According to the 1900 census records, my grandfather, then a young man, was a "hatter" for the Stetson Hat Company that was located in Philadelphia, not in Dallas as some would have thought. He later worked briefly as a carpenter and finally spent most of his career as the building superintendent at the Baptist Book Building on Philadelphia’s downtown Chestnut Street. During the Great Depression, they cut his salary by 25%, but kept him on, and he was so grateful that he teared up just telling me about it some fifty years later. My own father worked as a CPA with Standard Oil of Pennsylvania at their offices on the corner of Broad and Chestnut, but he never owned any of their stock that would have made him rich, nor would he ever consider owning any stock in any company. Such were the life-long scars left on those who experienced the Great Depression, even those who survived relatively unscathed.
Those scars even affected the attitudes of our generation. When we bought a house, we put a minimum of 20% down and used a rule-of-thumb of a mortgage in the range of two to three times our annual salary, our actual salary, not an optimistic projection. Credit cards were metal tags issued by department stores and were always paid off promptly. Even buying a car on time was unusual. We were cautious about debt.
Now, it appears, we are heading toward another generation-defining financial apocalypse. Back on April 30, 2007, Alan Abelson, the columnist and former editor of Barron’s, issued such a dire warning I kept a copy. He said, "We think the economy will slide into recession as the drag from housing and the burden of unprecedented consumer debt make themselves increasingly felt. We think the dollar will continue down the slippery slope, complicating Mr. Bernanke’s life and inducing slumpflation. We think this over leveraged, overheated, over hyped market will blow itself out and touch off a chain reaction that’ll rock global bourses. And all this will happen, if not tomorrow, then soon enough, we’re afraid." And, sure enough, tomorrow did arrive.
If you think the worst is over and things are looking up, just last month, after being right two years ago, Abelson said, "We’re only in the middle innings of an enormous wave of defaults, foreclosures and auctions. The huge overhang of unsold houses and the likelihood that sellers will come out of the woodwork at the first sign of a turn argues against a quick rebound in prices. The next phase will be paced by defaulting option adjustable-rate mortgages, prime loans, and home-equity lines of credit. The economy is likely to contract the rest of this year, stagnate next year, and grow tepidly for some years after that."
Just this week, he warned, "When we look back at the end of 2009, anyone that made positive predictions this year will not believe how far off they were."
(In the interest of accuracy, the quotes from Barron’s are my recorded simplifications of Abelson’s engagingly chatty style and are often of him quoting someone else he agrees with. They are only meant to capture his important points.)
We are a very, very, lucky generation. I have never experienced the wrenching loss of my home or job, much less both together. I have never had to move in with my in-laws. Of course, many of us lost a job somewhere along the way, but only as a minor glitch in an upward career, an inconvenience, not a permanent change of life style. We were born into an economy that was tight enough to encourage restraint and careful planning for our futures, but not so tight as to cause real pain. And things always got better. We lived better than our fathers, and our children, up until now, lived better than we.
We are not smarter than other generations, just born at a better time. History may remember us as the Lucky Generation, or, maybe, the Oreo Generation—living in the bright, sweet spot between two dark, bitter times.