A cottage industry of hand-wringers has sprung up in the popular press, evidently dedicated to either pointing out the painfully obvious, that we have all suffered a serious financial setback on our paths towards retirement and enjoyment of the good life, or more likely, pointing out the self-serving dedication that exists in the press to that most popular American pursuit, the selling of self-help advice.
Has there ever been a time when it has been clearer, that the only people significantly benefitting from this overwhelming volume of advice are the purveyors of the advice? Is there some delicious irony in noting that these same purveyors are often the same folks whose lousy advice helped lead us into the mess in the first place?
Collectively we have followed the piper’s tune from this current assortment of advisors and snake charmers, who were telling us how to amass wealth without risk, and consistently beat the market, because we thought we were smart enough to evaluate the advice emanating from the sphere of influence being created by our own ‘Madoffian’ gurus. We abandoned the conventional wisdom of broad market diversification and ignored the sobering caution imbedded in understanding random walk theory. We, the children of “The Greatest Generation”, coming of age as the self defined “Masters of the Universe”, the Boomers, living within the dangerous, delusional bubble of certitude, also ignored the even more fundamental nagging insistent in our Moms’ pithy little warnings such as: “If it seems too good to be true, it probably is”, and “A penny saved is a penny earned”.
The erosion of institutions and ascendance of the cult of personality fed into our own hubris with regards to the presumption of our ability to outsmart the masses by aligning ourselves with the most beguiling of these snake oil salesmen.
Getting Institutionalized
David Brooks, in a recent editorial in the New York Times, wrote about the differing driving forces between individuals and institutions. He opines on the value derived from the rules and obligations of institutions and cites political scientist Hugh Heclo, in stating that “institutionalists see themselves as debtors who owe something, not creditors to whom something is owed.” I’m sure neither one of them had Dedham Institution for Savings in mind when they were writing of institutions, but we, and almost all, smaller community banks are such institutions.
For over 175 years we have promoted the boring old value of savings, the idea of spending less than you earn, and the equally quaint idea of managing your debt responsibly. Although we grant credit, our fundamental underpinnings have always been based on owing something to our communities.
Somewhere along life’s path we have wandered away from the ideals of individual responsibility and institutional memory, and have now been blindsided with a sudden dose of reality. Our lack of individual discipline has been our undoing. Using caution as a brake to impede the explosive ride the economy was taking us on seemed old fashioned, and likely to make us miss this gravy train. Well, the Go-Go economic train has derailed. We have now been sidetracked into the Yo-Yo moment (You’re on your own).
Our safety nets haven’t broken, but they are stretched perilously thin. Community banks are institutions that have a long, honorable history of helping individuals through difficult times in their lives. There is nothing flashy about old friends, but they are always there for you. Come find out for yourself. n
