Americans are responding to the market basically in two ways; fear and confusion. This article from Bloomberg touches on how the everyday Joe is reacting to all of the chaotic news.
The sounds of Lawrence Olivier's panic stricken voice from the Marathon Man seems to resonate appropriately; "Is it safe?" Americans are calling their banks, their financial advisors and their friends worried whether or not their money will be gone tomorrow. It is a geniune concern.
Many of today's baby-boomers apply the financial advice from their elders who suffered through Great Depression. They heard the horror stories of banks running dry and saving accounts being annihilated. We remind ourselves almost ceremoniously every Christmas when we watch It's A Wonderful Life.
The federal government is trying to get as much screen time on the televisions to tell people, "Yes, it is safe."
But we don't necessarily believe them. They were the ones who said Fannie Mae and Freddie Mac were fine and only Bear Stearns needed to be saved. The federal government's treasury division is designed to sell one thing; confidence. Americans are doubting Thomas'.
Reading the Bloomberg article puts into perspective how dubious the typical financial education is of an average American. In response to the crises, people are choosing to go to the dollar store. Other's are liquidating their cash and burying it in their yards. Others are starting to buy generic goods instead of name-brand. The confusion around the subject is daunting.
Which illustrates that opportunities, big opportunities, are on the horizon.
Today's mortgage meltdown is almost a play-by-play re-enactment of what happened in the 1980's. Back then, mortgages became easy to attain, people who shouldn't have gotten loans did, and the impending results decimated the Savings and Loans enterprises. Americans paid the bills and property prices plummeted.
But they came back.
And herein lies the lesson. While greed drives the market, fear slams on the brakes. Fear is on the rise, but greed will come back. The question is, while property prices decrease, are you going to be brave enough to start investing when everyone else is getting out?
-Beasley
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