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Why We Won't Avoid a Double-Dip Recession


No matter what choices we make, the outcome will be the same.

We've arrived at this particular economic moment in time by the choices we've made, which now leave us with choices in our future that will be neither easy, nor convenient, nor comfortable. Sometimes there are just no good choices, only less-bad ones. In this week's letter, we look at what some of those choices might be, and ponder their possible consequences. Are we headed for a double-dip recession? Read on.

An Uncomfortable Choice

As our family grew, we limited the choices our seven kids could make; but as they grew into teenagers, they were given more leeway. Not all of their choices were good. Yet how do you teach them that bad choices have bad consequences? You can lecture, you can be a role model; but in the end you have to let them make their own decisions.

I've watched good kids from good families make bad choices, and kids with seemingly no chance make good choices. And one thing I've observed: Very few teenagers make the hard choice without some outside encouragement or some help in understanding the known consequences from some source. They nearly always opt for the choice that involves the most fun and/or the least immediate pain, and then learn later that they now have to make yet another choice as a consequence of the original one. And thus they grow up.

What Were We Thinking?

As a culture, the current mix of generations, especially in the US, have made some choices, some of which, in hindsight, leave the adult in us asking, "What were we thinking?"


And then something really bad happened: Our homes started to rise in value and we learned through new methods of financial engineering that we could borrow against what seemed like their ever-rising value to finance consumption today.

We became Blimpie from the Popeye cartoons of our youth: "I will gladly pay you Tuesday for a hamburger today."

The lay-away programs of our parents -- where they patiently paid something each week or month until the desired object could be taken home – weren't for us. Come to think of it, I'm not sure if my kids (ages 15-32) have ever heard of lay-away with credit cards so easy to obtain. Next family brunch, I will explain this quaint concept, though I've heard it's making a comeback.


(Oh, wait a minute. That's the same group of regulators who now want more power and money.)

No positions in stocks mentioned.


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