During the last week of March each year our entire family gathers on Marco Island. When we’re all together I’m overwhelmed with gratitude that fills my personal happiness bank to the brim.
The country of Estonia in Northern Europe actually has an online “Happiness Bank.” They don’t keep track of mortgage backed securities or bailout funds, instead they accumulate virtual “money” by doing good deeds for others. This may not provide economic relief for the troubled Baltic nation, but according to one of the Internet entrepreneurs who started the project, it does support the belief that doing good deeds has measurable value unto itself.
Here’s another interesting little tidbit. During economic downturns in Britain during the 1930s and 1980s, men’s neckties shrunk to as little as an inch in width. A snow-bird from London reports that right now the best-selling tie at the swanky UK men’s clothing shop chain Topman’s is an ultra-skinny, one-inch model, Elvis Costello style.
We don’t take comfort in knowing that others are also coping with recession, but according to The World Bank this is truly the first global recession since World War II. The global economy may shrink more this year than at any time since the 1940s. Of 116 developing countries, 94 are in an economic slowdown, and many countries in Eastern Europe, Central Asia and elsewhere are in trouble, other nations such as Austria, Ireland and Spain may need bailouts, too.
Let’s take a quick look around the globe. In Britain, where the men are wearing thin ties, financial and retail sectors are dealing with interest rate cuts by the Bank of England to historic lows of 0.5 percent. They’re pumping new money in the amount of £75 billion ($103 billion) into the economy to fight recession and deflation concerns.
France isn’t officially in recession yet, but its fourth quarter economic performance was the worst since 1974, and GDP is expected to shrink 0.1 percent in 2009. Australia’s GDP fell 0.5 percent in the last quarter of 2008. New Zealand’s government believes that the existing recession will last at least through the first quarter of 2009.
Japan, with a very export-dependent economy, saw GDP shrink 3.3 percent in the fourth quarter — the worst since 1974 — and the country’s prime minister sees “no bottom in sight.” Japan’s Nikkei stock index hit a 26-year low in early March. China’s and India’s economies, both growing at a fast pace in recent years, have slowed down but are still chugging along. Zimbabwe printed a 100-trillion dollar note and its 2008 inflation rate is an estimated 11,200,000 percent. Venezuelan’s inflation rate is 31 percent; Iran’s rate is 28 percent and Argentina’s at 22 percent. Russia’s industrial production dropped 16 percent and the inflation rate is 13.9 percent, while Iceland’s government quit in January when the country’s financial sector fell, has inflation of 13.4 percent. The U.S. “official” inflation rate was 3.8 percent last year.
The news isn’t all bad and this worldwide overview isn’t meant to depress, rather it’s meant to educate with facts. The laws of supply and demand over any meaningful period of time are absolute. Recessions don’t — and can’t — last forever in free-market societies. People may be saving now and putting off big-ticket purchases. We’ll eventually need to buy new cars, replace refrigerators’ and buy new clothes.
Although optimism has been rare the last 18 months, there is plenty of good news out there too if we look for it in the right places. According to some observers, including Jeremy Siegel, the stock market right now may be undervalued based on the index’s earnings. Bloomberg News calculated at the end of December that there was more than $8.5 trillion in cash, bank deposits and money-market funds where it’s earning rates lower than the inflation rate. The money will likely find its way back into the markets.
In the meantime, why not join the Estonians with your own online “happiness bank” while we wait for the recession to recede. Contribute to your own happiness by educating yourself, asking lots of questions and taking the actions necessary for financial well-being and piece of mind.
Darcie Guerin, Financial Advisor & Branch Manager, Raymond James & Associates, Inc. located at 606 Bald Eagle Drive, Suite 401, Marco Island, and FL 34145 provides this article. If you have questions please contact Darcie Guerin via e-mail at Darcie.Guerin@RaymondJames.com. Phone (239) 389-1041, toll free (866)-343-0882 or at RaymondJames.com/Darcie. Past performance may not be indicative of future results.