Our economy is definitely going through some "tough times",
as our President George Bush recently confirmed in a speech
regarding the floundering economy of today.
A combination of factors have created a very volatile stock
market, housing market, increasing inflation and cost of
living, and a faltering job market, but one key component
of a failing economy plays an intangible role in
facilitating and perpetuating economic instability.
That component is human fear. We can't help it, we've
evolved with fear as one of our main emotions, and the
media and our surroundings have only helped it along by
declaring "the sky if falling" with it's seemingly nonstop
doomsday headlines.
Heck, you can't read your email without seeing the
headlines on the side declaring that we are headed for
worse times before they get better, costs are skyrocketing,
foreclosures are at an all time high, gas prices are
astronomical, and basically that everything is working
against us right now.
The sky looks very dim indeed if you tune in to the nightly
news or happen to be bombarded with all this fearful
journalism every day on the internet, which is an
increasingly popular portal for getting the news. So, has
the media played a part in our faltering economy, or is it
really a combination of unfortunate factors, seemingly
brought on by events beyond our control?
Well, most people feel the media is partly responsible for
making things worse. Take the stock market for example.
Fear is the stock market's worst enemy. When consumer
confidence in the economy is low and there are other
headlines that are less than favorable in the financial,
retail, and last but not least, housing sectors, the stock
market suffers dramatic volatility.
In fact, one of the hardest hit in the subprime and credit
fiasco, whom also was recently bailed out by the federal
government and JP Morgan, another financial heavy, Bear
Stearns, acknowledges that fear is it's worst enemy. They
insist that their financials are still intact, but rumors
that were rampant about the company's imminent collapse
forced shares down to their lowest levels in almost eleven
years.
Many financial institutions are experiencing nosedives in
their stock prices, and have also slashed dividends to
preserve working capital, a move that is said to create a
domino effect in the banking industry where other banks
follow suit. This only forces prices lower on stocks, and
makes it harder for them, and consequently, the market, to
recover.
Most financial analysts agree now that we are in a
recession, but some are still reluctant to call that card,
saying that a recession may still be averted, and that we
are merely in an economic downturn. I for one, believe we
are smack in the middle of a recession, and I believe that
part of the reason for that is the fear that is being
spread about the dire straits the US economy is in, and the
sense of hopelessness conveyed by these doomsday headlines.
Fear perpetuates a sense of helplessness and "waiting it
out", as well as inspires investors to back their money out
of stocks and other investments, and put them into cash
accounts, which only puts us further into recession. For
those that have iron stomachs, it's actually a great time
to be an investor, as there are some good, solid companies
selling for well below their book values and their true
worth right now.
That's not to say there also aren't a lot of stinkers too,
but if you practice due diligence in researching their
individual financials and balance sheets, you may be
sitting pretty when this recession is over and the consumer
confidence that is so key to a healthy economy has returned.
I do personally believe we have a long ways until we are
out of the woods, but I also believe that we have the power
to turn things around if we can just practice patience and
discipline as a collective nation. Until then, it may be
sage advice to ignore the doomsday headlines and make up
your own mind about where this country's economy is headed.
----------------------------------------------------
Danna Schneider is the founder and primary editorial
contributor of http://www.creditcardcatalogue.com where
information on low interest credit cards, special deals on
low to no interest credit cards, and the best deals
currently going in credit and loans. She also manages an
online financial and credit info and news blog called
http://www.primeratecredit.com .
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