Tuesday 29 October 2002

Pic of the day: "It's all mine and you can't have it!" Besides being a comic book by Leonard M. Cachola (Hi Leonard!) its cover also pretty well illustrates my attitude ... or does it?

It has begun

They sentenced me to 20 years of boredom
for trying to change the system from within.
I’m coming now, I’m coming to reward them:
First we take Manhattan, then we take Berlin.

Leonard Cohen: First we take Manhattan.

"Third consecutive week of stock exchange rally" trumpeted the financial newspaper last weekend. I smiled. There were expressions like "reached bottom", and I certainly wouldn’t mind now. The stock market has not reached bottom, of course. As the article conceded, the third week had seen rather less growth than the two before. As well it should, because this was just a correction. The shares had slipped too fast, faster than the long term sliding trend; therefore they would bounce back up to the more sedate downhill run. Like all currents, also this one has its eddies.

But I wouldn’t mind. I wouldn’t mind at all if my gloomy predictions for the stock market were put to shame now. Because it is too late. It has begun. I read the newspaper today again; consumer confidence is falling. As well it should: Companies have been laying off people like mad for quite a while now. At first, they were absorbed into other jobs within the same industries. Then some of them went into other parts of the economy. But the downward spiral has begun to move; the jobless will buy less, and there will be fewer people needed, more jobless to buy less ... Yes. It has begun.

Oh, you loved me as a loser
but now you’re worried that I just might win.
You know the way to stop me,
But you don’t have the discipline.
How many nights I’ve prayed for this: To let my work begin!
First we take Manhattan, then we take Berlin.

I told you, didn’t I? I may not have given you readers as much advance warning as my friends, but some. Of late, I have been telling you that home prices will fall. I think I have told you, at least. I have certainly written about it, I just can’t remember if I have uploaded it. Well, it should go without saying, but few things do. As more people lose their jobs, and move to lower paid jobs or none at all, there will be more sellers and fewer buyers. As banks start to take losses from overly optimistic loans, credit will tighten again. None of this is good for home sales. People will try to hold on to their houses rather than sell them at a loss; mobility will be reduced, and this will hurt the economy some too. Oh yes, the downward spiral is rotating.

I am become Recession, the destroyer of dreams ... OK, got a little carried away there. ^_^*

But I maintain that this recession is not a bad thing. It is necessary to correct the mistakes we made for some years now. Yes, it could lead to disaster; but it need not. To continue borrowing and spending money we don't have, that would necessarily lead to disaster. There are limits, and we have exceeded them. We have to fall back and regroup. That's all it really is about. And it has already begun. Brace yourself.