My father was a stockbroker; my mother ran a bookshop. When the market crashed in 1929, my father's business partner committed suicide, and my mother's business shrank to virtually nothing. In a matter of months, they went from being comfortably middle class to broke.
They weren't alone; everyone in Colorado Springs was similarly affected. People who had been careless with money learned hard lessons about savings, about thrift and about debt. And those who had entrusted their life savings to the stock market learned the hardest lessons of all -- that stocks could go down as well as up, and that few investments were risk-free.
My parents struggled for years. They never forgot the Depression. They shunned debt, saved as much as they could, drove used cars, and lived modest, frugal lives.
I was -- and am -- different. I grew up believing that prosperity was almost an entitlement, something available to any American. All you had to do was figure out what you wanted to do, get educated in your field, get a job, move up to big money.
And although I'd never admit it, I believed the snake-oil salesmen with their self-improvement pitches: You're the only barrier to your success! You can make a million in real estate in 90 days with my sure-fire method! Go to EST, go to Landmark, go to Promise Keepers, go to Tony Robbins, and learn to be a successful, self-actualized person, down with the Lord and ready for success!
My parents would have looked at things rather differently. They knew that riches can disappear overnight, that American prosperity is not divinely ordained, and that life has no guarantees. That's why Social Security was created -- as a safety net, an insurance policy, a way of managing financial catastrophes. It made a lot of sense to my parents' generation, especially since the tax revenues that funded the system would be invested in the single most risk-free investment available: United States treasury securities.
But now, 70 years later, we think differently. Our world -- so secure, so diverse, so prosperous, so creative -- seems light years away from the cramped poverty of my parents' day. What might have been appropriate for the frightened pessimists of '30s Colorado Springs doesn't work for today's sunny optimists, the builders and dreamers who created our booming metropolis. The stock market's gone straight up for those 70 years -- why not take those payroll taxes, invest 'em in the market, and we'll all get rich?
Well, maybe ... but I don't believe it. I think that our long, fat and happy ride is about over. I think that our native American optimism has led us away from reality and into delusional, magical thinking. And forget the usual rants about our trade balance, and our low savings rate, and our unsustainable national debt -- just consider our town.
Based on the behavior of our local leadership class, here's what we believe:
Citizens of Colorado Springs so benefit from population growth that each citizen should pay many thousands of dollars in utility surcharges to support the growth.
Convention centers typically cost $100 million-plus in tax dollars, and require multimillion dollar operating subsidies. They're great investments!
The name COSMIX is well worth $21,000! That's only $3,500 per letter!
Just before the real estate crash of the late '80s, a Denver real estate developer, asked whether his latest deal, a spec office building, wasn't a little imprudent, candidly replied, "Look, for a developer, the only thing worse than a bad deal is no deal."
And that's our mindset, locally and nationally. Keep dealing, keep borrowing, keep spending, refinance and take out the equity, use the cash for two fabulous weeks in Hawaii. Don't worry about the bill -- it'll never come! Wasn't it Dick Cheney who said, "Deficits don't matter"? Of course they don't! And those wacky Japanese central bankers who hold $700 billion in U.S. treasury bills; why, they're so nice they'll never cash 'em in and use the dough to benefit their own country.
Luckily for me, I've figured out how to avoid the coming debacle. Buy a lottery ticket, win the lottery, buy gold bars. Crackpot scheme, you say? OK, I'll invest my winnings in a convention center.