A Sobering Look at the Recession

[Solon]

and its ramifications.

http://www.theatlantic.com/doc/print...america-future

[I.J. Reilly]

This thread and article will probably be overlooked by most because the article is pretty long, but it is a good read for those that have the time. It is somewhat depressing, though, so I suggest listening to happy music while reading it to even out the effects.

This article is especially interesting for anyone who has a passing interest in sociology and the broader effects of unemployment beyond immediate income loss.

Thanks for the link, Solon.

[Color Me Badd Fan]

and its ramifications.

http://www.theatlantic.com/doc/print...america-future

I'm halfway through the article and so far it's been excellent. It's especially relevant to me because I decided to make a go of it on my own and gave my employers my two week notice last week. I started working in late 05 and although 06 was good 07-09 were not. My firm bought land and built a building when land and construction prices were at their peak (06). The overhead was enormous and the rumbling amongst associates and junior partners was that the building was a millstone around everyone's necks. Raises stopped, bonuses diminished and there was definitely a malaise. To a certain extent, I understand the portions of the article that talk about how this kind of malaise can have a lasting effect.

And this is a huge reason why I quit and decided to go out on my own, even in this environment. Fortunately I have developed skills that are countercyclical to match up with skills that are cyclical. In fact, my countercyclical skills could potentially make me significantly more money than what I have been earning with my current job. My only regret is not doing this six months ago (and I'm admittedly a little late jumping on this particular train).

Since I made the decision to go out on my own (sometime in early to mid January) I've noticed that I've begun to get my "mojo" back. Optimism and a little entreuprenurial thought have begun to creep back into me. I may be a crappy employee, but it got to the point where the lack of raises and lowering of bonuses caused me to simply hold back on implementing some of things I'll be doing when I take off. I've been trying to keep things as amiable and professional as possible but I let it slip to the partner I talked to on Friday that the bonus structure was basically a joke. I could probably make more money waiting tables at the local Olive Garden.

[Coach McGuirk]

That is good stuff. Not quite done yet.


I have been waiting to see crime rates skyrocket, which I haven't seen yet. I think it is coming but maybe not if the economy does continue to recover. I just don't know what it is recovering with? Surely it isn't a true recovery. The lasting effects can be good too, and as of yet the article has only mentioned negative lasting effects. I am interested if it will bring these up at all.

[TripletDaddy]

Solon, interesting article. Very long, but worth the read.

What sort of things would people do if they had to undergo a complete career change?

Does anyone here have an almost college-grad in their ranks? What is the vibe? Is it pessimism or acceptance? It sounds like it is almost impossible to land a job out of college these days.

[Jeff Lebowski]

I'm halfway through the article and so far it's been excellent. It's especially relevant to me because I decided to make a go of it on my own and gave my employers my two week notice last week. I started working in late 05 and although 06 was good 07-09 were not. My firm bought land and built a building when land and construction prices were at their peak (06). The overhead was enormous and the rumbling amongst associates and junior partners was that the building was a millstone around everyone's necks. Raises stopped, bonuses diminished and there was definitely a malaise. To a certain extent, I understand the portions of the article that talk about how this kind of malaise can have a lasting effect.

And this is a huge reason why I quit and decided to go out on my own, even in this environment. Fortunately I have developed skills that are countercyclical to match up with skills that are cyclical. In fact, my countercyclical skills could potentially make me significantly more money than what I have been earning with my current job. My only regret is not doing this six months ago (and I'm admittedly a little late jumping on this particular train).

Since I made the decision to go out on my own (sometime in early to mid January) I've noticed that I've begun to get my "mojo" back. Optimism and a little entreuprenurial thought have begun to creep back into me. I may be a crappy employee, but it got to the point where the lack of raises and lowering of bonuses caused me to simply hold back on implementing some of things I'll be doing when I take off. I've been trying to keep things as amiable and professional as possible but I let it slip to the partner I talked to on Friday that the bonus structure was basically a joke. I could probably make more money waiting tables at the local Olive Garden.

Good for you. Best wishes in your new endeavor.

[byu71]

When you have family and friends that get hurt by this sort of thing, it is hard to say, "long term what happened is a good thing."

There was a time I read the "mental attitude" books, did the Anthony Robbins thing. They were extremely helpful to me at the time. Motivation was also there. I was broke. Had child support and alimony payments and fortunately parents that if I went to them to bail me out, there would be a heavy price to pay.

The economy at the time sucked, but that was fortunate. If things had been good, far fewer people would have listened to me. Those times since then when times have been tough in my field were great times to build for the future. This time not so much, because I really have little interest in building my business now.

My fear right now is that the "wheeler dealers" haven't paid the price, and the politicians haven't paid the price. Real positive change in my opinion won't come unless both of those groups get hammered. Less people coming out of Harvard business school will be a real plus.

As a side note. Anyone hear how Goldman Sachs knew about the impending problem coming with Greece but kep it undercover until they took care of themselves.

[I.J. Reilly]

That is good stuff. Not quite done yet.


I have been waiting to see crime rates skyrocket, which I haven't seen yet. I think it is coming but maybe not if the economy does continue to recover. I just don't know what it is recovering with? Surely it isn't a true recovery. The lasting effects can be good too, and as of yet the article has only mentioned negative lasting effects. I am interested if it will bring these up at all.

There is a small section on the good effects right near the end.

I read something not too long ago where crime rates in the US were linked to people's faith in government. In times where people had more faith and trust in the government (as measured by public opinion polls, not exactly a great source, but it makes for an interesting discussion) there was less crime. Less faith/trust in government, more crime. I wonder if that trend will prove out with the current situation.

[Color Me Badd Fan]

This presents the biggest problem towards a recovery:

"In a recent Harvard Business Review article, he and his co-author, Leo Tilman, argue that dynamism in the U.S. has actually been in decline for a decade; with the housing bubble fueling easy (but unsustainable) growth for much of that time, we just didn’t notice. Phelps and Tilman finger several culprits: a patent system that’s become stifling; an increasingly myopic focus among public companies on quarterly results, rather than long-term value creation; and, not least, a financial industry that for a generation has focused its talent and resources not on funding business innovation, but on proprietary trading, regulatory arbitrage, and arcane financial engineering."

The focus on quarterly results and a corporate executive bonus structure that provided massive incentive to pump up short term gain regardless of the long term results of the action played a huge role in the financial meltdown. In the 1980s and during the Internet boom, capital was being allocated to the Oracles, Googles and Amazons of the world. In the 2000s capital was being allocated to house flippers to buy a dozen homes in North Las Vegas, Victorville, CA and Queens Creek, AZ.

[I.J. Reilly]

My fear right now is that the "wheeler dealers" haven't paid the price, and the politicians haven't paid the price. Real positive change in my opinion won't come unless both of those groups get hammered.

This has actually been my greatest problem with this recession. If we want to bail out the banks and feel like we have a legitimate reason to do so (and I think we did), it needs to come at some price to them. I don't think it has, at least to the people on the top. I honestly think that there should be no such thing as "too big to fail." If that is truly the case with them, then we do what we need to do to stabilize the situation and then we start hacking these guys up until they are no longer of a size to make the argument that they are too big to fail. That is the price I think they should have to pay, and that is not going to happen. It's an opportunity lost, imo.

Much of the result of an unaccountability for those in the highest places is the widening income gap that we have. The income gap between the top 5% of earners and everybody else is greater than it ever has been and it continues to rise. The real income of those at the top grew in this last decade while those in the middle and bottom experienced flat to declining real wages. Imo, this is not good for American society.

[Color Me Badd Fan]

This has actually been my greatest problem with this recession. If we want to bail out the banks and feel like we have a legitimate reason to do so (and I think we did), it needs to come at some price to them. I don't think it has, at least to the people on the top. I honestly think that there should be no such thing as "too big to fail." If that is truly the case with them, then we do what we need to do to stabilize the situation and then we start hacking these guys up until they are no longer of a size to make the argument that they are too big to fail. That is the price I think they should have to pay, and that is not going to happen. It's an opportunity lost, imo.

Much of the result of an unaccountability for those in the highest places is the widening income gap that we have. The income gap between the top 5% of earners and everybody else is greater than it ever has been and it continues to rise. The real income of those at the top grew in this last decade while those in the middle and bottom experienced flat to declining real wages. Imo, this is not good for American society.

George W. Bush bailed out the banks because, IMO, he had to do it to prevent a financial apocalypse. These problems persisted into the first few months of the Obama presidency.

Although I can't quote exact statistics, Wall Street and Goldman in particular were huge contributors to the Democratic party. There were numerous officials from the Clinton administration that held high positions and the IEs and at Fanny Mae/Freddie Mac. I know the GOP's hands aren't particularly clean in this regard either, but the Democratic party has evolved to not only the party of big government and fighting for the little guy, but it's also been involved with the marriage of big government and big business and this marriage, IMO, is becoming increasingly toxic. Big government uses big business to execute it's priorities and vice versa.

We saw a prime example of this when Big Pharma jumped on board with Obamacare (and of the course Big Pharma made an assload of money off of the Medicare prescription drug benefit passed by the GOP during Bush's first term).

[byu71]

This has actually been my greatest problem with this recession. If we want to bail out the banks and feel like we have a legitimate reason to do so (and I think we did), it needs to come at some price to them. I don't think it has, at least to the people on the top. I honestly think that there should be no such thing as "too big to fail." If that is truly the case with them, then we do what we need to do to stabilize the situation and then we start hacking these guys up until they are no longer of a size to make the argument that they are too big to fail. That is the price I think they should have to pay, and that is not going to happen. It's an opportunity lost, imo.

Much of the result of an unaccountability for those in the highest places is the widening income gap that we have. The income gap between the top 5% of earners and everybody else is greater than it ever has been and it continues to rise. The real income of those at the top grew in this last decade while those in the middle and bottom experienced flat to declining real wages. Imo, this is not good for American society.

The oft used excuse for the big pay and big bonus's is these talented people will go elsewhere. Talented at what? Now if talent refers to be connected and able to manipulate, well then maybe they have talent.

I don't buy the they will go elsewhere argument.

[Fiyero]

Does anyone here have an almost college-grad in their ranks? What is the vibe? Is it pessimism or acceptance? It sounds like it is almost impossible to land a job out of college these days.

I attended a career fair at the U last week, with over 50 employers, and roughly half of them were looking for IT.

[Fiyero]

Here's another article:

Many of the current unemployed are facing years of unemployment:

http://www.nytimes.com/2010/02/21/bu...ployed.html?em

[landpoke]

That was a fun read.