Money dreams

It was in the early of summer of 2000 that I made the decision to retire. I made an appointment with my financial manager to restructure my portfolio. In early 1999, we’d done several restructures with Y2K in mind — and I had left everything alone until I was sure the world had breathed a collective sigh of relief and moved on. So it was a good time to for a review in any case.

The meeting took about three hours one morning, while Alene was still asleep, five hours behind London. Something must have made her pay particular attention to the proceedings, because when she woke up, she had recollections of much of what had happened as dreams. And I was a bit chagrined to realize that she had witnessed me moving a lot of assets offshore AND navigating my way through various tax loopholes — anything I could do to avoid the tax man.

I felt especially bad when she stopped at the ATM later that day and checked her balance after taking out some cash. She had $4013.16 in her checking account, and apart from what was locked up in her 401K, that was all the money she had to her name. And she didn’t seem that worried — said that she was expecting another payroll deposit in the next few days. She also reminded me that many people literally live from one paycheck to the next, whereas she had a bit of a cushion. It’s amazing how you can forget what it’s like to not have money – even when you’ve grown up without it.

Eight years later, in the spring of 2008, I went to New York on business. I bumped into an old workmate of mine, an American who’d worked in London for several years and had now returned home. He suggested we catch up over breakfast the next morning.

He was extremely proud of the money he’d made in recent years with the sub-prime mortgage market — and he was quite smug at how he had got out of it just before the market got into trouble. It was rather hard to stomach.

For the last few years I had been watching what went on in the retail stores where Alene worked. To be sure, I watched the American middle class squander much of its prosperity on complete rubbish. But by the spring of 2008, the signs of a softening economy were very evident at the point of sale — not just in terms of revenue, but the sentiments of the customers. One evening Alene was ringing up one of her regular customers. The price of one of his regular purchases had been going up in recent months, thanks largely to the increase in the price of oil, and when he saw his total rung up, he looked in his wallet and then up at Alene and said, “Whatever was I thinking buying a house!”

I was beginning to get a horrible feeling that the economy was in for a major crash — not 1929 per se — but to result in what we went through in the 1970s, when rising oil prices along with economic weakness resulted in stagflation and persistent high unemployment. And the activities my friend had been involved in had made the situation even worse by bringing too many potential homebuyers into the property market and running up house prices to unsustainable levels. The American middle class had managed to overextend itself even when the economy was chugging along nicely in 2004 and 2005. I saw how many times Alene had to hand back declined credit cards to customers — often having to try several cards from a plastic-stuffed wallet before getting one that would process. But the American middle class has most of its modest wealth tied up in home-ownership— and anything that threatens that can derail even the healthiest economy.

“Once companies start laying people off, you’re going to see a runaway meltdown of the economy,” I told him. “And they’re going to be laying off people in the millions — perhaps before the end of this year!”

This conversation took place before 7am in New York, so Alene was still asleep in Seattle and able to experience it as a dream. When she woke, she was very shaken — but I didn’t say anything. I let her just think it was a dream. I reminded her of it months later — in early December, when her hours were cut. You know it’s bad when you work in retail and your hours are cut just weeks before Christmas. Then I told her about the conversation she had overheard in her sleep.

I decided that if she ended up being laid off, I would move heaven and earth to send some financial support her way. And I was angry at the thought of all the other people like her — possibly facing financial destitution from no fault of their own.

As it was, Alene got to keep her job. And I lost my appetite for speculation.

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