Was this a frank admission?
‘The [aggressive defence] strategy increases the focus on the Indo-Pacific region, with the Prime Minister [Scott Morrison] warning that Australia needs to prepare for a post-COVID-19 world that is “poorer, more dangerous and more disorderly”.’
ABC News, 2 July 2020
And it’s not only nations that should formulate plans for a poorer world.
Families need to get their house in order as well…preparing for the worst and hoping for the best.
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NO quick recovery coming
Talk of a V-shaped recovery may provide hope of a more immediate return to our old ways, but that’s all it is…hope.
There is NO quick recovery coming. FULL STOP.
Entire industries have been gutted. Business is not spending. Banks are not lending.
The only thing that makes everything look reasonably OK is government largesse and banks offering debt deferral programmes.
But that ain’t normal folks.
While we move to beef up the defences of our island nation, we cannot defend ourselves against the deflationary forces of the global economy.
As this process of contraction continues to grind on, watch for countries to adopt a more ‘nationalistic’ tone — protectionism.
Don’t travel to China. Increased tariffs. Jobs for our citizens. Reduced immigration.
Buy locally made.
The thin edge of the wedge is already there…all it’s going to take is a further tightening of conditions to drive that wedge deeper into society.
Society runs on confidence.
When we’re confident, we spend. And when confidence levels are low, we retreat.
All households — from low to high income — have retreated
The law of averages tells us that a fair share of households face a poorer future.
The focus of today’s Rum Rebellion is not the financial challenges posed by a poorer future, but the emotional ones.
We are already seeing a migratory trend of unemployed young adults back to the family home.
As reported in The Atlantic on 3 July 2020:
‘For the most part, the pandemic has restricted motion in America. But one exception has been a large-scale nationwide reshuffling of humans between homes. Before the coronavirus came to the United States, many of the country’s young adults were working, studying, and building lives on their own. Now a great deal of them are back to living with their parents.’
This trend is not unique to the US. I know of a number of young adults who have done the same thing here in Australia.
The once empty nest is now not so empty.
Be prepared for that temporary refuge to become more permanent if the jobs market gets more difficult.
Compromise will be the cornerstone for the survival of relationships.
Recognise that the longer the period of unemployment (and mounting job application rejections), the greater the potential for self-esteem issues.
Perhaps professional counselling might be required. Private health funds and Medicare provide cover for treatment by psychologists. Not saying you need it, but it should be in your defence strategy if required.
In looking back to look forward, I referred to a Iowa State University research paper titled
‘Stories of the children of the Great Depression: What I learned from my parents’.
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This is from the Abstract…
‘ Five qualities were identified as important to the parents of most of the research participants in providing for their families during the 1930s:
- a strong support network which was typically provided by a comprehensive type of “family relief;”
- a strong work ethic of all family members of all generations;
- the practice of thrift;
- the utilization of a large set of personal skills; and
- beliefs and values which included religious faith for the majority of participants as well as the importance of family and education.
‘Another belief of the majority of the parents of the research participants was the importance of bearing hardship without complaint or grumbling—at least in front of the children.’
These qualities should apply equally in times of rich and poor.
However, it often takes a period of adversity for society to focus on what’s really important in life.
Young adults lack the skills to cope with a poorer world
The children and young adults of today have (in the main) only ever known good times. Continuous economic growth. Low unemployment. Asset price appreciation.
Generally speaking, they lack the skills to cope with a poorer world.
They’ll be looking to us for leadership and guidance.
How we live our lives will be instrumental in providing them with the ability to handle conditions they never knew existed.
Our actions, mannerisms, habits and opinions are being absorbed consciously and subconsciously by our children.
We are the constant reality TV show in their lives.
They see and hear things we do not even remember doing or saying.
When you appreciate this fact, you realise parenting comes with huge responsibilities together with a tremendous opportunity to shape these young minds…irrespective of their age.
Readers of the former Gowdie Family Wealth newsletter would know that we (my wife and I) have been preparing our family defences for many years.
This is by no means a definitive list, but this are some of the basics that my wife and I have focused on over the years…
- My mother had a saying that has stuck with me and have passed onto our children — ‘Beware your sins will find you out’. Be honest in your dealings and you do not have to be concerned about any inconvenient truths being revealed. Don’t lie about the situation. Deal with the brutal facts and develop a plan to get through to the better times that will — in time — come again.
- If it sounds too good to be true, it usually is. Get rich quick schemes, Ponzi schemes, Tax minimisation schemes, easy money to be made etc. As enticing and as believable as some of these concepts sound, they generally all end in tears. Don’t make a difficult financial situation worse by chasing the quick buck.
- There is no new way to go broke. It is always too much debt. A poorer world provides an excellent opportunity to demonstrate the perils of borrowing to excess. Delayed gratification is far more rewarding — and lasting — than the instant gratification of ‘buy now, pay later’ schemes.
- It’s not what you make, but what you keep. One the five qualities is ‘practice thrift’. Save first then prioritise spending from essential to non-essential.
- You must have goals. Without a target to aim for, you are shooting at nothing. Too many people are rudderless in life. Drifting with the tide rather than charting a course. Goals – large or small — give your life purpose. And when you have purpose, there’s a reason to get out of bed each day.
- Never, never, never give up. Sir Winston Churchill knew the power of persistence and determination. Teaching your children to ‘dust themselves off’ is as equally as important as acknowledging their achievements. You tend to learn more from your failures then you do from your successes. Give them the opportunity to fail and learn.
- Finally, ‘a smile is the best makeup a girl can wear’. A smile says so much about who you are and how you feel about yourself. It can also brighten a person’s day. Good manners go hand in hand with a smile — please and thank you are words that, sadly, are being used less frequently by the younger generation.
The looming deflationary recession is going to present many challenges.
However, in my opinion, there will be none greater than that of providing the support needed to build a rich family life in a much poorer world.
Take the time to prepare your family’s defences. It’ll be time well invested.