A question of trust
People, some of them in Congress, appear “more interested in punishing Wall Street than saving the economy,” says David Leonhardt in The New York Times. And no wonder. Nobody has connected the dots for us. So, why are we talking about another Great Depression? It’s not that we’ll repeat the severity of the Depression—the Fed has been more active and we’re richer than in 1929. It’s that the dynamics are the same. Things didn’t get bad until late 1930, when banks started collapsing, and the remaining lenders stopped trusting each other. Then as now, the pain from that freezing up of lending is a delayed pain. But there will be pain on Main Street unless we unfreeze lending. And, like it or not, our credit markets are on Wall Street.
Bail yourself out
There is plenty of advice on where to invest in this roller coaster of a market, says Chuck Jaffe in MarketWatch, and much of it sounds pretty promising. “But the one thing most experts have failed to suggest is that consumers do precisely what the government has been talking about, namely bailing themselves out of debt.” The average U.S. household has $9,500 in credit card debt, not to mention mortgages and car loans. If you think of your net worth as “everything you own minus everything you owe,” then the best way to raise your net worth is to lower your debt. Not only are interest rates rising, but paying off debt “gives a big psychological boost.” If things get bad in the markets, you’ll feel good being debt-free.
THE WEEK'S AUDIOPHILE PODCASTS: LISTEN SMARTER
- 43 TV shows to watch in 2014
- It's official: The religious right is calling it quits
- Obama just kneecapped Jeb Bush and Chris Christie's 2016 prospects
- The dangerously childish morality of liberal ObamaCare supporters
- How science is accelerating our search for alien life
- 10 things you need to know today: November 23, 2014
- Inside Turkey's shadow war with ISIS
- How to be the most productive person in your office — and still get home by 5:30 p.m.
- The Hunger Games: Mockingjay — Part 1: 10 major differences between the book and the movie
- 10 classic Sesame Street moments we wouldn't show today's kids
Subscribe to the Week