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I definitely believe we're in for a buster of a time. It's going to be tough. 1979-1981 type tough. I used to think we were going to see the DOW hit 11,500. But now I'm thinking we'll see it further down. But there are a lot of people that weren't around during the recession that started in 79'. I remember it quite clearly. We were middle class, living in a 40k house in 1978 (Which was good for that time, equivelant to a 2900 sqr foot home now). But when the recession hit? I remember Dad not being able to buy gas for 3 days during the oil shortage. I remember never eating name brand food. All our food boxes, as I called it as a kid were "in black and white" no-brand. Much of what we ate was food out of the garden. If we turned our nose up some days, we didn't eat. Because there was nothing else. We drove an old diesel (Peugot 505). My father would leave and go around the country looking for work. The man worked like a freaking horse. He'd take 6 months stints in Texas, Ohio, wherever he could find work. I honestly believe that's what we are in for. We will be very fortunate if we climb out of it in the markets by 2009. But the point is - we will climb out of it. This is simply the next peg down - which I agree - we need to take down. It's all part of the cycle.
But the fear I'm seeing is not justified. Everything has become so sensationalized. It's the culture that brought us "Entertainment Tonight". Now the same sensational fear is being applied to the markets. Talking with Dad? I found out that I was right in my childhood recollections. There was not the sort of fear out there in 1979 - like we're seeing now. Even when you factor in (at the real inflation #'s site) energy and food, our inflation is still far below where it was then. As are our unemployment numbers. Our standing are living is 20x's higher than what I had in 1979. But the consumer confidence is what I see as out of whack. The fear that's being spread about is the most serious part of the situation. Not the underlying economic factors - which while serious - don't match up. We've been in far worse spots, with less fear. The fear will screw us up faster, and farther than anything else. Fear causes market crashes. Not economic conditions.
Can you honestly imagine your middle class kid trying to live like what we experienced in 1979? Heck, even their parents? We've become a nation of crying babies. How would people react today if they simply could not buy gasoline. They flip out now if they can't get a freaking whopper.
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