Friday, October 24, 2008

At least we're in this togeather

Reading an article like this is both comforting and worrisome at the same time. The article in question discusses global markets, and how they are having just as much trouble as the US market is. The worrisome part of that is easy - the farther this spreads, the longer it seems like it's going to take to get any better. That's not any sort of qualified opinion, just my feeling of the situation. The comforting part is a little harder to explain.

Back in the spring when everyone was filling out tax forms and the government was discussing rebates, everyone was talking about spending. Spending was down, so the government was going to give us money back, to get spending back up. Spending went up briefly after the rebates, but not to what was considered "healthy" levels. It was a sign, they said, that people were still worried about the economy. What I think is totally bogus about this is that saving money was viewed as being a bad thing. Could they have possibly been thinking when they made that assessment? If more people saved money, then they would have money for emergencies, money for retirement, and perhaps most importantly right now, money to pay their mortgages! Saving is a good financial decision for many people. If individual people and families are financially healthy, then broader economies would be healthier as a result.

It really concerned me when all this talk of spending was used to gauge our economy for another reason as well. Spending these days is not a measure of how much money people have available. It's a measure of how much credit they have available. Maybe there's something I don't get about this, but I don't understand how a measure of credit is a good way to gauge the health of the economy. (It also drives me nuts that businesses think it's the consumers' faults when they can't survive. If there are not enough people buying cars to support all nearby car dealerships, then some of those dealerships need to close. It is not the case that more people need to take out loans they can't afford to buy cars.)

So back to the original article. If this mess is affecting much of the world, then it's not just the US who was foolish about their economics. Even if we say that the US has influence over world economies, then that still doesn't mean everything is just us. Just like it's every person's job to look after their own finances as much as possible, it's every government's job as well. As I read about the issues that other companies are having, it makes it seem more like a trend the world is undergoing right now. Sure it still sucks, but it's not like we (the US) totally ran ourselves into the dirt. More like it's the way things went given a very complicated and long going set of circumstances. That doesn't mean we don't have a lot of work to do. That doesn't mean that I don't cringe when I look at my investment portfolio. But somehow it's something I can live with.