Tim,<<<It may not be "patriotic" to batten down the hatches, but it sure is the smart thing to do.>>>
The Japanese economic model didn't work in Japan as the Japanese consumers batten down the hatches and their econmy went into decline.
Economics is as much about psychology as it is about anything else. Confident people invest in the future and get as much pleasure living in the the present as possible.
The economic bubble that we lived under had to burst as we did not have the fundamentals to support that vision. The pendulum swung too far in that direction. But, now the pendulum is swinging in the opposite direction. That much is clear. The dotcom bubble burst, interest rates were raised to cool down the economy, the telecom industry over built, the investment community threw too much good money after bad projects, and sensible people started to talk the economy down - all that created a logical result as before the markets opened September 11, 2001 the economy was heading toward recession.
There were only a few insiders that knew what was going to happen. But, I doubt the planners of the attack on the World Trade Center had a clue what the consequences were going to be. I don't give them that much credit. They were not rocket scientists. They were relatively low tech thugs. They didn't even have to learn how to take off or land a modern aircraft. But, I'm not taking any solace in that - I just don't want to give them any credit for intelligence. They were basically very stupid people.
Nevertheless, the consequences are brutal. Nothing is going to be the same again. This was an epoch event. I cried and cried each time I heard stories about firefighters, victims on that flight that crashed in Pennsylvania, and all the other stories about ordinary people. The travel, tourist, and entertainment industries are immediately effected and collateral industries will be hurt. Worse, terrible people will start to think about doing terrible deeds that was once not even considered. There is a snowball effect.
The pendulum has swung from going in the opposite direction. The pendulum will have a momemtum and direction of its own. It will follow the laws of physics.
But do you know what? Just as the pendulum swung too far in the other direction (irrational exhuberance), it will swing too far in this direction (irrational gloom and doom).
Talking down the economy, talking down life, are cheap shots. Any fool can do it - and most fools will. They will hunker down and live miserable lives.
The smart thing to do, is to get through the tough days ahead and be prepared to catch the pendulum as it starts to swing in the other direction. I'm not predicting when, but it is inevitable. Remember buy low, sell high. The more things change the more they stay the same.
Mary |
