Does it feel to you like the financial world has bounced from crisis to crisis since the turn of the century?
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| Barcelona Boogeyman |
That's partly due to a bunch of politicians only interested in the next election results demagoguing the issues and partly due to a 24 hour news cycle anxious to sell its greatest commodity: fear.
And, of course, there were and are underlying problems, mostly caused by those same politicians hamming it up for the 24 hour news cycle with programs that sounded good but led to unintended negative consequences.
The government program to make housing affordable worked very well for a long time, and in fact I would call it one of the most successful government programs ever, despite the fact that it blew up a few years ago and crashed the housing market.
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| Hilo Hope Fulfilled |
While housing prices were ballooning skyward due to unqualified borrowers buying houses they couldn't really afford, home owners felt rich with equity, and as a result became consumers who truly stimulated the economy. A bunch of Wall Street "geniuses" figured out a way to turn that inevitable bubble pop into a major financial disaster, crashing the stock market, but now, five years later, the indexes have reached new all time highs.
The stock market has generally been better at forecasting the future than reflecting the past. As such, it would seem that the market believes the worst is behind us. Nothing can keep the
animal spirits of capitalism down indefinitely.
I have this absurdly optimistic way of looking at things that guides me. I figure that if good intentions by politicians can lead to negative unintended consequences, then if I think the politicians have bad intentions or just plain idiotic ideas, those politicians will still act in ways that will have
postitive unintended consequences.
During the recent hard times, many businesses have thrived.
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| Peterhof Palace, Russia |
Apple rode a series of breakthrough products like iPhones and iPads to huge success over the past decade. Amazon, Ebay and Google created huge success in fields that didn't exist a short time ago, while WalMart and Target continued to grow by simply buying wholesale and selling retail, as merchants have for centuries.
The cruise business has been whipsawed by the 24 hour news cycle, from 9/11 to hurricanes to Mideast unease to the Concordia to Greek strikes to the latest
Carnival fiascos, but somehow the industry has continued to grow at an 8% annual clip through it all.
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| A quiet street in Venice. |
The latest Carnival problems were the reason for cancellations yesterday from a family scheduled to take a great Carnival Sunshine cruise through the Mediterranean between Barcelona and Venice. The Sunshine is
essentially a new ship emerging from an extensive overhaul, and the fact that over 17 milion people have cruised safely and happily in the last year puts the problems in perspective for me, but I am not here to defend Carnival, even if its mistakes were
sensationalized by the news media. It looks like Carnival will receive a financial whipping. Of its own accord, Carnival took the initiative to cancel a dozen cruises for a total of 30,000 customers to address the problems directly, which shows me they are taking this seriously, even if it is not enough for some.
But is the economy so bad that no one will travel?
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| Princess Balcony |
As I look around at many people, they also find themselves seemingly inexplicably better off than they were in the year 2000, despite the problems of international treasuries. (By the way, do you remember all the fear about Y2K disasters that turned out to be a bit overblown, to say the least?) Mark Zuckerberg, who dropped out of college and became a billionaire building a social networking website called facebook, is obviously not typical. Many other individuals, however, came out of school and started careers, switched to new fields that may not have even existed 20 years ago, changed jobs for more lucrative benefits, earned promotions or ever larger commissions, moved through a life cycle from spending most of their money on their children to being empty nesters with lots of disposable income....you get the idea. While the news focuses on tales of woe, people happily making their lives work don't get a lot of press.
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| St. John |
For some reason, most of us still yap about some perceived disaster at bay and find pessimism despite living in the best of times within our personal environs. The latest banking crisis in Cyprus, which many people would have trouble finding on a map, has brought concerns for the well off: where can they put their money, if government could begin taxing savings accounts as proposed in Cyprus? Some are seriously considering
alternatives to government backed currencies. As I said when I heard about one such scheme, I wouldn't mind being the person minting a new currency, because whoever does would be as rich as
Croesus, King of Lydia, an otherwise historically insignificant country where coinage is said to have been invented. I personally find the American dollar as safe as anything, even if it might be subject to the erosion of inflation and taxation. I doubt any withdrawal I made would cause a crisis among international treasturies anyway. In the end, money is simply a medium of exchange, to make it easier to trade our services.
We should have empathy for those struggling through hard times, and most of us don't have a problem with the government stepping in to provide temporary help to lift them back to their feet. But in the USA, we don't have a class system where anyone should accept less than they are capable of achieving, and no one should accept being labeled as permanently "poor."
The way to really help everyone is to grow the economy by pursuing our personal best interests so that the
invisible hand of capitalism creates more opportunities for those in need.
Getting back to the topic of this blog, if you have the means and desire to travel, there are wonderful opportunities right now to explore the world. Not only will you live your dreams, increasing your happiness and health, but you will help propel the world forward into greater prosperity.
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