By Wednesday, Down Boy had the look. The look was big on Bay Street this week, as the market fell and fell and fell some more. A vacant look in the eyes … as if a small neutron bomb had gone off in his head. That was the look.
Down Boy's an old friend, an investment banker with what he thought was $3-million in his RRSP. He planned to retire at 55. Then he made the mistake of opening his September statement. Five minutes later he was on the phone.
"I'm never retiring," he said, dolefully. I thought he was going to cry. "I'm down 40 per cent. I could have done better sticking the whole thing in a 5-per-cent CD."
"Why didn't you?"
"I thought I could do better."
There was a pause.
"I've had that moment when you realize things have changed enough that you have to change your behaviour. The cab I take to work every day, and my Starbucks and a little pastry thing? That's 20 bucks before you even get to work. Hundred bucks a week. Five grand a year." Now it's gone, along with the annual trip to Vegas, and maybe even the summer place.
For 20 years, Down Boy has been complaining about the emptiness of life in the financial world, despite its rewards. Now he's got less money, but meaning to spare. Turns out he's not alone.
Taking stock
Canadians have been taking and talking stock all week. But eight straight days of losses spooked everyone: Maybe this was the big one. Or not: Comparing market upheavals is always fraught with peril. The crash of 1929 eventually reduced the stock market to 5 per cent of its peak value. It took until 1953 to regain that high mark. But current losses haven't been nearly so dire.
Irving Lissak doesn't have 24 years: He's already 74. A metal trader in northwest Toronto, he planned to retire in a few years on the back of his investments. "I don't have a private pension," Mr. Lissak admits. "Everything I've got is 100-per-cent blue-chip stuff. But it's all in the market. And it's down about 30 to 40 per cent. If it takes as long as two or three years to come back, I'll be happy. But if it doesn't, all it means is I'll just have to keep working until I drop."
The unusual thing is how often you hear that precise sentiment, without rancour: People are down (about 30 per cent), but they're not out. Peter Lake, a 74-year-old retired consultant on Saltspring Island, in British Columbia, has watched his investments drop 30 per cent since the beginning of October. He seems calm enough on the telephone. "I've lost a considerable amount on paper," Mr. Lake says. "But I haven't sold it."
Like Mr. Lissak, Mr. Lake is a member of the generation that grew up before materialism inhaled the world, and his paper losses don't frighten him. (He arrived in Montreal from Britain with $15 in his pocket and took a six-day-a-week job for 75 cents an hour.) If you ask him what pleasures he remembers best, he cites "a day back in England, when I was a teenager. I drove a team of horses, turning a field of spring wheat, all day. I walked 14 miles behind those horses. I ate my lunch on the side of the field, the sun coming down. It was glorious, the happiest day of my life.") He hopes the crisis ends up purging the financial system of the dubious instruments, among other things, that produced the crisis in the first place. "In a way, if everything goes, it might be better. It's like a boil, this system. It gets to a point you have to lance it. But then it gets better."
Paul Crosby, a former investment banker in New York and Toronto who is also a member of the pre-materialist generation, even has a worry-free crisis investment strategy. "If you've got good stocks, there's nothing you need to do. If everything goes to hell in a handbasket, you're no worse off. If you've got some junk, it's too late to sell."
This is the secret of the Big Owe of '08: For all the pain it's causing, it's making people think. Over there, for instance: That woman in her 50s in a café not far from Bay Street, talking to a friend. "I think it's exciting," she's saying. "Will we have to learn how to be poor again? Can I finally stop worrying about keeping up?"
Or there is Kathy Roberts, who worked at a bank as an analyst before retiring to graduate school at York University three years ago. Now she studies the history of happiness, with occasional glances at the market. "First of all," she says of the worrisome financial picture, "it seems to me there's been a lot of fear-mongering." But the more important question is, "How do we think about being happy when we have no wealth? I think real happiness, that goes on and on, comes from joy - from shared joy. I do think that's a mindset we have to shift to. But it's hard to find joy when you're worried about money." It's for that reason, she says, that the crisis is "a real challenge to our psyches. How did I spend my time for the last 10 years? What have I got to show for it? They're really big questions."
"The whole subprime mortgage mess is a terrible fable of our society getting us into trouble by making available money we should never have had," insists Sally Douglas, who runs a branding consultancy in Vancouver. "That's the problem of the American Dream, isn't it? Where does it end? And I wonder if it isn't looking a bit like we've all been chasing this idea that you'll be happier if you have more - and it's a dead end. Because you aren't any happier when you get that big-screen TV. I think we're seeing that the gig is up."
And no, she has not looked at her RRSP. "I'd be utterly depressed," she says. "In any event, I'm not worrying. Worrying about it doesn't do any good, does it?"
History lessons
Financial crises always bring out the philosophers.
Scott Nelson, a history professor at Virginia's William and Mary College, believes that the current implosion bears more resemblance to the Panic of 1873 than it does to the Crash of '29. Alas, this is not good news. The collapse of '29 was a structural problem created in part by manufacturing capacity. "The thing that makes this time troubling to me is that 1873 was an inter-bank lending issue," Prof. Nelson says. "And they stopped trusting one another."
The crisis began during a property-debt bubble in Europe, when cheap American wheat wiped out European farmers. The ensuing banking crisis created widespread anti-Semitism (people blamed the Jews then in the same way some American politicians have tried to finger poor immigrants for the subprime mortgage fiasco) before it spread to the United States, where hundreds of banks failed. Unemployment in New York alone hit 25 per cent, and thousands of unemployed workers wandered the country slowly starving to death. "You read about people going from having something to having absolutely nothing," says Prof. Nelson, who's writing a book about the Panic of 1873. "And you begin to see the monopolization or oligopolization of capital - the great capitalists became their own banks, and they just ate up their competitors." Does that sound familiar?
But the Panic of '73 also reformed American society, mostly in the mould of Dwight Moody, a British evangelist who drew 100,000 acolytes per rally just by telling hard-luck stories from the panic. Then he told the crowd to embrace Jesus to sweep away the pain of its losses.
Moody was an important inspiration for the rise of American unions, the formation of the U.S. Communist Party, and the creation of the National Guard. It was a hard, strange and wildly creative time. The fathers of Rosa Luxemburg, Anton Chekhov and Sigmund Freud all lost their fortunes in the Panic of 1873. Luxemburg went on to incite Communist panic in cities across Europe; to save his family's cherry orchard, Chekhov wrote stories about the effect of panic on compassion; Freud invented an entire psychology based on hysteria. The Depression, in turn, produced John Maynard Keynes's insights into deficit financing that still help governments steer their economies.
Which is not to say that the Dirty Thirties, with their horse-drawn Bennett buggies, were any picnic. Tope Dinnick still recalls men at the door asking for food, her mother volunteering for soup kitchens. "I think you always remember the hardships you overcome," she says from her Toronto retirement community, where at the moment she's enjoying her evening scotch and water. "That you get through successfully. I don't know why. It's a feeling of accomplishment."
Lately she checks the market twice a day. She's 97. "But there's nothing I can do about it. If I can't afford to stay here, I'll have to go. And we'll come together as a family."
Just not this weekend, when her daughter Sarah Giacomelli, an economizing real-estate broker, is making Thanksgiving dinner. She usually buys 22 turkey dinners from the Summerhill Market at $25 a piece. "I looked into it, and thought, 'Oh, I don't think I need to spend that much this year.' "
But her mother won't be there. "Two of my daughters have nasty colds at the moment," Mrs. Dinnick observes. "And I'd like to stay alive until we get through this recession - or whatever it is." Like any graceful survivor.
Ian Brown