All the pundits state that the dow has not been at this level (7997) in five and 1/2 years. The point that NONE of them seems to acknowledge, and the American public seems to be unaware is the situation is much worse than that.
No I don't particularly like Reuters... but this is an example of what I hear and read daily.
http://www.reuters.com/...
The attention to the DOW and the NASDAQ as the only bellwether to the nation’s economic health is also a very one-sided way to examine the situation.
Read on as I make a couple of observations from my perch as an American citizen. Please tell me if I am wrong, point me to some resources! On the other hand...feel free to affirm my thoughts. I am looking for resources that help me articulate my position or dispel my restless nights.
OK, the Dow is down 6000 + points... there is no doubt that this is a signal that the economic health of the US economy is in serious shit. However, the pundits have neglected to highlight just how far down the drain we are. The low that they keep pointing to is a low that resulted from the FIRST "W" recession. We can argue (successfully), that this recession was from tax cuts to some at the expense of others. Perhaps it was the war... but that was never accounted for... just borrowed.
Anyhow....
The actual bottom for that dip in the Dow was on September 30, 2003, when the DOW tanked to slightly over 7528. We are close to that now at 7997. My problem is that until we go below that number (very possible), we will keep pretending that 2003 was a representative situation and part of the "overall" growth that the markets maintain.
So, what happens if (very possible), the DOW dips below 7528? On that day, we will hear all these pundits tell us we are now at an 11.5 year low. The Dow was on a healthy rise (yep... I know all about the tech bubble) and that the last time the Dow was near it was early July 1997.
Should we be concerned? Should we bail out every company that is "too big" to let crumble? While I am asking questions... should we accept the fact that the prime rate is now 1% while we, the consumers continue to pay "up to" 24.99% interest on credit cards? While we continue to get loans for our kid’s college at 6+ %, should we continue to send HUNDREDS OF BILLIONS to banks to "unfreeze" credit? By the way, even if there is tons of credit, how many of you are looking to borrow to buy anything right now?
Has anyone noticed that every time the market goes down, the price of oil follows? Therefore, if the market goes up, I get to pay more at the pump. Has anyone noticed that the banks continue to take a stance that changing loan terms on unreasonable mortgages is somehow, socialistic... and therefore, not "American"? Yet millions of Americans could continue to pay if their interest was not "ballooned" and/or not adjusted to the moon. Prime, 1%... what gives?
Will it be the end of days if the market stabilizes and the car companies that refuse to make cars worth buying fail? If insurance companies that, continue to screw us for premiums and make payment difficult, retract and fade? What would happen if the paradigms shift... completely?
I am not so sure that the "Average" American will really feel any worse than we do today. I know people who have lost hundreds of thousands in value on their 401K plans. They were within reach of a healthy retirement, but now face extra years of working as a Wal-Mart greater (Oh Joy, Oh Rapture).
Are the DOW and the NASDAQ really the best bellwether of the average American's economy? What if there were no 401Ks? Would most of us give a crap? Not likely!
Last pet peeve! When all is done, and said, what about our Social Security? I, for one, am sick to death of hearing how this "entitlement" is in serious trouble of going bankrupt. It is the only sure thing any of us have towards retirement, and the "right" talks about limiting it, cutting the benefits, hanging us out to dry. If your 401K has shrunk by 40% to 50%, you will see 40 to 50% less on this part of your funds when you retire.
Sure, it will recover... but that recovery comes from a new floor and therefore... "LESS" than you would have if this madness had not transpired. I would much rather have seen 700 Billion put towards making sure that the one sure thing, is solvent.
All of us are being screwed each which way from Sunday on this deal. I am hopefully pessimistic that Barack will figure this shit out and do the right thing. No, I do not know what the right thing is. What I do know giving taxpayer dollars to companies that have failed and continue to pay the executives that orchestrated the failures, billions in bonuses is %ucked up. How nice, a bonus to %uck up.
I want my Social Security to be secure. I think they should repeal paying taxes on 401K moneys when finally used for our retirements. I want regulations on corporations that prevent them from getting "TOO BIG TO ALLOW TO FAIL". Give me a break! If they screwed up, let them crumble. If we buy them then we need to regulate the living shit out of them so that they behave in a way that makes sense for the country, not just the company.
Adam Smith believed in capitalism and I am a real fan. Absolute and comparative advantage does not exist when our government selects companies that they choose to "assist" while others must live and die by their actions.
The United States is in a world of hurt right now. We are at an 11.5-year low, not a 5.5-year low. It will take us a decade to get out of this mess and millions of baby boomers do not have the luxury of working our way out of the mess. The answers are not easy, but they will be harder if we do not accept the enormity of what is going on here. The actions and inactions of the Bush administration have erased all the gains of the Dow for a decade +. On top of that, we owe almost 3 times as much to countries like China. On top of that, we are in the midst of a war that we have not bothered to tally up yet.
So, my point... how many people really understand how bad this is? How many in both houses of Congress recognize just how shitty a hand they have dealt us? What will we do if those who have "stars upon thars" prevail and get their interest protected, while leaving the average American to pay their bills, improve their wealth and eat their shit?
Get a clue folks; this is much worse than we have been led to believe. I hope that Barack will push the right buttons, say the right things, and enact the right actions. We the people need to be much more upset that we seem to be.
"IF YOU ARE NOT OUTRAGED, YOU ARE NOT PAYING ATTENTION".
PAY ATTENTION!