Newswise — The government's $700 billion financial bailout has passed, but Wall Street continues to slide, causing further uncertainty in a widening global financial crisis that is impacting the already fragile psyche of investors and consumers who are worried about their jobs, their homes and their savings/retirement funds. Temple University psychologist Frank Farley says the public should follow the "four Cs" to help them get through these troubling times: remain calm, be cautious and careful, and have confidence.
"We may be in a perfect storm, a massive piling-on: Wall Street, credit crunch, housing values and mortgage problems, billion of dollars being spent on Iraq, over 600000 jobs lost so far this year, plus a Presidential Election," says Farley, a former president of the American Psychological Association. "But, we have survived much bigger storms, tsunamis like the Civil War, WW1, WW2, the Great Depression, 9/11, and others along the way.
"There is a credit crunch at the heart of the Wall Street storm, but there is a credibility crunch at the heart of the Main Street storm," he says. "Should we believe the panicked politicians and pundits and their doomsday scenarios, or use our own common sense and take our own action where we live? The President, who has gone from 'shock and awe' to 'doom and gloom,' might well quote FDR's, 'We have nothing to fear, but fear itself.' But people probably wouldn't believe him causing fear to rise even more."
So where does that leave us?
Farley says we should look to the past, the present, as well as the future in taking actions that will help us deal emotionally with the high uncertainty that is bombarding us daily. He offers the "four Cs" as a guideline:* CALM -- "It is important to stay calm," says Farley. "Worry or anxiety is normal in these times, but don't let them consume you. Keep a cool head as you may have important decisions to make or actions to take. No repeat of the Great Depression is likely as the economy is vastly different today. It's much more complex and vastly bigger, its global, many nations' economies are much more interdependent--one nation can help prop up another financially, etc. One part of an economy may be bad, but another part be less effected." * CAUTIOUS and CAREFUL -- Review your finances and money habits carefully, recommends Farley. "Should you move some of your retirement money, if you have it, into safer places like T-bills or bonds or FDIC insured accounts, for the moment? If you do, go for safety." He says consumers should use this situation as a wake-up call to cut back on spending where possible; things such as entertainment, travel, eating out, clothes, etc. "If you can, don't initiate any big expenditure such as a car, appliances, etc. If you've been laid off or had your hours reduced, consider trying to upgrade your skills or resume through local community workshops, training programs and Internet courses." * CONFIDENCE -- We have come out okay from every recession in the past. The best predictor of the future is the past, says Farley. "Maybe this could be an opportunity to re-think your personal situation, your finances, your needs and wants, your habits of spending and saving, even your career or work life." Farley says the financial crisis could offer the opportunity to find a silver lining in this passing cloud.
"This could be the time to re-consider your career or job, particularly if your type of job has been hard hit, is vulnerable or has been eliminated," he says. "This could just give you the confidence and motivation to move into the line of work you've always wanted to try."
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