Is it the economy…or is it something else?

The US stock market has recently been going through some major ups and downs, and the effects have been felt worldwide. Today, the panic subsided somewhat when the Fed lowered interest rates, but given the fast upward trend the stock market has been on lately, I wonder just what the problem is.

Many and more have said that the recent downturn was due to the inevitable troubles in the housing/mortgage market – a combination of unscrupulous lenders and inattentive borrowers created quite a tenuous situation, with far too many people getting into adjustable rate mortgages (ARM), basically gambling against a future rise in interest rates. Well, interest rates rose, and almost instantaneously, the housing market was in trouble. Loans were defaulted, houses were reposessed, lives were damaged.

The general assumption is that this is a sign that the “Bush economy” isn’t all it’s cracked up to be – and with a leftist media, it isn’t cracked up to be very much, that’s for sure. The truth is, the Bush economy has been doing well – the problem that shook the stock market this week runs much deeper, and has been around much longer than George W. Bush has been president.

The problem with the US economy is that fiscal conservatism is dying in much of America – too many people are buying on credit, without the capital to pay off their bills. Anyone with a nose for history knows that this kind of trend was the instigator of the Great Depression…and thankfully, we seem to have avoided another such depression this week. However, if America does not change its spending habits, I fear that another depression will come, and sooner than anyone things.

Problem 1: Like too many of our citizens, our federal government has been spending on credit for far too long…and it has been spun as a national security strategy (see my previous post).

Problem 2: Too many people buying on credit means too few people with real capital, should the US actually enter an economic crisis. Our nation has become too lax: for some time our economy has been shifting from industry to services, and now we have more credit than capital…these are the harbingers of disaster, especially when the wolves of Communism (Cuba, China, Venezuela, and dare I say Russia) and Islamic Fascism (oil, anyone?) are circling. Whether Europe likes it or not, the United States stands virtually alone as the guardians of freedom and justice on the planet, and as it stands today, we are outnumbered, outgunned, and worst of all, we stand divided against ourselves.

The simple truth is that buying on credit is nice and convenient, but too much buying on credit will bring ruin to America. If China were to call our loans, or if one of our major oil suppliers were to stop supplying us with oil, the potential for an economic collapse is immense. Life in America is good, but we cannot afford to be big spenders. A storm is coming, and our money would be much better spend preparing – digging trenches and setting stakes – because the enemy is coming, it’s just a matter of time.

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Categories: economy, stock market

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