Quote of the Day “Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.” —Warren Buffett
They say the economy is tanking. For sure the stock market is, uh, tunk. I’m sanguine about the market’s prospects over the next twenty years, so I don’t let it bother me too much right now that my entire invested life savings would have been better allocated at 85% to a shoe box and 15% to even more wine, woman and song than I blew so much cash on in the first place. But I am getting more and more uneasy about the state of things to come.
It seems no one really understands the problem, least of all those tasked with addressing it, and that is what’s most frightening of all. The bailouts to the financial industry and auto industry are prime examples of problems too complex to appreciate. Most “folks” are against these handouts whether they consider themselves progressive or conservative but I’m not sure that they (we) understand the ramifications of the position. In Washington, the Dems and Bush are pushing the current bailout while the Republicans in Congress are opposing. I’m not sure if the Dems’ approach is wise, but as usual, I hear zero alternatives from the right, only opposition. The big problem with taking sides in this debate is that we cannot see the future, but rather must rely on the predictions of those who have lied to us so consistently for so long that we cannot be sure when they speak truly. This goes for both sides in DC. If the fall of the “Big Three” is allowed to happen and really leads to a million job losses, Richard Shelby and Bob Corker and all the Republicans are going to be ruined. But if Bush, Pelosi and Reid bail out the companies (and Obama come January) only to see them fail later or even fail to thrive soon, they will be finished. Part of me wants this bailout to fail just to see who’s right, for if it passes only the Republicans are covered politically while if it fails both parties are. Part of me wants to see it fail because it is another case of the public absorbing the risk for business while never sharing in the rewards. Part of me wants to see it fail because its another load of debt that will eventually be paid off by higher taxes on all of us. But part of me believes the doomsday scenario of massive job losses and the inevitable spreading and deepening of the recession/depression, possibly even to my very doorstep. That part of me leans toward keeping the Big Three afloat.
Of course the auto bailout is just a small part of the overall problem–remember that the financial industry bailout is a trillion vs 15 billion for the Big Three. The auto bailout they are talking about now is just for petty cash in comparison to the one in September. And that money has not been used as promised, to get banks lending to consumers again. If it were, the Big Three would be in less dire straits. The first bailout was based on lies from the Bush administration and incompetence from the leadership in Congress in believing Paulson et al’s lies and failing to legislate with specific mandates. I could go on and on on this subject but it gives me a headache. Basically, its a mess. And I don’t claim to have a firm understanding of all the threads in the web, much less how they interconnect.
Other than my retirement accounts, I have yet to feel the pinch personally, and I really don’t know anyone who is feeling it yet. I have read that Mississippi’s foreclosure rate is on pace to lead the nation (last no more!), so I guess I’m just insulated for the time being. I do, however, foresee plausible conditions that could really put my family in financial jeopardy. I’m concerned. For that reason I’m saving where I can, putting off big purchases and generally hoarding cash, all the while buying stock on the big drops. Am I approaching it wisely? I honestly don’t know. All I do is stare blankly–at my portfolio once every few days, or at the TV when the news comes on, or at the new million dollar neighborhood construction I see on the way to work every morning. I’m wondering what everyone else is doing, regardless of how they feel about the money being hemorrhaged up in Washington. Vote below on your state of mind and feel free to amplify on your vote in the comments.