Conservative Viewpoints

"Government is not the solution…it is the problem" -Ronald Reagan

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Fiancial Crisis: Calm is what is needed now

Posted by Stephen on October 10, 2008

The sky is falling….and the people get it. What is needed now, however, is for common sense and historical precedence to supersede panic and hysteria.

Yes the market is tumbling as we live and breathe and yes the international markets are feeling the pains as well and are falling rapidly. Yet, the services people need, the mass majority of banks, and the security of our financial base are intact and in working order.

What does that mean?

It means that the sky is not falling. In fact, there are some signs to point to that suggest this is a panic based on the fall out we have been experiencing for some time. That is significant because it suggests that there are no new catalysts that have popped up to burden markets or main street.

It is important at this time to seek hints or suggestions that cast a light on what most are describing as bleak.

Today, a trio of financial giants have helped mitigate some of the losses: Bank of America (BAC: 20.77, +1.14, +5.80%), JPMorgan Chase (JPM: 39.06, +2.38, +6.48%) and Citigroup (C: 13.49, +0.56, +4.33%) NOTE: Figures are as of 10:15am.

President Bush is scheduled to make comments about the economy and ongoing financial crisis in a televised appearance at 10:25 a.m. EDT.

Wall Street will be paying attention to any hints of another financial rescue plan. A day after reports swirled about the government injecting capital directly into banks in exchange for equity stakes, The Wall Street Journal reported the government is considering even more extensive emergency action.

Europe is acting to stem the negative tide as well. Great Britain is expected to push officials at the emergency meeting of the Group of Seven on Friday to consider a plan similar to its move to guarantee $432 billion in bank debt.

The Journal is also reporting that leaders in Washington are also discussing a move to insure all U.S. bank deposits to prevent further runs on the bank that took down Wachovia (WB: 4.78, +1.18, +32.77%) and Washington Mutual (WM: 0.16, +0.00, +0.00%).

Ultimately, the majority of working people in America will not be adversely effected and should be able to recover from losses in 401K’s, 403B’s and other tax friendly retirement plans as long as they take a breath, steady their hands, and allow the economic forces to work as they have in the past.

Why do markets tumble? Because people sell their stocks, pull out of their 401K’s and dump their IRA’s. People run for the hills thinking it would be better to keep their money in a cookie jar rather than their ROTH IRA.

It is a time to take some solace in the fact that the market has a 100% success rate based on any ten year period in its history. That’s just the facts of the matter and people need facts to make rational decisions during such as irrational time.

Stephen Winslow is the executive editor of Conservative Viewpoints.


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