hard times

we are in the midst of the greatest financial crisis since the great depression. all of us have grown complacent -- safe in the knowledge that economists have disected the depression and have a pretty good idea of what triggered it, what made it worse and ultimately what turned the tide. so, 'never again' was reasonable and comforting. it is of great comfort that our current fed chairman is an expert on depression economics.

i want to be clear, that many of the problems faced by average americans during the great depression are unlikely to be repeated. we have made many fundamental economic changes that will cause this current crisis to unfold in a different fashion.

in the 30's we had millions of americans unable to feed or house their families. at its peak, unemployment hit almost 25%. with unemployment so high there was a tremendous disparity of power between management and labor. without our modern workplace protections this lead to massive exploitation -- overworking employees, failure to pay in full for work that was done (with the threat that if you didn't like your reduced paycheck you were welcome to leave and there were millions of americans waiting to take your job), no health and safety protections like osha . . . the list of improvements in contrasting the current crisis with the great depression is long and fundamentally important to the outcome. so, we are not about to repeat the 30's.

that being said, this crisis will have some similarities to the depression that are worth noting. the american experience during the great depression altered our national consciousness and its echoes have been felt even to our lifetimes. similarly, the current economic meltdown will have real effects on every american.

for one real effect you only need to look at our baby boomer generation. the first baby boomer officially reached retirement age within the last year. pundits were quick to point out that our boomers did not have enough savings to retire and maintain their current lifestyles. they were heavily in debt, had underfunded retirement savings and had cashed out the equity in their homes meaning they had mortgage payments to look forward to in retirement. this was the the view of the 'average' boomer in early 2007 before the economic wheels started to come off.

if we fast forward to today we find that average american has seen their retirement savings cut by 30% and the market value of their homes cut by about 20% across the board. this is a staggering loss of net worth that most affects those in retirement or close to it.

this will have a stunning effect on those close to retirement. many will not be able to afford retirement and will need to continue working to pay their bills. rising fuel, food and heating costs will exacerbate the issue.

those of us far from retirement will feel the ecomic ripples from the boomers. since 70% of our gdp comes from consumer spending we are going to see a significant contraction over the years to come.

we are not about to replay the great depression -- in many ways we are better positioned to handle the most basic needs of our citizens. but we are living in tumultuous times and the history that unfolds over the years to come will change the american psyche forever.