Harry Reid, says the economy is or could be heading towards a recession.
That’s the best news of the week… the absolute best news of the week.
The politician who said we lost the war is now saying that we have lost or are losing the economy.
What I know is this: When Harry makes a call, the opposite is almost a sure thing.
We live here in a dynamic economy.
We live in the most robust economy in the history of human civilization.
A lot of us are not aware of that because we’ve only lived here so we have expectations based on relative strength and prosperity and affluence and the expectation that all that’s going to increase, and when there are moments and it appears that we’re going to take a downward cycle, people panic, refusing to keep things in proper perspective.
But in a dynamic economy, such as ours, in a capitalist economy, such as ours, markets correct.
Remember that word, “correct.”
That is short for correct mistakes.
You leave the market alone, it will fix itself. It may take some time, but it will. Businesses, out of necessity, correct their mistakes. Lenders, banks, correct their mistakes. Sometimes those mistakes are big; sometimes they’re huge; sometimes they are hurtful; sometimes they are devastating.
But, they correct their mistakes.
Can I give you an example of something that does not correct its mistakes very often, if ever?
Bureaucracies.
Bureaucracies do not correct their mistakes. They pile on them. That’s why a free economy will get more productive and bloated bureaucracies will get more bloated. And when I say bureaucracy here, think of the federal government.
It’s safe to say that what’s going on right now is that the markets are correcting, and if the politicians — and I mean politicians on both sides here — in an election year would follow the Hippocratic Oath, first, do no harm, the correction could not be so deep and not so long.
On the other hand, if a bunch of lawyers decide to fix it, we could be in a fix.
I make no predictions here. But this is reminder for those of you who don’t know your history, and this is key, especially if the privatization of Social Security ever comes up again, this little statistic is going to come in so handy.
In 1987, 20 years ago, the Dow Jones Industrial Average dropped more than one third in two weeks. On October 5th of ’87, the Dow Jones Industrial Average was 2658. On October 19th, 1987, just two weeks later, the Dow Jones Industrial Average low was 1677. So in two weeks it went from 2658 to 1677 on October 19th of ’87. That was the best buying opportunity in the last 20 years, because since 1987 we have gone from 1677 on the Dow to 14,200.
Don’t you wish your retirement fund had started in 1987 at 1677 on the Dow? Even today, we’re flirting with 12,000. What a growth opportunity, what a buying opportunity that was.
Now, some of the things we might want to correct, I said bureaucracies never correct their mistakes, they only add to them. Governments never correct their mistakes. How about this business of jobs Americans won’t do. That’s Crap, we could correct it.
We’re too proud and we are too guilty to produce our own energy. We encourage citizens to go out and buy a muffler, and doing that is not as productive as encouraging business to expand and business to hire. Of course, the Great Society, the war on poverty, everything else, miserable failures.
What do we do? Compound the failure by adding to the failure with the same plans, redundant, over and over again. We don’t correct our mistakes in government. We never admit them. Well, the people in government don’t and they don’t have to correct, and they should.
Not everybody is ignoring the expected Democrat tax increases. Voters might ignore reality, but businesses won’t.
So this is going to be very interesting to watch to see what happens with this rate cut, with the Media doing everything they can to drive down the perception of the economy today, and they’re failing.
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