The Sky is Falling…!

Politicians and the media have continued to spread the fear about the current economic condition, with both parties claiming this is the most serious economic situation since the Great Depression. But is it?

Recent Dow Jones drops have been in the range of 5-10%, and interspersed in there were multiple gains. Black Monday in 1987 dropped 26% in a single day. And no real recession followed.

Let’s look at recent history:

Could this merely be an isolated incident, compounded by the government in encouraging loans to those with poor or little credit? Surely that would show in the level of bad debt of banks if is was widespread…but as you see below, it is not.

No, not at all. The vast majority of banks in the country are highly solvent.

So why is this myth being perpetrated? Two reasons, I believe:
1. Control. Control of our collective psyche but instilling fear and control of the industry by government.
2. Distraction. By creating this fear, by causing this worry, and by creating supposed solutions, it distracts from the cause of the issue at hand, and our Congressional leaders’ part in it. The collapse of the subprime bubble has been brought up for years, and they failed to act. Of course, these are the same leaders who are essentially doing the same thing with the budget of our country and not addressing the massive deficit and debt we have.

The sky is not falling.

Politicians and the media have continued to spread the fear about the current economic condition, with both parties claiming this is the most serious economic situation since the Great Depression. But is it? Recent Dow Jones drops have been in the range of 5-10%, and interspersed in there were multiple gains. Black Monday in 1987…