Opining on the Economy

For the past year I have been reading reports of and hearing about the impending  recession. Month after month we all hear the same question bounced around as ubiquitously as whether or not it will rain today. Are we headed into a recession? YES!  Now let's be done with it and try to move on and work on solutions to recovering and stop worrying about whether or not it will happen, but how we will get out of it. 

I also have to say that I think the drop in the stock market is long overdue. Given the decline in the housing market over the past year, especially since the sub-prime market started to melt in August 2007, there was no real reason for the Dow to be in the 14,000 territory. Anyone who has any sense would know that that number was artificial and not likely to last. In fact, much of the holding were due to (as my understanding goes) short selling, which is what investors do when they bet that the market will go down. Once a moratorium was placed on short selling we saw a huge correction in the market, which I believe had nothing to do with the bailout plan. And, upon further research into credit default swapping, which is yet another mechanism for betting that a company will go under, how is it that so many people are surprised, when they facilitated the precipitous decline? Is it really shock, or despair that the good times are over? And also, one would have to think that as the massive sell-offs continue, the money isn't disappearing; it's just going into other markets. If you're smart, now is not the time to get into those markets, but to get into stocks. I am only hoping that whoever is managing my 401(k) is getting a good deal on the mutual funds I have. For now, I choose not to worry about my statement, because I know it's down. I also know it will go back up within 10 years, so I'm not worrying about it. 

For many, times were never really that good. Wages for many people across the country have been stagnate, if not declining, when adjusted for inflation. I am happy to say that my husband and I have been very fortunate to not experience this personally, but when I listen to the stories of what other people are going through, I know that times are not good for many people. I can most certainly say that we have felt the declining economy as gas, energy, food and insurance prices have gone up. We cab absorb them, for the most part, but I can also say that I am shopping in a grocery store that I haven't visited in years, just to save money. I can also say that I am much more conscientious about where I drive, how much I drive and how much I spend to drive. I rarely fill up my gas tank. Doing so is only depressing and not worth the gray cloud that hangs over my head after speeding away from the gas station.  On the flip side, I believe these corrections are necessary. 

As a nation we cannot go around spending blindly, taking on debts we cannot afford, all the while thinking that it doesn't matter how much we owe, as long as we make the minimum payments. Also, to be more conscientious about energy is not a bad characteristic to have. For years, Europeans have been conscientious about maintaining the cars they have so they will last for years. Their gas prices have been high for decades, and they have developed alternate routes for transportation. So that part isn't necessarily bad, it's just the impact that the prices have on manufacturing and other industries. Of course, the cost is passed on to the consumer, and so we all feel that pain.