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“The Worst {Fill-In the Blank} Since the Great Depression?”

  


             
It's a New Year, with the new President our mainstream media wanted.  So why can't we escape the daily media harangue that whatever statistic the talking head is talking about is "The Worst {fill in the blank} Since the Great Depression?!  
            It’s time to take a few deep breaths, find our qi, (
http://en.wikipedia.org/wiki/Qi), and get a grip. In many ways, we think ourselves into recessions; we have to think ourselves out. Tough times have no power over us unless we let them. The sooner we decide to no longer participate in “the recessionary nightmare,” the sooner it will be over. So snap out of it, channel your inner Phil Gramm[1], and travel with me on a little statistical Reality Check:

            Reality Check #1--The latest unemployment numbers. They’re no reason to celebrate, to be sure. But Great Depression? Hardly. At 7.2%, they’re not even close. During the 1930’s, fully 25% of Americans could not find work. It got so bad then that in 1933, over 100,000 Americans actually applied for visas to go to the Soviet Union to look for a job, any job, to avoid starvation. 

            Since the Depression ended there have been at least 8 years with worse unemployment rates than we have now. In the Carter years of the late 1970’s, (and even into the first two years of the Reagan administration), unemployment rates reached over 10%. Worse yet, during the Carter years unemployment checks didn’t go very far. Inflation had reached a paralyzing 13.5%. Our current levels are so low no one is noticing. 

Home prices and mortgage rates? Here’s Reality Check #2. Historically, until about 2000, your home was a place you lived in, not a market play. Home prices remained fairly static in real dollars. That all changed in 2000, thanks to the explosive growth of Fannie Mae and Freddie Mac. Their government meddling brought us the Wall Street crash, trillion dollar “TARP” bailouts, and the nationalizing of huge swaths of the American economy. 

But even with this “crisis,” home values are still up compared to prices of even less than a decade ago. So, change your perspective a bit. What the talking heads are calling the “Worst Housing Catastrophe Since The Great Depression” is instead just a long-needed readjustment of prices to less speculative, more sustainable, levels.  

Besides, all of those dreaded “short sales” going on now are blessings in disguise. They offer overextended debtors a way out of a situation that was doomed from the start. They offer new homebuyers a more affordable deal on a new home than they could have dreamed of even a year ago. They even give the mortgage banks a chance to reorient their risks, take their losses, and start the climb back to profitability.

While folks who bought homes in the last year or two may be a bit nervous for the next few years, (while their home values catch up to their mortgages), the news is actually exciting for people just entering the home market.   

Many young, first-time homebuyers couldn’t have hoped to afford a home of their own even a year ago.  Now, many are moving into one.  Millions of homebuyers in their ‘20’s are buying homes at affordable prices and with affordable mortgages. They couldn’t even imagine the world as it existed in the Carter years, with 16% mortgages and double-digit inflation.

Dark cloud, meet silver lining.

Those new homebuyers will need new cabinets, new paint, and new furniture. Multiply that by the millions of “short sales” and foreclosure auction purchases now underway, and you’ll begin to see the truth of the axiom that by the time we realize we’re in a recession, we’re probably on our way out of it. 

But what about the stock market, you say? Time for Reality Check #3. A tougher sell, sure, but follow me on this one. Did the market really “lose trillions of dollars of value” last year? Unless you sold at the low, you haven’t “lost” anything; you never had it in the first place! The skyrocketing highs reached by the market in 2007 were pure paper—cheap loans, high leveraging, and Madoffian Ponzi schemes. 

Over the long haul (which is the only stock market play that makes any sense), even at the current Dow trading range (around the 8000’s), anyone who has been in the market for a decade or so (particularly those who have taken advantage of their 401K’s and the employer match they provide) has done just fine.  If you don't believe me, check out any historical chart on the Dow Jones performance over the last 20-30 years.

There is good news even in the market plunge, for those with the patience and resolve to see it. Long-haul investors are dollar-cost-averaging their way back into the market and buying more shares for their dollars than they could have dreamed of, picking up good companies at bargain prices.  

So buck up out there, for crying out loud. This is the United States of America. Our best days are always ahead of us. We descend from ancestors who turned their backs on their feudal poverty and boarded ships to come to the New World. We didn’t huddle in our huts back then, and we won’t let a little setback slow us down now. The future’s waiting—let’s go meet it.



[1] http://www.youtube.com/watch?v=2NVjq2py7BA

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The Minstrel Boy

 

  "Great harm has been done to us. We have suffered great loss. And in our grief and anger we have found our mission and our moment. Freedom and fear are at war. The advance of human freedom -- the great achievement of our time, and the great hope of every time -- now depends on us. Our nation -- this generation -- will lift a dark threat of violence from our people and our future. We will rally the world to this cause by our efforts, by our courage. We will not tire, we will
not falter, and we will not fail."

-George W. Bush, September 20, 2008

As a new President plans his transition, I am pausing lately to give a little thought to the one on his way out. When George W. Bush took office in January, 2001, no one could have predicted the calamitous eight years that awaited him. His Presidency was transformed, and in a very real sense, sacrificed, on September 11, 2001. From the moment the planes hit the World Trade Center, the Pentagon, and the fields near Shanksville, Pennsylvania, he knew that whatever plans he might have had for his administration over the next four or eight years were gone. His mission had fundamentally changed.

In his joint session address to Congress nine days after the attack, President Bush made the Nation a promise. Its essence is highlighted above. In the last days of his Presidency, many people in the chattering classes have forgotten that speech, and that promise. But he never did. Though the years since have been fraught with setbacks, and he and his administration have made more mistakes than can be counted, President Bush has never broken faith with his country. He never tired; he never faltered; and he has not failed.

It is not by accident that this country has not suffered a single terrorist attack, within its borders or in its embassies outside of the war zones of Afghanistan or Iraq, since September 11, 2001. Had anyone predicted then that the nation would remain safe from terrorist attack this long, they would have been considered delusional. Commentators at the time were certain there would be many more attacks, even catastrophic ones, with the only question being when. At the time, it seemed an impossible task to protect the country from the onslaught of Islamic terror attacks we all feared were coming. Yet it was that very task to which President Bush and his team dedicated themselves.

In the end, perhaps it is the very success of their efforts these last seven years that, more than anything, has led to the decline of President Bush's reputation.  The success of the Global War on Terror has given the country the luxury of worrying about its recent economic setbacks to the exclusion of everything else. We’re no longer worried about the existential threat of terrorism.  The success of the Surge in Iraq (a surge that President Bush embraced late, to be sure, but embraced nonetheless), has caused the war to fade from the front pages as an issue.

But as he leaves office, President Bush can take some heart in the fact that while many have forgotten, there are still millions of us who remember. We remember what this country faced seven years ago. We remember like it was yesterday. We also remember the promise he made to us on September 20, 2001. We remember he warned us that the battle to win the war against Islamic terrorists would be long, fought in the twilight of secrecy or obscurity. He warned us that it would be a war with little credit given to its heroes, and with "victories" we might never even see in the open. But he promised that with the battle on, he would never leave the field until he was done, or spent in the effort.  We know, (though his plummeting popularity polls suggest most no longer do), what it took for him to keep that promise.

More needs to be done, to be sure, and new threats lurk around every corner. We pray our new President is up to the task. But though you'll never see this written anywhere but here, he has President Bush, and that magnificent military he commanded, to thank for how close he will be to victory in the war on Islamic extremist terror when he takes office.

It may be a hundred years before the history of the Bush administration can be written with sufficient detachment to be accurate. I am by no means a Bush apologist, and could spend the next several entries in this journal cataloguing his failures. But I won't.  I know that in many ways Bush has willingly sacrificed his reputation for victory in the cause to which he dedicated himself on September 20, 2001. He did what he thought was right, and never backed down in the face of the whirlwind. Of course, I will also never forget that there are nearly five thousand soldiers who made the ultimate sacrifice in the country's cause, too. President Bush would want all the focus on them, as it should be. I am sure his first prayers, in his quiet moments, are for them and their families.

In thinking of this President as he fades from the stage and makes way for his successor, I recall the words from an old Irish rebel tune from the late 1700's, The Minstrel Boy:

The minstrel boy to the war is gone

In the ranks of death you'll find him.

His father's sword he has girded on,

And his wild harp slung behind him.

"Land of Song," said the warrior bard,

"Though all the world betrays thee,

One sword, at least, thy rights shall guard;

One faithful heart shall praise thee."

Godspeed, Mr. President.

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