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Selective Hearing…

25 January 2010 One Comment

I like to talk about the growing chasm that separates the two worlds of our economy.  The real economy, which sucks, and the elitist/Wall St/government economy.  To demonstrate something, I’m going to have to ask you to perform an exercise.  If you were to cut yourself off from all talk from the media regarding the economy, what do you think you would believe about the economy?  If you cut yourself off from CNBC, from “earnings beat” announcements off the internet, etc., and instead got all of your economic indicators from the people you knew and the people you did business with, what would you believe about the economy?

I’ll tell you what I would believe.  I have a good friend looking for work, and not really finding it.  I have several friends in industries that have taken a hit, one expects to get laid off any day, the other is completely demoralized because of the awful outlook for his company.  For me, I’m in a company that is for the most part in survival mode as most people in our industry are.

Do you know of anyone working in an industry with incredible growth?  Do you know anyone who is excited about the outlook?  In 2009, everybody I knew would always say, “2010 will be much better.”  Well, 2010 is here.  When will we start hearing, “2011 will be much better”?

It is great that the stock market is up, but eventually the real economy and the Wall St. economy will snap back to a closer relationship.  If the stock market is the one that snaps back to reality, there will be great pain for many investors lured in by the “recovery”.  I only mention this possibility so that you will not be complacent and you will be cautious with your money.

I’m still waiting for a convincing argument on why this won’t be a decade long depression/severe recession.  Thoughts?

Lastly, if you think its absurd to shut off the talking heads on CNBC, just ask yourself how many of those folks saw the recession coming in 2007?  There’s your answer on how credible these experts are.  Move forward with extreme caution.

One Comment »

  • 20smoney (author) said:

    You're right and congrats on having a great year! I think you're prob in the minority!

  • Chris said:

    I've had similar thoughts. Many of the facts reported in the media are not positive (higher unemployment, more foreclosures), but the conclusion is still bullish, which doesn't make sense. A bearish attitude by the media would cause everyone to bail, making it a self-fulfilling prophecy, so the media has to be a bull. Looking at my local economy I have a lot of friends out of work and some heading towards foreclosure. It also worries me that media reports speak negatively about consumers saving more and borrowing less because it "hinders" the recovery. Something is very broken when making sustainable decisions is viewed as a hindrance.