Smooth sailing? No. But when is it ever?
1950 to 1973 — a span of time that people oddly and naively believe was “normal.”
Only a minority of the people active here - and certianly a minority of the chicken littles - were around for any of that. Hell, I wasn’t born until a decade-ish after that time span.
But, I’ve been around the block a few times.
When your janitor is making tens of thousands buying stocks in dubious tech companies, it’s time to bail.
When your secretary quits because she and her “handyman” husband can make $70,000 in three months “flipping” homes, it’s time to bail.
When people are rushing to sell their jewelry because of they’ve suddenly become aware of the value of Gold...
To make any money, you have to be two steps ahead. The good companies (Google, Yahoo, Microsoft, Amazon, eBay, etc.) survived the crash and new ones emerged, aware that they needed some way to make money or be indifferent to money (Craigslist) to survive.
The same will eventually happen in the real estate and financial sectors. Bear Stearns bet bad. Bear Stearns lost. End of Bear Stearns. Right and proper.
What people miss, largely Ron Paulites and other economically illiterate people, is that the Fed is the main reason why there was one Depression in the 20th Century and one roughly every decade in the 19th.
People mock the near-slogan that the “fundamentals of the economy are sound.” But, most of the time, it’s true. There’s no slackening of demand. There’s no reduction the population. There’s no massive shortages of materials. Pretty much every major Depressoion (as opposed to mere recession) was as a result of a finance crisis. Certianly, the Depression was. To create the Great Depression it took three stupid steps:
1) The Fed responds to the crisis by tightening.
2) International trade is hampered by runious tariffs.
3) Taxes are massively raised.
What we’re seeing here, in the end, will be to the great benefit of everyone if it’s allowed to work itself out. A financial sector which had grown too reckless will be chastened and cleaned up a bit. At the same time. allowing the dollar to find a new level is pumping America’s exports.
The trade deficit fell by 10% last year. It’s on pace to fall by much more than that this year. The odds are, baring a major adjustment, that it will fall again next year (I won’t make any promises after that). Meaning that, by the end of that time, it’ll have falled to something like half its former level as a percentage of GDP.
Everything in the economy is linked together.
Don't you remember? During the Xlinton years! Everything was so rosy and perfect, it was utopia I tell ya!