Common Sense.
Friday, January 18,2008,
Jacqueline Thorpe (Canada: National Post newspaper) wrote a good description on the worsening economic picture for the U.S. market. With tens of trillions of dollars affected by their mortgage lending practice crises, soon to threaten recession, including in Canada, I hope you have closely watched and guarded your investments.
Jacqueline Thorpe explains past market corrections have dropped on average of about 20%. First, there is “wobbling” as drops around 2% - 3% are recorded. (Today many markets have dropped around 3% - 5%). Then as markets reach the inevitable consequence of bad practise, the major correction occurs. But first governments try not to look nervous, trying to “help” economic events, then the markets settle to their trough.
I won’t offer any advice, but will only say what I have done. Last November, I had moved the entire of my savings and pensions to the money market or cash. For example, I moved all - every dollar - of my defined pension plan to the companies money market funds and took all my mutual funds and stock funds out of the market into cash. (No, this doesn’t mean I’m walking around with a pocketful : ). It means I made my money very, very liquid. The interest I gain is now miniscule, but safer.
I preserved my capital this way and now I’m in a position to “buy low” when the markets bottom out. When will that be? I don’t know, but now I’m secure in the fact the markets can fall (correct) all they want. In fact, I’d be glad the correction occurred to beat out all the speculative and iffy lending that has occurred down south. Toronto got a whiff of it when Donald Trump came whizzing through scooping up cash to bolster his losses - I bet. The strong, stable, and straight-forward lenders (i.e. The more honest lenders) will win out in the long run.
I’ll ride the American and Canadian market as they go back up and recover.
On a deeper level
I was talking to a bank loans officer and I mentioned the fact it was governments fault for this “credit crunch” because it was and is artificially low credit rates governments established that caused speculative lending and borrowing. The true economic betrayal here is political dishonesty, - government control of credit. The idea of government control of credit was not a North American idea. It was imported and adopted by dishonest North American leaders. Government control of credit was given modern expression by Karl Marx and the communist politbureau. Communist control of credit was and is part of the totalitarian concept - total control. In the 1930’s, weaker political leaders feared the “strength” of the communist propaganda and ”borrowed” some of their principles. Those principles, rooted in sacrifice, never fully have been cleaned out of today’s political systems.
This is not freedom.
This decades old betrayal also has long term consequences. Young people today cannot turn to government for honest economic policies. In fact, the idea of a free market sounds foreign to them. It doesn’t even register. Not only has freedom across the board been betrayed, but honesty too. What does this say for the future? What does this say for civilization if the truth is buried?
Let us not be the same. It takes a lot of hard work to appreciate honest principles. It is even harder to stick to them. But when we do recognize the truth, we must uphold them without fail for there is no other way to live.
The best site I can recommend for better economic reading is (of course) The Ayn Rand Institute. ..and also google “Richard Salsman” - an objective and truthful market economist.
Ted.
