Marketplace Scratch Pad

Lessons for the New Year

Scott Jagow Dec 29, 2009

I’m sitting here in a thinker’s pose, wondering what it is that I learned in 2009. Or what lessons should I have learned? I’d love your help on this.

I was just reading the transcript from the latest Marketplace Money show. Host Tess Vigeland talked to a panel of financial types about the year’s most important takeaways. They all seemed to agree that despite the finger-pointing at banks and bailouts, there was a collective failure, summed up by Wall Street Journal columnist Jason Zweig:

.. my dad, who was a very wise man, used to have a saying that when you point your finger at somebody else, at least three of your fingers are pointing back at you… And of course, it’s the overcompensated executives on Wall Street — who took their firms down in flames and pocketed hundreds of millions of dollars in the process for themselves — who make everybody annoyed, because they’re very visible.

But there are 300 million people in this country, and we’ve really developed in the past couple of decades a bit of a culture of what we might call “responsibility-free decision making… There comes a point at which people need to recognize that when someone offers you a loan that you can’t afford, it’s not 100 percent the other person’s fault.

So is lesson number one, personal responsibility?

Uh, not according to some of the people who heard this panel discussion:

  • I am livid after listening to your smug, patronizing panel of “experts” use words like “scapegoating” to refer to the anger of ordinary Americans at the Wall Street execs who both created and profited from last year’s crash. Shame on them all for implying a moral equivalence between individual homeowners who took risky loans and firms like Goldman Sachs who destroyed the lives of millions of Americans and have never been held accountable.
  • Am I annoyed at the Wall Street Financiers who nearly blew up the world’s economy? Annoyed??, Annoyed?!! What planet have your guests been living on? Annoyed?!!! I’m livid!, and that’s an understatement!

Lesson number two: Wall Street is enraging. And it doesn’t give a rat about you.

I’m just free-wheeling it here. Financial columnist Liz Pulliam Weston throws in her two cents:

And one of the things that I see coming out of this, that might be the silver lining is that people are realizing some of the personal finance basics… You’ve gotta have an emergency fund, you’ve gotta be saving for retirement, but look at the risk you are taking. I think one of the most tragic things was how many people so close to retirement were overdosed on stocks.

Lesson number three: Protect yourself. No one else is going to do it. Oh, and Wall Street doesn’t give a rat about you.

But Zweig says people tend to learn over-specific lessons:

So, if you chased the hot returns of Internet stocks in 1999, and then you lost all your money in 2000, the lesson you learned was not to chase the performance of Internet stocks. So then you went out and you flipped condos in Ft. Lauderdale and then you got wiped out on that. And now the lesson you’ve learned is don’t flip real estate, but you’re piling into gold. And if that’s the way you learn lessons, then you haven’t learned any lesson at all.

Lesson number four: Don’t behave like the TSA and overreact to a toothpaste bomb. Think big picture.

One more comment from Zweig:

I’m talking about the people on Wall Street and their clients around the country. It’s almost as if for a lot of American investors, this market crash never occurred. The party seems to be starting up again, and a lot of people seem to have forgotten the pain that we’ve been through, and I’m a little worried about that.

Lesson number five: On New Year’s Eve, remember, it’ll be 2010. Not 2005.

Alright, let’s hear ’em — what you’ve learned or what you think we all should’ve learned…

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