When The Well Runs Dry

The problem vs. the solution

By Ron Ciancutti

There was yet another column in the Sunday paper about baby boomers being hit the hardest during this Great Recession, and it resonated with me. The columnist insinuated that theU.S.government duped us all, that we were lulled to sleep by the confidence of a robust economy, and we had every right to believe housing values would continue to rise, promotions would always be available, and life would move generally upward. Some people believed it was once “healthy” to leave one company and start fresh with another, to mix it up and gain a lot of experience, to endlessly add new skills surrounded by new people. In fact, I’ve been reading that for decades.

© Can Stock Photo Inc. / dundanim

Endless Optimism

Ten years after starting my career to ensure I remained a value commodity to my company, I completed my master’s degree in business in the evenings. One of my professors asked me and another classmate what we planned to do with our degrees. What was the next challenge, he wondered aloud. My friend said he had already applied to two places and intended to give his notice the minute he heard from either. Looking at the floor, I stammered that I was hopeful my current company would give me a small bonus for graduating with honors and increasing the professional standards for the position I already held. My friend snickered, and the professor instructed him to “get me moving already.” That same friend called me late last year to ask whether my company would be hiring in the spring for the summer staff. His hip-hop credentials had garnered him little or no equity wherever he was when the axe fell because each time he moved up, it was with a different company. With job layoffs occurring everywhere, he was always the newest guy on the team, and therefore the easiest to remove. He complained that he was a victim. I begged to differ, but said nothing. Did he really think the fountain would never run dry? I am all for optimism, but endless optimism?

High-Stakes Gambling

Another friend is $100,000 upside down on his house, and is suddenly unemployed. He is in sales and jumped at the chance to sell a “bigger-ticket” widget that he was not familiar with. I suggested he stick with what he knew, but the financial increase was too tempting. A few years ago, he had taken on a big mortgage at a time when the market was flourishing and his investments were performing with momentary success. At one point, he considered moving when he was offered $360,000 for his home that cost $250,000 to build. He turned it down, and less than a year later had to take on a second mortgage. A year after that, the Fannie and Freddie crisis hit, and the value minus the equity of that home has sent him under water almost permanently. I am not saying he should have sold at $360,000, but if his margins were that thin, it was a gamble taking on such a mortgage in the first placeBut he, too, was banking on nothing but the St. Elmo’s fire of endless and permanent appreciation of property values, continued raises, and job promotions. He had never even considered any type of safety net if the high-stakes gambles didn’t work out. Now let me pause here. I respect the dreamer; I rally behind the man who looks it all in the teeth and boldly says, “I’m going in anyway,” but does a man have the right to be so bold when he has a family and related obligations? Should we be responsible for the recovery of the dealings of a man who gambled with no conscience?

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