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After listening to talking-head after talking-head tell us how this is the worst economy since the Great Depression, we took a brief look and compared then versus now. Unemployment during the Great Depression peaked at more than 25% versus today’s rate of 7.6%. Furthermore, the Gross Domestic Product of the United States shrunk by 50% during the Great Depression versus a total of 6% thus far during this “Great Recession.” Therefore, there is no comparison.
We then went on to take a look at a more recent period of time, the 1970’s, to determine what the economy was like then versus now and before we jump off the bridge over today’s economic worries, let us be reminded that the 1970’s were highlighted by double-digit Unemployment, double-digit inflation and mortgage rates above 15%, all numbers that make this recession look like a walk in the park.
What is it then that makes this recession that much more frightening? In addition to many other issues, we believe that there is a pervasive lack of confidence/faith/trust in our business leaders as well as political leaders. We also place some of the blame on the media, whom recognizing that some 70% of Americans are invested in the stock market, has stoked our fears and played us like a finely-tuned violin. In fact, a major business network, promoting one of its shows, starts ne with “with the economy in freefall; your investments on the brink…” We call this fear-mongering to say the least and sadly suggest that the race for ratings has outrun ethics.
Many business leaders have also let down the American public in their never-ending search for profits. Like some in the media, they have forsaken ethics, putting themselves before their shareholders and before their country. What a nice segway to how Congress and the Bush Administration, the bodies that should have been our watchdogs, turned a blind eye to the wrongdoing that was rampant over the past five years or so. Perhaps lobbyists got the best of these entities. Now, with the value of investor accounts cut in half, both the Republicans and Democrats squabble like young children in front of the cameras, once again placing their own interests above those of our country.
Finally, let’s look in the mirror. Is it our “right” to own a flat-screen television? Is it our right to travel to Florida every year when we all used to go camping when young? Is it our right to own a home? Why is it that we all have much larger homes, but smaller families? Have we, as individuals, lost our moral compass?
The bottom line is that most Americans bear some responsibility for this financial mess that we have gotten ourselves into and we’ll all have to pull together to get ourselves out. Hmm, sounds like we need to care more about each other and less about ourselves, more about our families and less about what toys we can acquire over time. It will take time, but we firmly believe that America will right itself and so will the stock market.