~Ben

Six months ago, America’s household savings rate rose to 6.9 percent. This was a marked shift from the pre-recession rate, which dipped to zero in April 2008. Though such saving is not what the broader economy needs now in recovery, such a dramatic behavioral change could linger on well into the future, especially for new job seekers introduced skeptically to employment security.

Two recent articles have further addressed this point. Writing for Slate, Daniel Gross blamed the relative “overreaction” to Dubai’s debt woes on financial post-traumatic stress stemming from the shocks of Lehman, et al.

Using the Great Depression as evidence, Gross wrote, “The damage was so traumatic that the crash sapped the national tolerance for risk for decades…In 1952, 82 percent of families had life insurance, but only 4.2 percent of the population held stocks.”

Additionally, in his latest column, the New York Times’ Ross Douthat referenced a joint paper, “Growing Up In a Recession,” which reports that “Americans who experienced ‘macroeconomic shocks’ between the ages of 18 and 25 were more worried about poverty and inequality across their voting lives, and more skeptical about the wisdom of the market.”

And while Douthat speaks mainly to the political implications of such generational findings, will such collective trauma and skepticism alter saving and spending patterns?

For me a quite tangential memory lingers from “Apollo 13,” which was my favorite movie through much of my youth. I recall that one of the many bespectacled NASA men was arguing that the damaged spaceship needed to cut back drastically on power in order to survive atmosphere reentry, and that struck a chord. There was then the need for planning ahead and conserving and an underlying fear of not making it.

It is within this context that I also weigh the upcoming discussions on climate change in Copenhagen. Certainly behavioral principles pertaining to saving and spending could be related to conservation and consumption. And I can say confidently that our generation is more attuned to environmental conservation; simply, no other group has grown up with the specter of climate change in the popular narrative.

So, with our upbringing in the climate change era and the recession perhaps reinforcing saving, will our behaviors be altered and counter the ease of consumption in this modern, “throwaway culture”? Looking for a silver lining, then, perhaps our ongoing financial trauma could serve as a sort of unwanted and forced behavioral panacea, crafting “children of the Recession” when we need it.

~Ben

But, on an admittedly superficial level, these two men, struggling, to some extent, with impending deployment to Afghanistan and economic woes, respectively, show a nation internally eaten away by disaffection. Our military is disgustingly overextended and our general populace frustratingly underemployed.

The notion of the American fighting spirit is being put to the test, and cumulative effects cannot be ignored. As the Afghan strategy debate continues, the battered human toll must be considered along with sheer troop numbers. Experience does not ease the immense strain of multiple tours of duty and, as Joseph Kinney wrote Friday, the “shadow” of combat lingers longer.

And while some “green shoots” spoke of profit and productivity gains this week, it was reaffirmed that such green can occur despite continued job losses – unemployment proved its “lagging indicator” nickname. For job seekers and the young, the battered psyche continues as well. Concerns of financial survival and a relative “shadow” exist for those fighting economic worries, as well.

It’s unsurprising, therefore, that for all the various and contradictory lessons offered by the media after this week’s off-year elections, the one consensus, epitomized by Michael Bloomberg’s close call in New York City, is that it’s bad to be an incumbent. Disaffection is a powerful force in the voting booth.

Given that, the reaction of some in government to demand troop increases, speak out against further stimulus spending and want to slow down on major, societally-beneficial legislation is sickening. Let the tea-partiers, the deficit hawks, the war hawks and the generally cautious rant from all sides.  Positive actions have always spoken louder than words. Those war advocates should consider human costs and cost-benefit analysis and those politicians worried about their futures should crack the policy whip, now more than ever. For the good of the nation as a whole, mollify us in the short term and give us something to look forward to in the longer term.

Disaffection is a dangerous and self-perpetuating national sentiment. The shadows are lengthening and the status quo is unsustainable.

~Ben

I therefore ask: Why hasn’t current “widespread anger” affected projected bonus payouts at Goldman Sachs? In the face of public dismay, as job seekers find heightened competition, why can’t banks admit beneficial government terms and diminished competition?

Further, the column argues that sentiment “has become counterproductive.” I do agree that banks should return to their “chartered roles.” In that case, how productive, for the economy at large, are profits driven by principal investments while investment banking lags?

I understand that bankers are responsible to their shareholders and I don’t mind that compensation levels are high (although I do think they should be more significantly taxed). I do, however, disagree with the notion that public outcry and reasonable reforms would impede our economy or bankers, who for years have held very advantageous positions.

~Ben

On Monday, a piece by E.J. Dionne in The New Republic caught our eye.  Dionne explored the traditionally-fickle nature of youth voters, as some Democrats are worried that young people will sit out subsequent elections now that Obama the Change Candidate has become Obama the Pragmatic President.

Said Thomas Bates of Rock the Vote: “For people who were energized in 2008, it was a time of hope and optimism.  And when you get to the brass tacks of governing, the atmosphere in the process of legislating has become poisonous.  That makes political engagement as unappealing as possible.”

If 2008 was a relative one night stand, it was indeed impressive.  As Dionne notes, there were more under-30 voters in 2008 than voters over the age of 65, which certainly bucked an established voting trend.

And while I believe there has been and will be residual youth engagement as a result of 2008, I do share these same concerns with regard to my fellow youths.  In July, Matt Bai theorized that Obama is the Shuffle President.  I assume that would make us the Shuffle Voters, prone to bounce around without commitment.

But while significantly lower youth turnout, say, in 2010, would be disappointing, the fact of the matter is that majorities traditionally give away some congressional seats.  And in 2008, there was a relative unifying cause.  It’s hard to get behind the “Democrats-need-to-maintain-their-majority” cause, especially considering some of the legislative inertia slowing down the current liberal majority.  It almost makes one crave a divisive issue.  Would a slowed-down climate bill be effective for 2010, for instance?

~Ben

Fondly,

The New Feed