Monday, October 6, 2008

Economy is all in your head

This is a true statement.  The only reason the economy is going down is that everyone seems to think it's going down.  People are still buying products, people are still employed (I'll come back to this statement), and all the money that used to be there is still there.

The stock market is pure speculation.  The price of a stock is not what the company is worth, it's what you think it's worth.  The only reason stocks are worth less now is that people think they're worth less.  Here's how it works:

  1. Somebody sells stock for some reason at a lower price.

  2. Somebody else thinks "they must have a reason to sell low, I'd better bail out too" and they sell their stocks.

  3. Stock prices plummet.

That's what's happening.  It then cascades and ripples from there - businesses see their stock going down and start the massive layoff procedures to try and "cut costs", this in turn causes the unemployment rate to go up, which cycles back to the stock market as people see "the economy is in crisis".  If people would just settle down, things would go back to normal and everything would be OK.

The problem is that everyone needs to do it.  Businesses need to quit laying people off, individuals need to quit selling everything, and the media needs to quit panicking people into doing all of the above.

This needs to start on top.  CEOs need to quit being greedy and rather than laying people off, give everyone a raise!  If everyone starts making more, they will spend more.  Cash will flow again, the businesses will report their massive revenue, stock prices will go back up.

I  find myself yelling at the TV as I see these news blurbs about the stock market crashing and "economists" going on saying crap like you should take all the money you need for the next five years out of the stock market.  That. Is. Not. Helping.

I honestly wonder if there's a conspiracy going on to make everyone sell all their stocks, purposefully causing an economic downturn so that these individuals can buy everything at low rates and make billions in the long term.  Look around - all the prices are at crazy lows.  The company whose stock you are buying is still what it was yesterday.  It hasn't physically changed.  The only change is an artifical price sticker based entirely on speculation.  If you were smart, you'd buy not sell.


  1. A friend of mine just emailed me one of your articles from a while back. I read that one a few more. Really enjoy your blog. Thanks

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