So what if there isn’t a recovery?
According to present economic practice, a recovery will occur when consumers start spending money, running up debt, reflating asset bubbles, and etc, etc, as in “we have heard this story before”.
But what if the consumer, having been fooled again and again and again, and having been cheated again and again and again, decides he and she have had enough?Â Or rather, that they have enough trash in all its varieties and don’t need any more kegerators, all wheel vehicles, giant-jumbo-automobiles, and thousand buck hand-bags?
Consider the Baby Boom generation, my own demographic cohort.Â I am 56 years old, nine years away from the conventional retirement age of 65.Â How many kegerators, giant-jumbo-automobile, and thousand buck hand-bags will I buy over the next decade?Â Absolutely zero.Â None.Â Nada.Â No plans for expensive annual vacations (I’ve only had one two week vacation that involved travel in the last decade).
I’m in pay-off all debts including the mortgage before retirement-mode and am on target to do that.Â I do not think I am unique these days.Â
So what’s the government’s plan B?Â
The answer to that is — they don’t have a Plan B.Â They can’t imagine that things won’t get back to the “spend and consume normal” that has been true since the end of World War II.
So once again, we must look to ourselves for our own rescue.Â The broad parameters are clear and have been heard here before –
- Pay-off debt.Â As the economy winds down, “make hay while the sun shines” and get out of debt.Â This reduces your monthly expenses, and thus reduces the amount of income you have to earn in order to live well. Sell financial assets if you have them to pay-off debt, especially your house mortgage.
- Reduce your consumption.Â Conserve energy, patronize the after-market, avoid “new stuff” wherever possible.Â Here again, this reduces your monthly expenses, and thus reduces the amount of income you have to earn in order to live well.
- Grow some of your own food.Â Growing food in your yard is like growing money.
- Develop a part-time income in the local economy that over time could become a full-time income once you have reduced your expenses by eliminating debt, reducing your expectations/consumptions, and thus increasing the quality of your life.
- If you are in a hole that is so deep you can’t get out of it, don’t delay, declare bankruptcy, let the bank have the house if its not “keepable”, and start over.Â Don’t throw good money after bad.
The best thing to do is plan for a future without a “conventional recovery as we have known it.”Â If the situation turns around, well, you end up with less debt and less junk and that is certainly good.
Betting on a recovery however, could significantly increase your risk of financial catastrophe.