Saturday, December 27, 2008

Economy Disappears!

These days, when an update comes on about the latest economic indicators, I cringe before I even hear the broadcast. My Better Half usually advises me to just turn off the radio. It's a natural reaction I think, watching in horror as the economy flies by in the handbasket headed for hell. I am waiting for the day that hear: "it was another off day on Wall Street, with the Dow closing off 10 points, to -275."

There is an element of common sense here though that I think we're missing: in today's economy many of the things we used to pay for are free. Music? Ask any teenager where they get there music, and more often than not it'll be from free downloads. Content is free and getting freer on the internet. Adding insult to injury, noone needs to watch commercials anymore as TiVo lets us zoom through them without a glance. Video games can now be bought for pennies.

Hardware is not free of course, but when you consider the price declines we regularly see in those products, isn't it common sense that we arrive at a state of zero profitability?

Now we layer on top of that a complete lack of faith by the consumer, the engine of growth, and look what we get: a disappearing economy. Is it time to save coal for barter, time to buy a goat and secretly raise her in the backyard for milk? Don't buy bonds, yields will be negative. Stock? Short it of course.

It's a jarring time and a world of Catch-22s. Save your cash cuz you'll need it. But if you don't spend your hurting the economy. Time for a run, I've skipped too many days over this holiday.

6.3 miles in the slush, this one was slow....

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