The James Dicks Blog

The past year has been very rough on traditional investors; investments have blown up in the faces of people who had been religiously putting funds in 401(k) plans and IRAs and chances are their home values have crumbled around them as well. Thousands more got caught in a layoff and are now forced to use what is left of their savings to simply survive, while thousands more have lost their homes to foreclosure. It was the kind of year that people will talk about for the rest of their lives; just like Grandpa used to talk about the Great Depression of the 1930s.

Many businesses have collapsed under the stress of this fragile economy; some are still alive but running on the fumes of what they were able to scrape together soon after the recession hit them. Like I said, it’s been a tough year but it is not impossible to overcome. Now it’s time to rebuild our personal and professional lives.

As we enter the holiday season, I see the effects of this economic downturn hit yet again. Corporate CEOs and HR managers have had to do what was in the best interest of their companies – normally that means trimming the employee roster – at least for the time being. We’ve all had to determine where costs can be cut to generate needed cash flow so American companies can stay “open for business” and start to mend our damaged economy.

The same goes for families across the U.S. trying to find their “new” paths to personal financial freedom. Many of you were doing everything correctly and thought you had it made, only to discover that traditional methods of investing just didn’t work anymore and established family traditions had to be cut or done away with all together.

I’ve heard more and more people say that this year’s holiday season will be different – this year there won’t be as many presents given to as many people as there have in the past. Charitable organizations are already feeling the pinch because there are fewer donations coming in this year than in previous years. For many charities, the recession has delivered a double blow. There have been sharp drops in donations tied to increasing demand for their services in these difficult economic times.

Maybe it’s time for us all to start cutting back and simplify our lives. Perhaps we all should cut back a bit and use the extra time and money to get closer to our family and friends. Read more to your kids and grandchildren, and get interested in what your spouse is working on in the kitchen or out in the garage. Invite your friends over to play a board game – these are all things that will allow us to reconnect with people; something that is probably long overdue.

Like “Grandpa’s Great Depression,” we must now find new ways of doing things; changing our lives is not an option anymore. Prior to 2009, Americans were not savers – today more and more of us are starting to put money away for that proverbial “rainy day.” American business now understands that their consumer base has changed their spending habits and has had to get creative to keep things moving forward. This is all positive. These are all things that we should have been doing all along. Maybe if we had done so, the economic situation would not have hit us all so hard.

So this year, instead of indulging ourselves in a rich holiday season, maybe we should focus on what we have remaining in our lives. We need to center on giving thanks for the food and the time we can share with our family and friends, and celebrate the things that we believe in; commemorate the holiday traditions that make our lives meaningful. And one more thing, don’t forget to spend a little quiet time with yourself this holiday season, reflecting on the past year and looking toward the future with optimism.

Happy holidays,

James Dicks

Most of the global population is feeling the effects of the current economic malaise that has spread like a virus to the world’s economies.  We keep hearing statistics that we are currently facing the worst economic situation since the end of World War II but this has happened numerous times – even before 1945.  I did some investigating and found that our new country had one of its first economic failures in 1797 while even the “Founding Fathers” were still wet behind the ears. 

The list of recessionary periods erupted for a variety of reasons; weak economic base, greed, war, governmental regulation, and a lack of confidence due to a variety of issues.  This is by no means a comprehensive listing of the weak/recessionary economic periods that have been faced by our nation but let’s take a look at a few.  I think you’ll find this interesting.

Panic of 1797 –

The effects of deflation of the Bank of England crossed the Atlantic to the new United States and upset commercial and Real Estate markets as far south as the Caribbean.  Britain was affected greatly because they war fighting a war with France. 

Depression of 1807 –

The Embargo Act of 1807 was passed by the U.S. Congress during the term of President Thomas Jefferson.  It devastated the shipping industry.  But as a result, the Federalists fought back at the embargo and began smuggling into New England triggering an economic depression. 

Panic of 1819 –

This is the first major financial crisis in the U.S. and featured widespread foreclosures, bank failures, unemployment, and a slump in manufacturing and farming.  It also marked the conclusion of economic expansion following the War of 1812. 

Panic of 1837 –

A sharp downturn in the U.S. economy was caused by bank failures and a lack of confidence in paper currency.  Speculative markets were affected when U.S. banks stopped payment of specie (gold and silver coins). 

And It Continues

Between 1837 and the turn of the century; there were a number of economic maladies that included the Panic of 1857, Panic of 1873 and the Long Depression (yes, I said depression) between the years of 1873 to 1896.  By the way, the Long Depression was caused when the Vienna Stock Exchange collapsing which caused an economic depression that spread around the world.  It occurred during a time when the world’s industrial output had expanded fourfold. 

There was a Panic of 1907 that happened because of the failure of Reading Railroad and withdrawal of European investments led to a stock market and banking collapse.  The Post-World War I recession from 1918 to 1921; the Great Depression of 1929; Recession of 1953 and 1957; 1973 Oil Crisis, a recession in the early 1980’s, 1990’s, and 2000’s which brings us to today. 

This Too Shall Pass

As you can see, the effects of a negative economy on Americans (and the world) have happened many times before.  I counted 19 separate weak economic periods that we have endured since the inception of this nation and there’s probably a few I missed. The point is this is nothing new.  

The world’s economy is actually rather fragile and can be upset by the most innocent of motives.  No matter what the reason, one thing is certain – we have always recovered from these devastating periods over and over again to experience positive economic growth on the other side.  While there’s no time frame that can be guaranteed as to when we will exit from this current economic state of affairs, one thing is for sure, at some point, things will start to improve.  In the meantime, keep a positive attitude and work toward a positive and useful future.  What choice do you have?  It’s time to make lemonade out of these lemons.