“So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself—nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.
In such a spirit on my part and on yours we face our common difficulties. They concern, thank God, only material things. Values have shrunken to fantastic levels; taxes have risen; our ability to pay has fallen; government of all kinds is faced by serious curtailment of income; the means of exchange are frozen in the currents of trade; the withered leaves of industrial enterprise lie on every side; farmers find no markets for their produce; the savings of many years in thousands of families are gone.
Yet our distress comes from no failure of substance. We are stricken by no plague of locusts. Compared with the perils which our forefathers conquered because they believed and were not afraid, we have still much to be thankful for. Nature still offers her bounty and human efforts have multiplied it. Plenty is at our doorstep, but a generous use of it languishes in the very sight of the supply. Primarily this is because the rulers of the exchange of mankind’s goods have failed, through their own stubbornness and their own incompetence, have admitted their failure, and abdicated. Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men.
True they have tried, but their efforts have been cast in the pattern of an outworn tradition. Faced by failure of credit they have proposed only the lending of more money. Stripped of the lure of profit by which to induce our people to follow their false leadership, they have resorted to exhortations, pleading tearfully for restored confidence.
Happiness lies not in the mere possession of money; it lies in the joy of achievement, in the thrill of creative effort. The joy and moral stimulation of work no longer must be forgotten in the mad chase of evanescent profits. These dark days will be worth all they cost us if they teach us that our true destiny is not to be ministered unto but to minister to ourselves and to our fellow men.” - Franklin D. Roosevelt, Inaugural Address, March 4, 1933
It is sobering to see how closely today’s market crisis parallels the Great Depression. Certainly there are differences and our mechanisms to deal with the crisis are greatly expanded, yet the root of the market collapse happening before our very eyes is fear.
And what is fear?
Fear is a lack of trust. Banks do not lend to each other or to their clients because they do not trust they will be repaid. Investors do not provide capital because they are distrustful it will be returned. Our global, interconnected marketplace is based on trust and that trust is being severely tested.
Participants hoard their capital like squirrels as if preparing for an economic winter.
When capital is hidden away in the 21st century equivalent of the proverbial mattress: government bonds, then businesses do not expand.
When businesses do not expand, then jobs are lost, economies contract and suffering increases.
When distrust is rampant, people are only willing to create and transact commerce with those they know.
They turn to their tribe. In past times, your tribe would have been members of your family and local community.
Today we have the social tools to connect with people across vast distances. The breakdown in trust does not have to mean turning only to those close at hand.
We must build and create and trust with those we have met on social networks such as Twitter, Facebook, Linked-In, Ning and others.
Trust is rebuilt one relationship at a time. We are fortunate the technology is in place to rebuild those relationships not in an insular, local fashion but globally.
Return to your tribe until you can trust again, but please make sure your tribe is global.
2 Comments, Comment or Ping
Ellen
JD this is a very insightful post. You have a gift for making this finanacial mess clear and understandable to the layman. Thank you.
Oct 31st, 2008
jd
Thanks Ellen. Your complement means a lot to me.
Oct 31st, 2008
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