I interviewed St. Paul native Dave Kansas about his new book “The Wall Street Journal Guide to The End of Wall Street As We Know It.” I couldn’t fit all of the nuggets into my column so here’s the rest of the interview:
Q: Who would you say the book is written for?
A: It’s for the vast majority of people out there who know we’re in a financial crisis but don’t really understand how or why we’re in that crisis. I think a lot about my family. They’re not steeped in financial news, but they’re incredibly curious about all the stuff that’s happening and how it came to be like this. So I was trying to write for people who just wanted to figure out “What the heck happened?” in a way that would be accessible, so they would be better equipped to sort out what they ought to do.
Q: You were just in the Twin Cities. Describe how is the mood in New York different from the mood here?
A: The mood in New York is much grimmer as it relates to the economy than it was in the Twin Cities. And I think that’s because the because the New York economy is so tightly tied to what happens on Wall Street. And there’s been so much damage, carnage and job loss on Wall Street that people can’t help but think about it. Things are more diverse in the Twin Cities. There is a large financial community there, of course, but it’s less a big money hub as it is in Manhattan, which is why the Bernard Madoff story was surprising as it related to the Twin Cities.
Q: Can you talk about the challenge of writing a book on a topic where news breaks daily?
A: It’s just like writing a magazine story with longer lead time. My last chance to really look at it was in mid-December. You need to kind of focus on the bigger trends in place and become a little less detailed oriented. That worked in terms of writing about the automakers and Citigroup. It didn’t work so well in terms of mentioning now-departed John Thain of Merrill Lynch or Bank of America.
Q: Would you say you’ve changed how you’re managing your money in the past few months?
A: I have not changed much, but I toyed with taking cash I had available and investing it in the stock market back in September and I thought about it again in December and I thought about it again this month. For me and for other people, what’s important is the ability to sleep well at night and not about getting into the market at a perfect time.
Q: In the book, you mention a return to thrift. Do you think that will be by choice or by force, because credit has dried up and income is down?
A: I think it’s mostly happening by choice. Even with the unemployment rate the way it is, 80 to 90 percent of the workforce probably hasn’t seen much change in their material situation. But people know enough people who are being forced into a change and the headlines are such that people can’t help but notice that things are different. I hear stories about people all the time whose financial situations haven’t changed at all who are eating at home instead of eating out, who are taking the bus instead of taking a cab, or bringing a sack lunch to work instead of ordering in Chinese food, not buying the season tickets, just buying a couple of tickets. The psychology around money has really changed for a lot of people. I’m traveling less, eating at home a lot more, trying to figure out ways to save money here and there.
Q: Do you think the shift towards thrift will be permanent?
A: No, nothing is permanent. But we went through a process like this in the late 1980s and early 1990s in the wake of the “Greed is good” decade. There was a kind of a moving away from ostentatious displays of wealth and we’re seeing a similar thing now. President Barack Obama spoke of an era of responsibility and I think a lot of people are embracing that.
Q: Any rays of hope in this economy?
A: I think the new administration has a smart economic team and I think that they’re going to work hard to help solve the problems we have. Also, we sometimes lose sight of how vast and complicated the U.S. economy is and that there’s a lot of creativity and a lot of small business activity that flies under the radar screen that’s going to be the source of a rebound. The other important thing is historical context. We haven’t had a rough recession in almost 30 years, but we got through that one too. We can’t lose track of the fact that the economic cycle comes back, even if it gets bad before that happens. I think we’re going to start to see that within a year.
