Or, as a reader recently asked, and so many of us are beginning to realize, are we headed for an "extended lower standard of living." And if so, how do we prepare for it?
The economy before last year's crash was built on debt and derivatives. Debt said "Eat, drink and be merry...you don't have to pay until tomorrow." Derivatives said "Trust me. Your investment will increase in value." The derivative bubble burst last year. All we are left with is the debt: $11.6 trillion in Federal debt and $2.5 trillion in personal debt. That's a tad more than U.S. GDP of $14 trillion.
Other statistics are sounding an alarm: rising unemployment, declining bank lending and an impending commercial real estate crisis.
The American Way of Life seems unsustainable. But is a lower standard of living so bad? Unemployment has freed many of us from jobs we hated. Fewer loans means we rely less on banks, more on each other. Less time shopping means more time to look at those we love. This is difficult for an economist to say, but (gulp!) maybe money isn't really all that important after all.
What This Means for You
How can you protect/preserve your standard of living?If unemployed, look at several part-time "streams of income" rather than an all-consuming career. Barter services with friends - it will deepen the relationship. Reconnect (for free!) on Facebook with folks you've lost touch with for more opportunities. Quit the gym, go for walks, and meet your neighbors. Host pot-luck suppers in each others' homes. Share baby-sitting duties. Have family picnics.
You get the picture. Yes, its a snapshot, not a French Impressionist painting, but it didn't cost much, and its real.
The dream is over, and the morning air is so fresh and clear. In fact, it's downright invigorating.
