Face it, we’re in a recession, it’s like the end of the world and stuff.  Get your revolver and grab grandma, we’re going to the bomb shelter.

Stay calm Weakonomians.  Recessions are fine if you have sufficiently prepared for them.  Of course most of us don’t which is why so many people are scared.  By I digress.

It is important to stay calm because panicking will only cause you to make bad decisions on a whim.  In order to understand a recession, you must know to never have to ask the questions I’m about to share with you.  These are questions the media asks pundits over and over again.  No matter what they say, you are left more fearful than you were.  So here are five questions you should never ask in a recession and why:

How Bad Is It?
The only way to measure how bad a recession may be is to look at it in hindsight.  The recession will be over before we know how bad it is.  The faces on TV don’t know how bad it is.  They can only speculate.  They would serve us all better to just shut up and stop distracting us from doing our jobs.  I can’t count on my fingers and toes how many people are currently in the break room at my office watching CNBC instead of working.  We can compare one stat from 2008 to one in 2006 or 1974, but we can’t paint the full picture until we’re in recovery.

Where Is The Bottom?
“Hey you, random investor guy from Random Investment Company, where is the bottom to this market?”  The simple answer is that no one knows where the bottom is.  If he knew where the bottom was, he wouldn’t tell the entire world.  He’d place his investments in a manner best to capitalize on his knowledge and make the money himself.  Portfolio theory actually says that revealing the bottom would then make that fact null.  If every investor pounced on it, the bottom would happen either soon or later than what random investor guy said.  In a down market simply tell yourself that your regular investments are simply buying at a discount.  If you have the means, I’d recommend ramping up your investments a bit during a recession.

How Long Will It Last?
Like the search for the bottom, we don’t know how long a recession will last either.  Sure people can guess, I have my own guesses.  But I predicted $3.50 gas by end of year.  Economists predicted $200 oil.  This time last year your leaders in Washington said this problem was contained.  Don’t put weight into their guesses, because if they actually knew when we would recover, they could implement policies and procedures to speed up the process.  A recession is organic, we have to let the system fix itself.

Is My Money Safe?
Tanking investments, FDIC insurance, bank runs, what is going on with my money?  I’ve had parents, grandparents, friends, co-workers, and readers ask me abou the safety of their money.  I’m happy to lend a brain cell or two to discuss the matter, but you have to take responsibility for your money.  In good times and bad I know exactly what money is at risk.  Investments are risky, you can lose them.  Deposits are insured, you won’t lose them.  Every dime to my name is accounted for and I know what risks are carried with losing them and what potential returns I expect to get from them.  You shouldn’t have your money in something you don’t understand.  Sadly most people have to learn that the hard way.

Whose Fault Is It?
You Americans are so caught up in your own self absorption it’s impossible for you to take ownership of your problems.  You want to find someone to blame.  You want a scapegoat.  Madoff, Cioffi, Bush, you’ll do anything but take ownership of your own problems.  Well please stop trying to figure out who or what to blame.  Accept the reality of the situation you’re in, and work on improving the reality.  Only after you recover should you consider spending the time and effort on tracking down who or what did this to you.  In the end though, you’ll only find you did it to yourself.

Recessions are a part of life.  Once in every generation you get hit with a big one that makes you question everything you’ve understood about the world.  We’re going through that right now.  The best thing you can do is not get distracted and do your best to produce more at work, and help others that many need some assistance getting through the recession.

By The Weakonomist

The Weakonomist is the founder of Weakonomics. Clicking the picture of the puppy will tell you more about him. If you like what you're reading consider subscribing to the blog, following him on Twitter, and checking out the related posts below. Please consider a donation if you really enjoy Weakonomics.

categories: economics, lists