Will Prozac Help This Depression?

As we get near an election, all news about the incumbent party is spun as bad news by the party out of power. Wars get deadlier, global warming gets hotter, government spending is higher and the economy becomes the worst of a generation. I can generally ignore the pre-election blather and write it off to campaign worms living on four hours of sleep, cigarettes and vitamin C. But I am not so sure about the last one; are we in fact on the verge of an economic collapse or just in another normal up/down business cycle? Since I could only read a few pages of Samuelson before wanting to poke my eyes out, I flunked Econ 1 so it’s difficult for those of us who don’t know the difference between classical, neo-classical, Austrian School or Keynesian theories of economics to know if we’re, basically, screwed.

To confess, I have been thinking more about The Great Depression lately because I have been re-reading The Razor’s Edge. (An interesting sidebar to the novel: I saw the Bill Murray Razor’s Edge before Tyrone Power’s Razor’s Edge before reading the W. Somerset Maugham novel that each movie was based on. While I am certain I would draw the wrath of literary and film critics alike, I preferred the Bill Murray version. Or at least it stuck with me because I saw it first.) At any rate, the novel uses The Great Depression as a backdrop to the excess of America during the Roaring Twenties and how it was generally believed at the time that the great American engine could never be broken.

There are some frightening similarities to The Great Depression and today, most notably the rise in personal debt due to low interest rates and the loss of manufacturing jobs. I know today’s economy is global and far more complex than it was 80 years ago, but it seems to me the current credit crunch that is taking down banks and lending institutions coupled with odd monetary policy could sink a financial ship that is already listing.

Rather than be a downer, I am hoping there are those out there who know how this financial stuff works and can put my mind at ease. But, give me something that makes sound logic and is easy for the untrained mind to understand, because I have to admit, I am a bit nervous that all that is out there are reasonable differences based on economic theory.

Admittedly there is a part of me that wants to sell our house, collect all our money and invest in gold, rent a house in a safe and inexpensive small town and ride it out. Most Realtors, stock brokers and other heretics will tell you that home and stock values have their ups and downs and the best investor is the patient investor. Thank goodness my shirt was lost during the stock market bubble, but what if my home value drops in half and it takes the rest of my working life before it works its way back to the current market value? Wouldn’t we be wiser with cash than equity in this situation?

Do we really have to wait for John McCain to get elected and take us to a war with Iran before we would see an economic upswing, or will our future leaders find a prescription to what ails us economically? Put in that context, does anyone out there have confidence that Nancy Pelosi, Harry Reid and Obama/McCain will keep us from falling over the cliff? Hell, none of them has ever held a real job, little alone run an economy. Or do we trust today’s captains of industry – business leaders who gave us Enron, World Com and oil at $138 per barrel – to keep the current sputtering economic engine running? Seems to me we’re faced with a Morton’s Fork (look that one up).

Well, don’t just sit there anxiously agreeing with me with your diapers in need of a change, give me some good advice on what to do; what we all should do. I know that the run on the banks during The Great Depression had to do with confidence in the economy and people behaving as sheep, but, as they say down on the farm, the sheep are nervous.