Tuesday, October 14, 2008
The US economy will come out OK
Let me guess: Will today's headlines be about the stock market or Sarah Palin's daughter?
It was a great Monday for the stock market:
"The major U.S. stock indexes each gained more than 11%....."
Here is really good news: Gas price marks biggest drop ever...
Here is my message: Keep an eye on dropping gas prices! They are cash flow for families and businesses.
This is why we say in this blog: Believe in the US economy!
IBD reminds us about the amazing US economy:
"Even after our stock market and housing losses, the U.S. is still extraordinarily wealthy.
In the second quarter, Fed data show, the U.S. private sector owned $110.6 trillion in assets — an immense amount of wealth.
The estimated $1 trillion to $2 trillion cost of the current financial mess is small by comparison."
How bad are things? Ask your parents or grandparents who grew up in the Great Depression of the 1930's:
"During the Great Depression, U.S. output plunged 27% in four years; unemployment neared a third of the work force.
Real private investment shrank 87% in three years; personal spending plunged 41%.
We're not close to that."
We are doing quite well, specially when you compare us with everybody else. After all, where would you like to start a company or look for a job? The answer is the US!
The US economy is the best in the world. According to WEF:
"The US has again topped a widely-watched index ranking country competitiveness, despite the financial crisis that has left it and other highly ranked nations facing market meltdown and a prolonged economic downturn.
The WEF’s global competitiveness index this year rates 134 countries on 12 criteria which include quality of education, labour and product market flexibility, infrastructure, macroeconomic stability and “financial market sophistication”.
Like the rival index produced by the Swiss-based IMD business school, the WEF index relies heavily on the views of business executives as well as statistical data, and the rankings depend crucially on the weights given to the various factors."
The other 9 in the top 10 are Switzerland, Denmark, Sweden, Singapore, Finland, Germany, Netherlands, Japan, Canada, Hong Kong and Britain.
Sadly, there were no Latin American countries on the top list.
Why? Because Lat Am countries have fallen for the same misguided populism and protectionism that you hear from Obama.
We will get through this current storm. Like previous stock market meltdowns in April 2000 or October 1987, we will survive, recover and come back stronger.
Of course, I'm assuming that we don't elect Obama, raise "taxes on the rich" and promote protectionism.