Happy Days Are Here Again:
by Jeffrey A. Tucker
Joy to the World, the market has started to crash again. It was a tough time, that previous week, when the market gained back some of its previous beautiful losses. It was painful to watch the remnant of bulls crow, and see bears inching gingerly back to their caves.
The press subtlety shifted away from its thrilling apocalyptic tone — with the inevitable warnings of the coming Great Depression — back again to the same insufferable nonsense about how recovery is just around the corner. We've been hearing that since April 2001!
Ah, but what a gift this week has been: nearly all bad news. We've got a bit of a way to go before the Dow reaches its previous post 9-11 lows, but there's every reason to be optimistic. Just look at these losses for the Fortune E-50! Fabulous.
And don't you just love the excuses? "Discouraging data sinks stocks" — as if a press release and not fundamentals are to blame. Maybe if we got rid of economic data, the stock market would rise forever! Even now, the partisans of the bull market have so much to learn.
Now, the last time I wrote this, people said this point of view is perverse. Why be happy when nearly everyone heavily invested and holding stocks is sad right now? The simple answer is that the appearance of prosperity and its reality do not always coincide, and when you have to choose, reality is better.
Imagine you have a friend who, you discover, in the course of one weekend has painted his house inside and out, written a novel, and ran a marathon. You might marvel at his productivity! May it continue forever. Imagine what this man will achieve in a week, a year, a lifetime!
But let's say you then discover that he has been on heavy doses of narcotics, speed, and is nearly to the point of exhaustion and actually endangering his life? If you care about him, you have to hope that his "productivity" comes to an abrupt halt and that he enters a de-tox program.
Those of us who are celebrating the bust are essentially celebrating the druggie who has finally entered de-tox, the drug being Federal Reserve money creation.
Yes, it's lovely to see P/E ratios start to normalize. It's pure pleasure to see unviable businesses go bust. Business is learning the rule: enterprise does not exist on rising stock prices alone!
There's another self interested reason to cheer the bust. Unless you just have impeccable insight, it is very likely that those of us who are completely out of the market now and into cash missed a good part of the run up in the late 1990s.
Do you know how much we suffered? Our spouses, parents, and in-laws began to question our sanity. We have the answers to all the problems in the world, but when it comes to the bottom line — our bank accounts — we were missing the greatest stock run up of all time. Maybe we ought to just shut up for a while, people secretly thought.
So long as stocks were rising, there seemed to be no good reason to complain about the government, or to grouse about US foreign and domestic policy, as we do constantly. "What do you want?," they would demand. "I'm going to retire a multimillionaire! Your politics are just a rationalization for your being such a loser!"
Even loved ones began to wonder whether it is true what people say: we are fuddy-duddies adhering to outmoded theories of economics that have no application in an Age of Information.
It was so bad there for awhile that we began to treat our portfolios as our Dark Secret. We dreaded someone asking about it. When the subject did turn to the markets, we were one-note sambas: this can't last! And the refrain would go out: "that's what you've been saying for 10 years!"
When everyone else watched the Nightly Business Report, we watched sit-com reruns. Everyone else made CNN Money his homepage, we clung to LewRockwell.com. Sometimes we considered going into the market, but it seemed almost like going over to the Dark Side. We didn't! Ok, so we haven't made any money. Who cares. We still own what we earned.
These are our glory days. The bull market was our Purgatory but now is our Heaven. We worry that this surely cannot last — what if the Fed is able to gin up the market again, what if the suckers began to control Wall Street again, what if (shudder) the bad has been washed out and we are poised for another runup?
We cannot know the future. All we know is that we are happier now than we've been in years. Enjoy the blessed bust, so long as it lasts, and may it last as long as necessary.
August 3, 2002
Jeffrey Tucker [send him mail] is editorial vp at the Mises Institute.
Copyright © 2002 by LewRockwell.com
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