World stocks routed on fears for economy – This was a Yahoo Finance headline today
I guess everyone in the news media is cognizant that if a recession hits (versus slow growth) that every human will be instantly vaporized….or at least we will all be destitute for years to come. Holy mackerel, has anyone in the media ever heard of a recession before? I can distinctly recall 3 in my working career. Does any business writer understand that we have endured recessions in each of the last decades and that after each recession, the economic output and market valuations of the United States roared past the previous record highs? Does anyone get it that recession is a normal, albeit unpleasant, aspect of the business cycle?
Maybe there are too many reporters who cut their teeth during the run up to the Y2K spending frenzy and the internet bubble who have read about realistic expected rates of return, but secretly, in their heart of hearts they really do think the 19% returns year after year is the norm. While no one looks forward to a recession, and I was not convinced there would be one in 2008 until every media outlet jumped on the doom and gloom bandwagon, the reality is that recessions are a time for economic and corporate cleansing. Companies that grew too fast and too fat over the last expansion trim their excesses and refocus on activity that yields the highest return. Prices of “things” that had gotten out of balance reset such that any given market is closer to a state of equilibrium.
Recessions happen, no one likes them, but smart business make good investments during recessions and come out much stronger. I am not sure I can stand the media run up to this self fulfilling prophesy of Recession 2008. I almost wish that we could declare it started, so we can be done with the headlines about the world coming to an end.
By the way...I am not big on predictions (though my LSU wins the National Championship was totally on the money) I predict that if we do slide into recession, thanks in part to the media frenzy, that if a democrat wins the presidential election, the economic news will shift dramatically until we can declare that Hilliary or Obama has pulled us out of the republican economic quagmire. I further predict that if one of the democratic hopefuls makes it to the White House and raises taxes and increases entitlements as much as they are promising on the campaign stump, we will have yet another recession and a nasty one at that. Economies work better when they are left alone. Hilliary and Obama seemed determined to "level the playing field" by making everyone poorer through a smaller and less efficient private sector. Talk about a headline for Yahoo Finance...that will never be written.
No comments:
Post a Comment