It’s the War, Stupid.

The economy is just a symptom of the general malaise in the U.S.

Since markets are to a great extent driven by emotion, the war, the political mess in Washington, and the coming election are the reasons our economic engine has slowed…we’re all, in the words of the Oracle, “waiting for something.”

As with the Internet bubble, Americans went out and took risks, this time on housing. The American can-do spirit means we’ll fall for just about any reason to get excited and start taking risks. The collapse of the housing market and the sub-prime loan mess has given us all pause…now it seems we’re just waiting for a reason to start taking risks again.

The Iraq war, a conflict that has now out-lasted any other conflict in our short history, has droned on and on with no end in sight. While wars usually create an economic spark, that can only last so long. The inability for Congress to get much done (but plenty of time to focus on baseball and steroids) shows just how dysfunctional our political leadership is right now.

So here we are, waiting around, keeping our money safely tucked in our mattresses, hoping for change in the Fall.

Rothschild is quoted as saying “buy when there’s blood on the streets,” but I believe only those willing to take enormous risks will follow such advice. Families with kids, a mortgage, car loans, and college expenses can’t afford such ultra-risky behavior. It’s up to the rest of us to crank up the economic engine.

I’ve been talking about a “green” bubble for a couple of years now. More on that next.

This entry was posted on 12 April 2008 at 15:49 and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response or trackback from your own site.

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