10.13.08
After the crisis…
Do you think the United States will lose its position as the world’s financial superpower?
This was a question posted at CNN.com. It was very interesting to sit and consider, so this was my response.
With the growth around the world, losing our financial superpower status was inevitable and happened long ago. It isn’t a bad thing, it is just fate. In economics it is known as the Catch-up Effect. We can’t sit alone at the top forever, and it shouldn’t be our goal to do so.
In my opinion, this crisis has changed nothing with respect to our financial standing or leadership. We will always be a strong influence, but we don’t make all the rules or control everything. What is happening now is the economy resetting itself after a bubble burst, and it is entirely normal for the economy to do so. The economy cooling off after a hot run is a painful process where people lose money, which is why everyone is freaking out. When the process is complete, the market will be back to it’s normal levels where it -should- have been during the bubble.
Company’s that do bad business will (and probably deserve to) get hurt. The only difference now is that those businesses are financial and everyone is crying because they are watching their 401k’s disappear. While severely unfortunate, this is the nature of the stock market. You may gain big or lose big. It is the privilege we pay for. If you don’t want to lose your money, tuck it under the mattress, but realize retirement may not be very easy.
As a side note, this was posted as a comment and I found it highly amusing:
A Pledge for Our Times (2008)
I plead collusion to the fraud of the United Socialist States of Amnesia and to the recession for which it stands, one Notion under Debt, unforgiveable, with sub-primes and bailouts for All.