If you’ve been watching the news lately, the economy might look pretty shaky right now. The stock market is dropping, businesses are looking for government handouts, and the President is preaching doom and gloom for us all. It’s as if a buyer’s market has become a bad thing because golden parachutes for those at the top suddenly aren’t large enough to blot out the sun from the average man on the street.

No one can predict the future, but if I’ve learned one thing in my life, it’s that the future is rarely as ominous as people make it out to be. Here are 5 types of people that I’d really offer a free, hot cup of STFU to when it comes to listening to their views on what the economy is and isn’t.

1. People Who Freak Out Every Time The Stock Market Drops

If you’re a current retiree who has to sell shares from your retirement fund to make ends meet, you are allowed to freak out a little because the value of your retirement fund can have a direct effect on your lifestyle. Most people who I hear moaning and groaning the loudest about their funds dropping in value aren’t retirees, though. They’re generally people who are still buying into their retirement funds.

Why is it that people look at low prices as being a good thing everywhere that they shop except the stock market? How does that make sense? If you’re buying into your retirement fund, low prices are actually a good thing. Rule number one of how to make money in finance isn’t “buy high, sell higher”. It’s “buy low, sell high”. When stock prices are down, you should be giddily buying, not bitching that you can’t buy at a higher price. A low price means you can buy more shares and have a potentially higher profit margin when you sell those shares after you retire.

So, if you’re not currently retired, do us all a favor and stop sighing and complaining about how much you’ve “lost” in the stock market. The fact is, you haven’t lost anything until you sell at a lower price than you bought at. If you aren’t selling, then you aren’t losing. Got it? Now, get out there and start buying because there is a fire sale going on right now, and supplying a steady stream of coke and hookers to that retirement home in your golden years is not going to be cheap.

2. People Who Picket To Stop Foreclosures

I understand that things can go wrong in life, and if picketing is your way of using the media to refinance your mortgage, good for you for working the system. Between you and me though, let’s not pretend that it’s a mortgage company’s fault that you bit off more than you can chew. When you sign mortgage papers, they have a page that shows you your exact payment for the length of the loan. If that number is more than you can afford, or even close to what you can afford, you shouldn’t be buying the fucking house. Get something cheaper and fix it up, or wait until the market tanks and is full of dirt cheap properties.

The mortgage company didn’t trick you by pre-approving you for a bigger loan than you could afford. You’re not stupid. If a mortgage company told you that you could afford a $4.2 million dollar house, would you head over to Beverly Hills to start looking, or would you think they’re nuts and look for a house that fits into your budget? You look for one that fits in your budget. Trust me, I know what it’s like to go broke because of extenuating circumstances, but maintaining personal responsibility when the chips are down builds strength and character, which are getting harder and harder to find these days.

3. People Who Spread Fear

I’m not a Republican or a Democrat, and I see most of the antics of politicians as stupid theatrical tricks worthy of being ignored. When the President went on television and told the nation we were economically doomed, I got really irritated because there are a lot of smart people in the White House who know that the biggest thing an economy requires to move forward is consumer confidence. If you intentionally panic people (which is what I see as the intention of the message), then you undermine people’s confidence and drive the economy down.

If people are comfortable, they spend. If they are nervous, they spend less. If they are panicked, they spend nothing and start hoarding. That’s when you have bank runs that feed the panic and drive the economy under. For the President of the United States to act like there is a 700 billion dollar emergency ready take down the nation was a bad parlor trick whose only aim was to drive the economy into the ground. While there are a lot of motives for this, few are altruistic or in the interest of the common good.

4. People Who Want to Prop Up Failures

Purchasing a 700 billion dollar stake in companies that are failing was a ridiculous idea from the start and everyone knew it. Companies that make bad decisions should fail or be bought out by stronger companies. That’s how the free market economy works. If Congress comes to the rescue, then there is incentive for the companies to make the same mistake again because they will never pay the price for their mistakes.

But, without the bailout, loans will dry up! All the money in those Morgan Stanley funds will be gone I tell you! We’re doomed? AaAAaaAAaa! Ugh. Shut up and calm down. If you want to bet that the company that manages your retirement fund is going go out of business, then sell out, take the hit, and invest that money elsewhere. You’ll lose some of your money and retain your peace of mind. Then, a few years from now, you can look back and imagine all the money you would have made if you didn’t freak out and base a major financial decisions on raw fear. My feeling is that before a large company like Morgan Stanley starts to goes under, a larger company will step in and absorb them. All those accounts would move to the new company and everything will be business as usual under a new name.

If Morgan Stanley and other big companies end up in that situation because of an over reliance on mortgage backed securities, that’s tough. If I go throwing my money away at the casino, Morgan Stanley isn’t going to drop by and hand me wads of cash to cover my debts, so I ask them for the same consideration. If a company screws the pooch with some bad financial decisions, they can’t knock on the taxpayer’s door for a handout. That’s not the taxpayer’s responsibility in a free market economy.

5. People Who Forget History

Let’s have a quick history lesson. In the 1980’s, there were specialized banks called Savings & Loans that used deposit accounts to fund mortgages. Thanks to deregulation in the quest for profit, the S&L’s played around heavily in real estate speculation. They wrote out high risk loans to capitalize on the double digit interest rates (despite some of them being completely insolvent), and for a long time, the government pretended not to notice. When the frenzy came to a halt, there was not only a glut of real estate on the market, but a lot of people were simply walking away from their mortgages because they were paying so much more than their houses were worth.

The S&L’s went into a tailspin and not only bankrupt the FSLIC (a S&L version of the FDIC), but required a $125 billion bailout from taxpayers. In the middle of all this (1987), the stock market crashed the hardest since the Great Depression. Most people had to kill and eat their neighbors to survive because society came to a grinding halt. I, myself, had to fight in Thunderdome to get some much needed gasoline for my all-terrain death buggy. Wait, scratch that last part. My memory is a little fuzzy, so that may have been from a movie I saw. Actually, despite the state of the economy, people went on as usual, and those who went against the dark financial forecasts and sunk their money into a house after everything crashed made their money back a number of times over when the market corrected itself.

Conclusion

Yes, real estate is typically the single largest asset people own, so it can seem like it would be a major effect of the economy as a whole. In reality, it’s not as big as you’d think. Real Estate makes up less than 5% of GDP, so the economy is not going to grind to a halt if the housing market bottoms out. The most important factor in keeping the economy strong is consumer confidence and that starts with all of us. I’m not saying to stick your head into the sand and pretend that economic downturns don’t happen, but they can be weathered and profited from with the right strategies. To profit in any financial climate, all you have to do is see opportunity where others see fear, do the opposite of what everyone else is doing, and of course, “buy low, sell high”.

Posted in Money