40 Days of Mindfullness

My life is a little crazy busy at the moment, but I watched our president on Tuesday night, and one of the things he said struck me as part of the problem, not part of the solution.

I agree that we need to concentrate far more on our children's educations and on healthcare for all of us. I agree that we need to help people climb out of the problems that they have--financially, socially, physically, educationally--and improve the life of each and every citizen of not just the country but the planet. I think he's got some great ideas that warm the cockles of my heart.

But then he said this: "...the flow of credit is the lifeblood of our economy."

Why? Why does it have to be that way?

I understand that 99% of us cannot afford to buy a house with the money we have on hand, and I agree that probably 50% of us can't buy a car outright either (at least not without jeopardizing other bills and life requirements). That's investment, as far as I'm concerned. Credit, to my mind, is something that you get because you can't afford what you want, not what you need. If I really want an iPod but don't have the money to buy it outright, putting it on a credit card is no investment of any kind, as it provides no usable equity (though it does make it easier to listen to the presidential address podcasts).

So credit is one thing and investment another. You should have what you can afford and save for what you can't.

It's unfair, however, to expect that to actually be the case. Our capitalist economy has been built on spending money whether you have it or not, and the industries we have are simply designed to work on money that is loaned: You loan the bank money by opening a savings account; the bank loans Bob money, and Bob pays Jimmy (who employs Ken and John) and buys materials (which employs some other people) and eventually gets paid off by Max (who borrowed his own money) and pays off the bank which then pays you off in the form of interest.

So, I guess credit is the lifeblood of our economy, but coming to that realization requires me to rethink my definition of "credit" to include investments like those described above. Is it possible to live without credit (using my original meaning) and still get what you need? Yes. It just requires that we all rethink what the definition of "need" is, as well.

A human being needs, minimally, food, water, shelter, and clothing. Which sounds pretty minimal indeed. But if I go to Spago and eat foie grae and oysters, wash it down with imported bottled water from Italy, go home to sleep at my penthouse apartment in Central Park West, and wear Armani while doing it, I've got the basics, haven't I?

There are people in the world who need those particular basics. If you're not one of them, you must just not be watching the right TV shows, because all the admen are telling us daily that that or something like it is what we need to have.

I'm not saying you have to give up your iPod (you'll pry mine from very angry hands), but I do think we should all spend a little time finding out what the definition of need is.

For Christians, the season of Lent has just started--40 days of reflection and penance. Instead of just celebrating this Lent as a Christian holy season, where the most many of us will do is eat fish on Fridays, I'm going to invite anyone and everyone of every faith and none to join me and give up thoughtless spending for the next 40 days (or thereabouts).

Here's how I, personally, am going to work it:

• I am going to try not to eat out for the entire 40 days. If I do eat out, I will consider the source of the food, the plates I eat with, and the social and emotional benefit I get.
• I will try to spend the least amount of money on my food and minimize the packaging with which I'm willing to deal (luckily, lots and lots of things come in bulk now).
• I will not buy anything on impulse--each magazine, candy bar, and online music purchase will be considered and acquired in a mindful way.
• I will keep track of each and every cent I spend, without guilt or remorse for the entire 40 days. Easter week, I can take a look and see if I can find places to cut more out of the needless acquiring.

So? Who's with me?

Why is this Mr. Capitalist's job?

Alan Greenspan, former chairman of the federal reserve said he was shocked his ideas led to the current economic crisis and said "I still do not understand exactly how it happened."
     Well, let me see if I can give it a shot: Banks bundled mortgages that had been given to people that wouldn't even qualify for jury duty and then sold those, along with credit default swaps which are basically insurance the seller provides to the buyer in case the entity loses value. However, unlike regular insurance, these swaps weren't regulated so they failed to meet any standards of responsible business. Then, when everything collapsed, it spread like an infection, because when people are making money, they don't ask how, they just say "yay!"
     But again, you're the expert.
     --Seth Meyers, Saturday Night Live, Weekend Update, 10/25/2008

The global economy is in the tank. Many countries are teetering on the edge of bankruptcy and economic depression. Banks are failing left and right. And it's up to us to save it all. That's right, not Americans, my friends, but every single capitalist on this planet.

At least that's what the politicians and many of the pundits seem to be telling us. And because we're trying not to spend, us frugal people are hurting the economy. On the other hand, experts in personal economic security are telling us to save, save, save!

What can you do? Are you hurting the environment by spending tons and tons on things that use up resources--things you don't need and really probably can't afford anyway? Are you hurting the economy by minimizing resource use and not spending what little money your hard work makes you? Why do you have to fix this, and is spending all your money really the way to do it?

Mr. Capitalist has a hard time not spending money. Back in the 80s, when he was young, he got into all kinds of problems with credit card debt and ended up having to go to a credit counselor to get back in the black. Granted, he had to work two jobs all through the 90s to pay off those credit cards, but then he had a nice clean balance sheet to buy a house with his new wife.

When they went to buy that house, of course, the bank preapproved them for a mortgage that was very, very expensive--almost all they could afford at the time. Then, they had a baby and Mrs. Capitalist's father wasn't doing so well and needed a lot of financial help and it all added up. Luckily, the house had an equity line of credit, so Mr. Capitalist didn't worry too much.

Because, you see, he'd been told that we're all supposed to get mortgages we can barely afford and spend more than we have because we're supposed to buy things--that's capitalism. We need to make sure the family has TONS of Christmas presents (whether we celebrate Christmas or not), and then there's always Valentine's Day and Mother's Day and Father's Day and Grandparents' Day--the buying never stops because it's good for the economy!

Except...

Except that now Mr. Capitalist has a car loan and a mortgage and a home equity line of credit and a dozen credit cards and the minimum payments all add up to $5000 a month, but he only makes $4000 a month after taxes, and he never had much of a nestegg to begin with because he was spending like he should be. So suddenly the car is being repossessed and the house is being foreclosed on and the credit cards are in default and three or more banks are carrying "bad debt" because Mr. Capitalist was doing what he was told to do. He was stimulating the economy.

Not to mention the fact that, with his credit ruined he can barely get approved for a rental. His job gets downsized because he works for a company that does business with one of the banks that's carrying Mr. Capitalist's bad debt--you see, the company can't get a loan to cover its expenses while waiting to be paid by clients who can't get loans to cover their expenses because the bank is trying to hold on to what it has while it drowns under bad debt. So Mr. Capitalist goes to the unemployment line and gets his unemployment check--a check that is essentially paying back the loan he and his employer made to the government by paying taxes.

But of course, that money the government got on that loan has already been spent a hundred thousand times over, so they take out another loan to pay Mr. Capitalist, who can't get enough to pay his bills and provide for himself and his family.

This is an exaggerated thumbnail, of course, and doesn't take into account the fact that, at least in the US, the economy has also been severely damaged by the lack of affordable health insurance, which bankrupts hundreds of thousands of people because they either can't get it or have inadequate amounts of it.

It also doesn't take into account the greedy and immoral practices of banks and mortgage companies and futures traders, a great number of whom made up numbers as they went along to try to make the bottom line look good. And then there's the fact that society keeps touting the image of the affluent American, and the government has, until recently, kept trying to convince us that everything will be just fine if we can spend our way out of this.

So, fine. It's not really Mr. Capitalist's fault that the economy is crashing. It's not just because he spent more than he had--and if the economy continues to languish, it's not because he's now saving most of what he makes. But what do we do now? What can each of us do to help get things back on track? I'm not an economist by any means, but for me personally, the following is a good start:

• Spending: still a good idea--but wisely. Don't go into debt to stimulate the economy. Go check out Suze Orman for good tips on staying on budget.
• Saving: still a good idea, too--and remember, as that Fox article I quoted earlier says, paying down debt is saving. (I'm so not advocating listening to Fox News as a general rule, but in this, they're right. Ask Suze Orman; she'll tell you the same thing.) CNN's Money (particularly Money 101) has some good info on smart debt reduction.
• Giving: absolutely crucial. It's crucial for the survival of the idea of society, if not exactly the bottom line. If this world economy comes out the other side of this a stronger one, but leaves five billion people in the dust and ruins? That's not strength. And it's certainly not right. I've listed sites for donations before, but think of calling your local shelter and seeing what they need. There are a frightening number of people in need right now and any little bit helps.
• Learning: takes some time, but is so worth it. Read the newspapers, subscribe to political and economic blogs, check out your government websites (US Executive Branch, US House, US Senate, US Supreme Court) and read up on the bills being debated and the rulings coming down from your courts.
• Doing: hard, but necessary. Write a letter to your congressperson asking him or her to support real solutions for healthcare, call your senator about the current state of scientific funding.
• Thinking: is an often daunting prospect for some reason. There's a big list of things here, and it's hard to figure out what to do when and how. Think about three things every time you make a decision about your money: Am I helping the planet? Am I helping other people? Am I helping my soul?

We can hope all we want, but we have to work to make things happen.