THE ECONOMY WILL AFFECT YOUR LONG TERM FINANCIAL HEALTH

I do the best I can to engage people in dialogue on the economy, peak oil, and climate change with the intent of opening their minds to a different view. It's been a character building exercise as I learn patience and the ability to bite my tongue when I raise someone's ire. The goal, I remind myself, is to get people thinking not to 'win' an argument. I'm kind of used to 'winning' and I admit to having some rather extreme financial ideas. Such as, I don't want to invest in the stock market until I'm assured that it is well regulated and fraud is reliably ferreted out. Most people agree with my sentiment, yet continue to invest in a system that has proven to be flawed.

Why do they keep investing? Because their employer offers a match and because 'the stock market always recovers.' 

To which my response is, recovers to what? It's pretty clear that several thousand points on the Dow are due to the mortgage debacle and the risky credit default swaps it spawned.  Credit derivatives are characterized by Warren Buffet, a well respected and revered financier, as "financial weapons of mass destruction." They have the power to take world markets to dizzying new heights of profit...and to wipe out the entire global financial system. In order for the market to rebound any time soon we would be revisiting the fraud, lies, and cheating that took it too far in the first place.

If the stock market starts booming again, I believe, we should be deeply suspicious that the boom is unsustainable and predicated on poor business practices. Frankly, I find it unethical to profit from such a ponzi scheme. We need to face the truth that those thousands of points on the Dow aren't coming back any time soon.

Further, worse than the stock market booming on financial magic tricks, is the consequence of assuaging our fears and worries with the platitude of 'the stock market always recovers.'  During the Great Depression it took about ten years for the stock market to recover. In ten years I will be 45 and have ten fewer years to meaningfully save for retirement. (Actually, I think retirement is a thing of myth and legend, but, for now, let's pretend I'm going to actually going to be able to put up my feet and watch the world go by in my Golden Years.)

Even if the stock market comes back and is regulated enough that I'm willing to entrust my money to Wall St., the impact of the crash is life long.  Sure, I can sock away more money into my 401k once things are going better, but that will be at the expense of my discretionary spending. It's awfully hard to buy a new car or a fancy house or diamonds for a 25th wedding anniversary when you're stuffing twenty or thirty or forty percent of your income into a retirement account (and praying the return is high enough that you won't be the world's oldest Walmart greeter). In fact, it will be a challenge to keep a small roof over our heads and buy a decent used car.

The stock market may recover, but the little investor never will.