Don’t freak out over Dow
economy rapidly into recession or worse.
Rising rates also will increase debt costs to the federal government, which continues to rack up deficits and borrowing with reckless abandon. At the most recent count, the nation’s debt level is more than $20 trillion. Why is it that we see little or no concern about this? Have times really changed that much?
Lost in all of this discussion, too, is the fact that, more and more, the global economy can be best understood in the context of winner-take-all games. Tangible economic benefits accrue to an increasingly smaller segment of the population. This week’s winners in the market plunge appear to be the banks, which have yielded a windfall in fee income resulting from a higher number of trades during the current volatility. For them, it doesn’t matter whether things are getting better or worse, but only that investors think the times are changing.
Back to that little investor: What should she or he do when a bleary-eyed floor trader says “We’re all freaking out, man”?
Well, first thing: Don’t panic. Don’t freak out. But do consider what is driving these markets, and has been for a long time now. Wall Street has to change its ways. As a nation, we must get back to building and sustaining an economy that rewards actual growth — not consolidation. If your portfolio is heavy into mergers, you may be contributing to the problem. But take your time, and make moves to which the rules of common sense apply. If it looks like a freakout, it probably is.