Friday, October 10, 2008

Pucker Factor or Market Correction?

The Dow Jones crossed a dangerous threshold, and may still have more to lose - should it cross below 6000 points it would represent the 2/3 sell-off which began the Great Depression. So, are we heading into a greater depression? Or is this a natural market correction cutting off years of fat acquired by indulgence in credit and living beyond our means?

We have to ask ourselves what values we hold most dear, what values we intend on "clinging to" in these times of 'lesser plenty', and what this may mean to how we conduct business, family, and life in general!

If one were to look at the Dow Jones, which is the canary to our economy, you would notice the importance of crossing the threshold of the 8000 point mark today. The 8000 mark is the exact mark where the United States would be had we been witness to steady and responsible market growth.
The Technology Boom in the late 1990's began a perceived era of prosperity - however, this era soon met it's demise as dotcom businesses proved unreliable and unstable on the market of industry. This stagnation was capped by the attacks of 9/11, which began an era of uncertainty in the US markets - and the world markets, as nations ceased to be defined by maps. This instability brought into question the reason and logic behind "business without borders", and the ideals of a fully global market without national interest. In fact, the US citizen ceased to exist, replaced with the title "consumer". When our nation was attacked, our marching orders were not to act as a Militia and strengthen our defenses - rather it was "keep shopping", an order to continue to purchase items made in China in order to stabilize the world markets.

This Unstable period saw excuse for the Bush administration to increase the government, and governmental spending to record sizes - But he is not fully to blame - Clinton's policies of credit in the 90's set the stage for this government take-over.

Alas - here we are today... cutting the fat from the rumps of the market - and returning to values that would be reasonable under stable economic growth, stable market growth.

In these times of "less plenty", we have to look at the signs around us, and ask if we really are seeing a depression. In the 70's, unemployment rates were 11%. Today they hover just above 5-6%. In the 30's, through the Great Depression, unemployment rates were in excess of 25%. As unemployment rates rise, we should not worry until the rates hit 10-15%.

We can little claim that we are in a depression when businesses like Circuit City and Best Buy continue to sell entertainment goods and personal communication devices... as long as we continue to operate as consumers, the market will survive.

What we will see is a need for jobs - an increase in the need to manufacture some goods of our own. Perhaps we will see the market bring a return to small town America, where mom and pop shops are preferred to Wal-Mart's "China Discount" Store. Who can be certain what direction we will decide to pursue.

Only one thing is for certain - some people are losing their shirts today. Those people need to pull themselves up from the bootstraps and decide not to be victims. The economy is sound - the basis of America is sound - we are just seeing a correction from a life of excess to a life of comfortable stability. Perhaps this is a good time to get to know your family again. Have dinner with them tonight, around the table. Turn off the TV. Remember what it is that makes America strong.

If you are having trouble at the end of the month, I hear you can give Obama a dollar in taxes and he will give you back some "change"...


  1. To me, the credit freeze is the worrying part. The stock market going down is one consequence of that. A contraction and plugging up of general commerce is the scary part. Containers sitting at ports, for instance:

  2. Jessi - the credit freeze is the result of the market realizing that it has overstretched itself. There is no basis for our money, no significance behind goods... no purpose to the system of "consume as much as you can as fast as you can" commercialism that we have created. The end to credit indicates (hopefully) a return to a gold standard, of limited credit, of personal responsibility, of living within our means, and of simpler times.

    The government can leave this alone and we will do what free people do - rally around ourselves, our family, and our community - government will shrink and we can get back to being the USA... or they can continue to interfere, drive up inflation, and drive this country into a government run cesspool.

    The choice is clear... let's hope that they back off and let the markets alone!