Raise your hand if you’re tired of the media’s “the sky is falling” approach to the American economy. Since at least 2006, publications like The Economist and Reason were predicting that the United States housing bubble was going to cause economic pain. Sadly, it appears that few people were paying attention, which led to headlines like this one from Forbes:
Recession Risk Watch
I’m curious, did people really think that their homes were going to continue gaining value if the market reached a point where buyers wouldn’t be able to afford them? Apparently so given the amount of debt people now face from a time when they were house rich. Now, the “R” word is tossed around in every other story and the topic has finally made an appearance in the presidential race.
Parts of a Story
There’s at least three things going on here:
- Our belief EVERYONE should own a home—Homes are not the only thing we believe everyone should extend themselves financially to own, but they are one of the riskiest. We’ve been told for years that homes are a safe investment. I wonder how the people who owe more on a home than it’s currently worth feel about the people who told them it was a good investment.
- Our increased acceptance of massive consumer debt—I’m talking to you, the guy who bought the big screen television on a store credit plan. I’m not talking about the people who’ve gone into to debt due to health emergencies, for example. I’m talking about the people who see something they want, then buy it without consideration to whether they can actually pay for it.
- We want more—I’m the first to admit that I want more. My more is usually books, but the point remains, I don’t really need more books. Media types have been wailing about the recent shopping numbers from December that show a drop in buying. Reality check—how many people actually NEED something? Christmas shopping has become mostly pointless at my home because what’s left to purchase other than newer, bigger, better, etc., of what we already own?
These are all parts of a story we’ve been told, and the conclusion to this particular story has been there’s only one way to save the economy: spend more. This story is important because we hear similar ones all the time in other areas, but we don’t always recognize the story when we hear it, so we overlook the issues like the ones outlined earlier.
The Impact of Stories
Currently, we’re told stories about global warming (note: to avoid having to explain in comments, this isn’t a challenge to it’s veracity, but rather to the idea that a story has developed around it), terrorism, identity theft, online predators, and hundreds of others. We’re told these stories because “somebody” wants a certain response, and as our world becomes more uncertain, the stories will flow at never before seen levels.
In spite of the benefit of multiple channels and sources, I think we’ll have an even greater responsibility to check out the stories we’re told. A kernel of truth is usually enough to get people to bite, but it doesn’t necessarily make for the best decisions. Keep this reality in mind as you listen to and read the stories filling your inbox, feed reader, newspaper, and television. The people telling the stories want a certain response, but is that particular response the best one for you?