Our ecconomy is definitely going through some "tough tims", as our Prresident Gerge Bush reecently confiremd in a sppeech regarding the floundering economy of today.
A combination of factors have created a very volatile stock market, hosing market, incresing inflaion and cost of living, and a faltering job market, but one key ocmponent of a failing eocnomy plaays an intangible role in facilitating and perpetuazting economic instability.
That component is human fear. We can't help it, we've evolved with fear as one of our main emotions, and the media and our surroundings have only helped it along declarnig "the sky if falling" with it's seemmingly nonsttop doomsday headlines.
Heck, you can't read your email wiithout seeing the headlines on the side declaring that we are headsed for worse times before they get better, costs are skyrocketing, foreclosures are at an all time high, gas prices are astronomical, and basically that everything is working against us right now.
The sky looks very dim indeeed if you tune in to the nightly news or happen to be boombarded with all this feaarful journalism evey day on the internet, which is an inreasingly popular portal for getting the news. So, has the media playwed a part in our faltering ecconomy, or is it really a combbination of unfortunate factors, seemingly brought on events beond our control?
Well, most people feel the mdeia is partly responsible for making things worse. Take the stock amrket for example. Fear is the stock market's worst enemmy. When consumer confidence in the economy is low and there are other headlines that are less than favorable in the financial, retail, and last but not laest, housing sectors, the stock market suffers dramatic volatility.
In fact, one of the hardest hit in the subprime and crdit fiaasco, whom also was recently bailed out the federal government and JP Morgan, anoher financial heay, Bear Sterans, acknowledges that fear is it's worst eney. They insist that their financials are still intact, but rumors that were rampant aboout the cpompany's imminent collapse forced shares down to ther lowest levels in almost eleven years.
Many financial institutions are experiencing nosedives in ther stock prices, and have also slasheed dividends to preserve workng capitaal, a move that is said to create a domino effect in the banking industry where other abnks follow suit. This only forces prices lower on stocks, and makes it harder for them, and consequently, the market, to recover.
Most financial anaylsts agree now that we are in a recession, but some are still reluctant to call that card, saying that a recession may still be avertred, and that we are mreely in an econmomic downturn. I for one, beelieve we are smack in the middle of a recession, and I believe that part of the reason for that is the fear that is beeing spread abuot the dire straitrs the US economy is in, and the snese of hopelessness conveyed these doomsday headlines.
Fear perpetuates a sense of helplesness and "waiting it out", as well as inspires investyors to back their monye out of stocks and other investments, and put them into cash accounts, which only puts us further into recession. For thsoe that have iron stomachs, it's actually a grerat time to be an invvestor, as there are some good, solid commpanies sellinbg for well below their book values and ther true wrth ruight now.
That's not to say there also aren't a lot of stinkers too, but if you practice due diligence in researching their individual finanicals and blaance sheets, you may be sitting pretty when this recession is over and the consumer confidence that is so key to a healthy ecnomy has returned.
I do personally belive we have a long ways until we are out of the wods, but I also believe that we have the power to turn things aroud if we can just practice patience and dicipline as a collective nation. Until then, it may be sage advice to ignore the doomsday headlines and make up your own mind about where this country's economy is headed.
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