secondgd

Fed Chairman Ben Bernanke declared today that 2010 would be a ‘year of recovery.’ An optimistic economist is a sure sign that the end is nigh (and by that I mean the end of the world). So let’s down our last pint of bitter, stick out our thumbs, and prepare for a long ride.

First off, a little context. If this is the Second Great Depression, it’s still early.

Unemployment

While unemployment is rising (and near or into the double digits in some places, such as Florida and Puerto Rico), we’re a long way from the 25% unemployment that the US experienced during the Depression

Stock performance

Today the market roared back from a 12 year low, 50% off the high. During the Great Depression, the Dow lost more than 90% of its value.

But the biggest market losses during the Depression came in the two years following the crash of ’29, and full recovery took more than two decades. So the good news is that we’re doing alright. The bad news is that things can get a lot worse.

How do we prepare for the worst?

Don’t Panic. By that I don’t mean ‘hold the steady course.’ You may want to pull your money out of the market. You may want to clear out your bank account and stick it in your mattress. You may even want to walk out of the house that the bank is going to bulldoze anyway and head west. I mean, DON’T PANIC! Remember the gentlemen on the Titanic. Cling to your decency, even if it means that you’re not able to secure a place for yourself on the life raft.
Cling to your towel. When you think about it, there aren’t really that many things we need, but there are a few. Food, water, a pocket knife, a flash light and your iPhone should pretty much cover the essentials. (I saw a homeless man with an iPhone yesterday.) Think especially hard about how the few things you have left can serve multiple uses. Your chippendale furniture, in a pinch, can double as fuel for a garbage can fire. That Starbucks cup will make a great receptacle for any spare change you might be able to squeeze out of the schmucks who still have jobs.
Don’t cling to everything else. The Great Depression hit some people very hard. For others, it was a great adventure. The difference seems to be the extent to which they clung to their valuables. While Manhattan bankers were jumping out of sky-scrapers, many families packed up the family car and headed to Yosemite National Park (toughing out the depression in the most beautiful place in America couldn’t have been that bad). The best things in life are free: love, art museums, long walks on the beach, and now, the internet!
Keep your sense of humor. Which, I suppose, is another way of saying: ‘don’t panic.’ It really isn’t that funny that your retirement is now worth half what it used to be. And it’s not exactly hilarious that you’re either going to lose your job in this recession, or you’re going to be doing double the work on the same salary to cover for your cube-mate who just got laid off. But it can be funny when viewed with the right frame of mind.

And what better way to put you in that frame of mind than a tall pint with your best friend?