I saw Bob Shiller in his driveway the other morning, and I asked if we were over the hump. He gave me what I took to be a positive indication, and then I saw the fuller explanation in last weekend's New York Times. It's a version of Franklin Roosevelt's first inaugural speech: The only thing we have to fear is fear itself.
Basically, he was saying that the recession will end if people decide that it's time for it to end, and begin acting as though it has. He cautioned that there are many ways to derail such a phenomenon, and warned that we, or the government, could do that. However, if we all move forward, spending and expanding, we might be able to pull it off.
There are many sticky wickets to navigate in that strategy. For one thing, the banks are certainly not acting--or lending--as though we have returned to normal. The appraisals are low, the terms are high, and the process takes a long time. They also are modifying loans for those who can't pay, but most of those modifications go bad within a year. While we need to think positively, we can't fool ourselves into thinking that we are OK when we are not. My advice to those who have gotten a change in the terms of a loan: Take the deal, then list and sell as soon as you can.
The other big obstacle for a recovery is employment. As long as job creation is low, and layoffs keep going up, we won't have a permanent recovery. It's hard to fool yourself into thinking that the economy is on the upswing if you don't have a job. Whether or not we can fix the jobs conundrum remains to be seen.
Government spending on the national, state, and local level is also a huge block to long term stability. We can't keep spending what we don't have, and it is beginning to look as though our debt could cripple us in the not-so-distant future.
Having said all that, though, we can pull together and pull out of the trench. It takes some faith, some guts, and some hoarded cash. The stakes are big, and each individual action is small, so a lot of us will have to act in order to make a difference on a macro level. But let's hope that we do, so that we can all prosper together.