Wednesday, October 8, 2008

What Goes Up, Must Come Down.

I am no economist, but being old I remember a couple of recessions.

Everyone is running around like chicken little. The stock markets around the world are dropping like a rock. But, weren't they incredibly overheated?

Hasn't everyone in the shipping industry been overworked for like the last 3 years? Not only were U.S. imports relatively strong, the exports went crazy. It has been at least 20 years since the U.S. export market has been so strong.

But now things are going to slow down. I think it's called a correction. I doubt we will go into a depression as people are claiming. I don't think those folks even know what a depression is. My parents lived through the depression and the Kansas dustbowl. Up until a few years ago my mother still saved aluminium foil.

Yes, there will be lay offs. Companies will go out of business, or be bought by others. Consumers will reducing their purchases, which will have a ripple effect through the world. This happened in the 70's, and 80's.

Everything is cyclical. I don't know why it's such a big surprise.

The good news is with the drop in demand, oil prices are already coming down. And with demand down in general, prices for commodities will also start coming down.

I expect the stock market will continue to drop. My guess is the Dow will get down below 8500 before it bottoms out. And, I am thinking the recession will go on for 3 years.

Good thing I am retired.

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