The Bear Market

The DOW has officially dipped 20% since its high in October. Everybody panic!

Good bets? Coal and steel are experiencing an uptick in exports we haven't seen in a long time due to increased demand from China. Gold continues to look sturdy (it's gone up almost 50 bucks since two days ago). The big multinationals (like Coca-cola, etc) are also awesome.

Unfortunately, those nominal losses are compounded by the falling dollar. Since those measures are in dollars and dollars have lost value compared to goods and other currencies, the losses are actually greater than shown in the simple nominal loss. This is a reason to look to invest in other markets instead of markets that so heavily exposed ot the dollar.

Hopefully the emerging bear market will promote some things we are desperately in need of: domestic industrial production, for instance. No doubt, the falling dollar is intimately intertwined with our trade deficit and decreasing reliance on resource extraction and manufacturing as our main economic drivers. This is a battle that will be fought one way or another and on many fronts; China has shown us all that in the end, the market will triumph... Twenty years ago, the USSR learned the same lesson. Perhaps our fat living on the cash cow is finally paying its just dividends in misery; perhaps a protracted recession is what the market has dictated as a realignment of our values as Americans. I'm coming to believe more and more that the only way our society will get back on track is to be forced in that direction by circumstance and the need to survive. Ease does not breed growth or maturity; for thirty years, we've been economically triumphant and maturity-impaired. The pendulum was bound to swing the other way eventually.

I only hope that the damage hasn't been irreparable.

B-Ran wrote:Hopefully the emerging bear market will promote some things we are desperately in need of: domestic industrial production, for instance. No doubt, the falling dollar is intimately intertwined with our trade deficit and decreasing reliance on resource extraction and manufacturing as our main economic drivers. This is a battle that will be fought one way or another and on many fronts; China has shown us all that in the end, the market will triumph... Twenty years ago, the USSR learned the same lesson. Perhaps our fat living on the cash cow is finally paying its just dividends in misery; perhaps a protracted recession is what the market has dictated as a realignment of our values as Americans. I'm coming to believe more and more that the only way our society will get back on track is to be forced in that direction by circumstance and the need to survive. Ease does not breed growth or maturity; for thirty years, we've been economically triumphant and maturity-impaired. The pendulum was bound to swing the other way eventually.

I only hope that the damage hasn't been irreparable.

A recession is what we need. It will be hard to take, but it is the only fix that could return us to a stable economy. Hopefully the recession will have us turn more toward this country's fundamentals of economic freedom instead of toward government intervention. We and the rest of America have that decision to make.

See my upcoming post entitled "A Few Little Rays of Hope" in Politics for my response to the above post.

Enron wrote:

B-Ran wrote:Hopefully the emerging bear market will promote some things we are desperately in need of: domestic industrial production, for instance. No doubt, the falling dollar is intimately intertwined with our trade deficit and decreasing reliance on resource extraction and manufacturing as our main economic drivers. This is a battle that will be fought one way or another and on many fronts; China has shown us all that in the end, the market will triumph... Twenty years ago, the USSR learned the same lesson. Perhaps our fat living on the cash cow is finally paying its just dividends in misery; perhaps a protracted recession is what the market has dictated as a realignment of our values as Americans. I'm coming to believe more and more that the only way our society will get back on track is to be forced in that direction by circumstance and the need to survive. Ease does not breed growth or maturity; for thirty years, we've been economically triumphant and maturity-impaired. The pendulum was bound to swing the other way eventually.

I only hope that the damage hasn't been irreparable.

A recession is what we need. It will be hard to take, but it is the only fix that could return us to a stable economy. Hopefully the recession will have us turn more toward this country's fundamentals of economic freedom instead of toward government intervention. We and the rest of America have that decision to make.

Here is a quote that I found in "Economics For Real People". It relates.

"When the crisis hits, a turn toward the free market is not
inevitable. The other possibility is to turn toward socialism, in
order to eliminate the remaining “market failures,” and allow
state regulation full sway. Which direction the system takes in
a crisis will depend, to a great extent, on the ideological leanings
of the public." p 183
http://mises.org/books/econforrealpeople.pdf