Be careful who you listen to
Hysteria is running rampant in the news media. Headlines like these are filling the front pages of newspapers and news magazines across the country.
“Economists bet housing prices will fall 10% more”
“Homebuilder Lennar Corp posts third-quarter loss of $510 million and cut its work force by 35%.”
“It’s going to be a distressingly long time before we get back to normal.”
“The National Association of Realtors reported existing home salesl fell in August to the lowest level in five years.”
“Nearly 180,000 homes fell into foreclosure in July, up 93 percent from a year ago.”
“Sales of new single-family homes were off 22.3 percent in June from a year earlier.”
“The National Association of Realtors reports there’s enough housing inventory for sale to last 9.6 months, more than double the 2005 level.”
“This is the largest sustained decline in year-over-year prices since 1991,” says Yale economist Robert Shiller.
“The collateral damage is spreading.”
“The second quarter, same-store sales were down 5.2 percent at Home Depot and 4.3 percent at Sears.”
“In July, auto sales were down 12 percent from the year before.”
“The sky is falling. The sky is falling”. NOT
Relax we have been here many times before.
When Jimmy Carter was President in the 1970s we had double digit inflation, double digit interest rates (400% higher than today)- my home mortgage was 13%- and double digit unemployment, gas lines and gas rationing. All of this led to an avalanche of home foreclosures and the collapse of savings and loans banks.
In the 1980s and again in 1991 we had a recession. No big deal just an economic bump in the road that preceded one of the greatest bull markets the world has ever seen.
If the financial hysteria doesn’t scare you how about lead poisoned toys, fish and tea from China, global warming, the melting of the polar ice cap, the bird flu epidemic, terrorist plots, the war in Iraq, the sub prime debacle. Pick your boogey man. To quote Jimmy Buffet, “It’s a scary world out there kiddies.”
In its desperate need to fill the airways and tabloids the mass media manufactures hysteria, dire predictions and over hyped crisis that scares the hell out of a jaded, uniformed and ignorant public. They do that because they know if they were to report on the low unemployment rates, low interest rates and a healthy economy they wouldn’t draw much of a crowd.
While there is a significant correction in the bloated housing market – remember the talk of a housing bubble just three years ag0 and the stock market correction earlier in this decade – we are not headed for an economic depression. Recession maybe. Depression not a chance.
The key to your prosperity in good times and in bad is to eliminate a scarcity mentality by learn to focus on Cultivating an Abundant Mentality. If you will do this you will position yourself to take advantage of the fear and hysteria that permeates the business landscape?
Stay tuned for part 2 next week…