Physical Decline

Recessions are really "depressions," but the term "depression" seems too terrifying. After the Great Depression, economists began to use the word "recession" instead.

The 2007-09 recession involved a financial crisis, high unemployment, and falling prices, and was named the Great Recession. Our current recession is still without a name.

A standard measurement for a recession is two-quarters of consecutive GDP contraction. But the official arbiter of recessions and recoveries, the Business Cycle Dating Committee of the National Bureau of Economic Research (NBER), prefers domestic production and employment indicators instead. Other signs of the recession include:

• Declines in real (inflation adjusted) manufacturing, wholesale-retail trade sales, and industrial production.
• Extended declines in production, employment, real income, and other indicators.

The point is that the more specific a lesson of history is, the less relevant it becomes.

One of the interesting parts of the Great Depressions from history is not just how the economy collapsed, but how quickly and dramatically people’s views changed when it did.

People suffering from immediate, unexpected adversity are likely to adopt views they previously thought absurd. It’s not until your life is in full chaos (with your hopes and dreams your dreams unsure) that people begin taking ideas they’d never consider before seriously.

In the world of investing, having gone through a traumatic experience first-hand makes the difference between a cautious investor and a blind one. The scarred investor cannot think in the way the fresher, who hasn’t experienced the turmoil can. 

Our unique experiences impact our vision in ways we cannot comprehend on the surface.

Different generations have different investment risk appetites, with the younger generation wanting to take bigger risks and going into uncharted waters without any experience.

The New Generation, who hasn’t experienced turmoil and loss, are good at getting rich. However, the older, scarred generation is good at staying rich due to their general pessimism and conservatism. There is a need to balance the two aspects while taking an investment decision. People with different experiences aren’t necessarily smarter than others but just have a different worldview.

Earned income comes from what you "do for a living."

• Consider what you enjoy as you will be more likely to succeed financially.
• Consider what you're good at and see how you can use those talents to earn a living.
• Consider what will meet your financial expectations.
• Consider how to get there. Determine the education requirements, etc.

Evaluate your income situation annually.

To ensure that you save enough money, your wants should not exceed your budget.

• Track your spending for at least a month.
• Trim the fat. Break down your wants and needs.
• Adjust according to your changing needs.
• Build your cushion. Aim to save around three to six months' worth of living expenses.
• Contribute to a retirement fund and try to get the maximum your employer is matching.

The average working hours have declined only 6 percent, while income has increased at a decent rate per year.

The economy has actually grown even after automation, due to the addition of workers.

The Solow Paradox suggests that automation and computerization aren't taking our jobs, but are adding to our overall workload, taking away our leisure time.

• Banks are better able to handle a financial crisis than a decade ago. The 2008 recession was about the housing market and shares, which affected higher income groups.
• The present crisis seems to be hitting the lower-income groups, the vulnerable workers, young, and less skilled. It is similar to the late 70s, early 80s recession, which affected young and unskilled workers.
• Another lesson from 2008 is that recessions don't always lead to significant numbers of job losses. Layoffs were concentrated among a small number of people, and they stayed unemployed for a long time.
• In this recession, far more workers will be at risk if social-distancing rules remain in place over a long period.

• A drop in GDP was expected during the 2020 lockdown. Shops and businesses were closed, and the total value produced by goods and services decreased. In turn, this affected the staff of those businesses earning less money.
• Furloughs. At its peak, about nine million people in the UK were paid a furlough - the government paid 80% of their salaries, and the employer could choose to top up the rest. Other countries have similar state-backed furlough schemes. These schemes will be coming to an end, and employers will have to decide if they have to lay off employees permanently.
• The losses are not yet crystalising. People are taking mortgage and credit holidays. It means the losses are pushed further down the road. The financial sector bubble will burst, and we will see real turmoil again.

At this time in history, many people are wondering whether we will have a life again. Will we recover with dignity?

Science suggests that we will do more than recover: we will show immense capacity for resiliency and growth.

Resilience is the ability to maintain a relatively stable and healthy level of psychological and physical functioning during and after a very traumatic event.

Studies reveal that resilience is actually common and can be attained through multiple unexpected routes. Studies further show that the majority of trauma survivors do not develop PTSD, and most report unexpected growth from their experience.

The feeling of nostalgia is like traveling in a time machine. The activities that were once cherished are no longer done, and the world that is remembered no longer exists.

Nostalgia can be a form of self-deception, giving a rosy tint to the past, creating a paradise out of the moments of our lived lives.

Deep nostalgia fosters a sense of serene melancholy and spiritual longing.

The deepest form of suffering is a feeling of extreme dissatisfaction about the impermanence and the insubstantiality of everything around us.

Buddhism mentions suffering as inevitable as long as there is desire, lust and a sense of coveting/craving in our lives. Once we grasp this fully, we stop craving and struggling in hope and fear.

Good listening is active, not passive:

• Maintain eye contact.
• Do not fidget, shift your body weight often, and never look at your watch! 
• Nod your head to show agreement but do not interrupt to make your point or share your own experiences.
• Respond by repeating at least one key point the person you are talking with just made in the form of a question. 

Keep questions positive and focused.

Ask a question that is on-topic whenever possible. If the topic is negative, do not just suddenly change topics. It will make the speaker uncomfortable. Instead, give an empathetic reply to show support and then ask a question to redirect to something that is still related, but allows the speaker to respond with something a little more positive.