The federal budget sequester has taken effect, Detroit has been declared insolvent, Dennis Rodman has returned from his friend for life tour of North Korea, Venezuelan President and no friend of America Hugo Chavez has died, a baby has been cured of AIDS, and the Dow Jones average has just recovered to the level of its October 2007 high.
It took 5.4 years to erase the precipitous stock market slide that started slowly in 2007, picked up speed in September 2008, and finally hit bottom in March 2009. That doesn't seem long compared to the 25 years it took to erase the stock market crash of 1929, or the 17 years of stock market misery from 1966 to 1983.
If you count from January 2000, when the stock market peaked before the dot-com bust, it's been 13 years of economic misery. And we can't say there won't be more. Both the stock and bond markets are still propped up by historically low interest rates, so we won't know what we really have until those props have been knocked out.
Still, we may be ready to have an economic spring. I suspect that it will be a New England spring, overcast and chilly, with a $16.6 trillion cloud hanging over our heads. Just a couple of warm, sunny days here and there would be great.
I've been looking at a retirement plan calculator this evening. It tells me that if the market performs poorly I still have quite a number of years to work. I don't mind working, it's the having to work that I mind. On the other hand, things don't look so bleak if the market performs on average. But what if the market performs above average? My retirement plan administrator won't tell me that.
I suppose I could retire now if I move to Detroit, where the median listing price of a house is $21,000. Detroit has some beautiful two-story brick homes built back in the heyday between 1910 and 1940. My mother's family is from Detroit and I still have cousins in the area, who've moved to the suburbs, California, or Florida. My cousin Tom was the last out. He joined the Detroit police force in the late 1960s and was required as a condition of employment to live in the city.
The city of Detroit peaked in 1950 with a population of 1,849,568. It's now down to a population of 713,777 as of the 2010 census, a loss of 61%. It's wrong to think that is only white flight. The whites were gone by 1970. The city lost 25% between 2000 and 2010. There's a lot of black flight too.
It's easy to look at Detroit as a harbinger for what could happen to America if we run up our debts too high and succumb to drugs, crime, and poverty. But there is more to Detroit than the city. I've spent a number of very pleasant afternoons boating on the Detroit River. The Detroit metro region has had some setbacks but has held steady over the last 40 years. The outdoor culture is still very strong. The husband of another of my cousins, who took early retirement from the auto industry in 2006, just passed away after spending much of the last 7 years at his hunting lodge in mid-state near Mount Pleasant. As the Michigan saying goes, "if you seek a pleasant peninsula, look about you."
The new Secretary of Defense Chuck Hagel was only partly right when in January 2007 he called the Iraq troop surge "the most dangerous foreign policy blunder in this country since Vietnam." The surge strategy was ultimately bipartisan, both in Iraq and Afghanistan, but there is no question in my mind but that the cost of the two surges brought down the domestic economy. I remember the debates of fall 2002, and the Bush/Clinton/Kerry idea was to make quick work of Saddam Hussein in Iraq and then turn to Iran and North Korea. You can't say that worked when all we have to show for the grand strategy is Dennis Rodman. I'm not asking whether it was worth it, just when it will finally be over.
My grandparents made it through the Great Depression of the 1930s. My parents got displaced in the recession of 1969-1970 and made it through the 1980s farm crisis. What does it matter, so long as you can remain productively employed and maintain a few harmless pursuits? That said, I should put aside this harmless pursuit and get back to my productive employment, in case the stock market does continue to perform worse than average.