May 2015 – How Soon We Forget

By Tony Shepley,

Mother Nature must have wanted us to be happy, because she gave us the ability to remember things the way we wished they’d happened and if that doesn’t work, she also made us pretty good at forgetting them all together. This explains the old adage “Time heals all”, because given enough time, one way or the other, it will all seem better.

It’s amazing how the absolute crisis of today will subside and fade away. Think of how worked up we have gotten ourselves over lead paint remediation regulations, building code hurricane requirements, mold, FEMA flood plane remapping, workers comp , the high cost of living and sprinkling single family homes in MA, just to name a few. Each of these loomed large enough to cast King Kong’s shadow over all of us, but a year after, it’s as if it weren’t such a big deal after all. By that point, we’re on to the next disaster! What we all couldn’t stop talking about, we often aren’t even thinking about, a few months down the road.

I’m not sure why we get so fascinated by things gone wrong. Why do we feel drawn to  disasters, wars, crime and dramatic headlines? It must be because on some level, we can say, “Well, I am better off than they are”. Then sure enough, two weeks later, it’s old news, discarded forgotten, or remembered in some more pleasant form.

I’ve been studying Recessions only because I’ve been around long enough to have participated personally in the last 4 of them.  1975-1978, 1989-1992, 1999- 2001(remember the Tech Bubble?), and  2007-2013 were all severe enough recessions that we all remember them, if we were in them. The one thing that I can say for sure is that Recessions demonstrate how short our attention span can be. It takes an incredibly short amount of time before people get back to their old habits in a big way. If the late 80’s recession was the result of over-inflated, over leveraged real estate, then please remember that once we got free of it, we started on the longest running, over inflated, over leveraged real estate boom of all time. The 16 year run, starting in 2001, made the 1980’s look like a warm up and not only did we resume our old bad habits, we put those bad habits on steroids.

Here we are again, at the beginning of an economic recovery. We’re sick of Recession and we want things back the way we remember them. It is the perfect germination point for new bad habits and the same greedy behavior that always gets us in trouble. Typically , people get back to their old habits in a remarkably short time. Jonathan Winters once said “I couldn’t wait for success, so I went ahead without it”.  In 1905, Harvard Professor George Santayana wrote, “Those who do not learn from history are condemned to repeat it”.

My advice, the next time you see lenders advertising 100% loan to value mortgages, just think to yourself, “We’re back!”  That might be the moment to duck!

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