pop at different things, under different domains of stress.

So take the long view: realize that we are in a long winter, people will be getting cranky and cold, and that they'll feel better in the economic spring, several years from now. You just can imagine all the stress, problems, fears, hardships, lifestyle changes, health issues, financial challenges, etc. that they might be facing and experiencing right now. So go easy on people. While you certainly don't have to coddle them or try to help them through (unless that would be appropriate as a brother, sister, etc.), you don't have to erupt into a counter-tirade, get defensive or poke at them, either.

Know that things will get better in time. Know that they are going through rough times, and may well still be cool in the future. Think of things on a 10-year timeline rather than what they said today, and take the long view. Be a long-term friend, a smart friend, a reference and a kind and understanding example friend.

It'll help them, and it'll help you be a winter fire of light and warmth.

The Positive Power of Choice

Major changes are coming for the lifestyle of the average American. The economic winter means less buying power and higher living costs. The bottom line is a serious reduction in disposable income for most Americans, and possibly the elimination of disposable income all together for many people. This means a forced change in the shopping, luxury and consumption habits of most Americans.

To get an idea of the effects that you and many other people may well be facing, imagine what it would be like to live on half your current income for the next five years. What would you need to cut out? What simply can't be paid? If you can't make the payments on high-debt credit cards, what will be like to manage the bill collector's calling? What luxuries, services and spending would simply no longer be available to you?

I'm not saying everyone's income is going to be cut in half. No, the changes in buying power and cash flow will be varied, but they will all be unwelcome. Sudden job loss. Extended unemployment. Lower wages for new jobs. Sky-high medical costs. Companies defaulting on pensions, leaving retired parents and grandparents needing help. Market wipe-outs of 401K funds. Loss of homes in the mortgage mess. And other horrible messes. It all irons out to be a net effect of a huge loss in income. Half of your current buying power is a realistic planning number.

There's no debt rescue through bankruptcy, either, in case you were thinking that was an option. With changes to bankruptcy laws that took effect back in October 2005, people can no longer simply wipe the slate clean anymore. You can't just discharge $30K, $50K or $100K of credit card debt these days. Instead, creditors now get to petition the courts for long-term, court-enforced payment plans, with interest. ["The New Bankruptcy Law", Nolo press]

All this to say that this is going to be serious. This isn't the recession of 1991 or 2001. This is one big storm, and we are all going to end up getting economically cold and wet to one degree or another before it's over. To quote Chris Martenson, "the next twenty years will not be like the last twenty years."

With that mind, there is something that you can do that will make a real difference to your personal future mood, capacity, confidence and outlook.

Choose to Adapt Now
The psychological impact of choice is subtle but powerful, especially over the the long term.

You have the opportunity right now to choose to reduce your living expenses drastically at your own command and timing. Or, you can wait and see what happens, and likely have even more severe reductions in your standard of living forced upon you at the whim of the economy, your employer, maybe a health crisis, and so forth.

The difference between these two scenarios are actually much more enormous than you'd first think.

The Costly Choice
When something is forced upon you without your choice, it creates an emotional base of bitterness and anger. It feels as though your lifestyle has been taken away from you. It is easy to feel victimized and some people will want to act out retribution, even if it is against the wrong people or organizations.

Even if you don't think you would react this way now, and even if you think you are an easy-going person that would tend to roll with the punches, a deep level of emotional effect will happen from changes like these. It will take time and energy to process and unfold these emotions, consciously or unconsciously, and that process will distract you from better activities and outlooks during a time when you need your best wits about you. Depression, resentment, blaming, loss of hope, and perhaps eventual resignation - these kinds of feelings only suck away your energy and ability to solve problems and make big choices.


The Empowering Choice
Or you could decide yourself that you are going to reduce your overhead, pay off debt, and get yourself to a point where you could live on half your income if you had to, and get there on your own schedule. Make cuts to things in the order you choose and at the moments you choose.

The difference is subtle but quite powerful. Even though, at first, it may not "feel good" to cut back spending and cut luxuries deeply, it pays off in spades year after year of your future. And make no mistake, it'll not be pleasant nor fun in any way. You'll need to cut back deep and hard. But the fact that you did it under your choice changes everything.

First, you'll feel good because you took smart action before "the storm hit." A little preparation goes a long way in crisis.

Second, you'll feel good because you chose the changes, even if it was only just the timing of them. That means you took control of your life, rather than the economic winter taking control of your life.

Third, by making these changes early, you'll actually command more resources and be in a better position than if you had waited: you can allocate some cash to savings, pay down as much debt as possible, and more, all while you still can. This avoids the "kick-yourself" scenario of "if only I had paid that off when I still had my high-paying job."

Forth, you'll come to understand that, if nothing else, you chose to avoid the morass of negative emotions and feelings that come unavoidably with forced loss. You will still have to deal with the change of lifestyle and big challenges, but you now have more resources, more confidence and a can-do outlook in the mix to meet the challenges.

Finally, when other people are just starting to suffer with the forced lower standard of living and shopping withdrawals, you'll already have adjusted. You'll be living a life that will be much more able to handle the changes without much affect on your already trimmed-down lifestyle.

Remember, it isn't just about you squeaking through this economic winter; people you care about will need help. Getting yourself in the strongest position possible means that you'll be able to help someone else when they need it most.

Flow with the Powerful River
For the next twenty years will certainly be very different from the last twenty years. Different rewards, different kinds of satisfaction, different ways of thinking, different levels of family and good friend relationships. Make yourself a winter fire and be a source of warmth for you and others.