That Feeling in the Pit of Your Stomach

Negative Gs - like riding a roller coaster or a down elevator in a tall building is the feeling I am talking about. You know, like the stock market since last Thursday. Whew! What a ride! Before assuming that our economy is launching off an aircraft carrier without an airplane, let's consider some basics.

First, corporate profits have been pretty decent. This show how resilient the American economic engine is despite the best efforts of politicians to put sand in the gas tank and strip it for parts. American corporations have been selling their products to the world and the world has been buying. Corporations are not doing much hiring because of tax and healthcare uncertainties, but those can be removed when the Obama Administration departs in early 2013. The economy will perform given half a chance.

Secondly, as big a jolt as the last few days has been, it was probably necessary for the political class to snap out of its lethargy regarding reform of the entire government financial system.  The Democrats are still trying to spin things - the Tea Party for crying out loud. As I heard on the radio yesterday, that's like trying to blame Paul Revere for the American Revolution! We would not have had a conversation on our monstrous debt had it not been for the insistence of the Tea Party, which is precisely why the Democrats are so mad. They yearn for the days of old recently past where debt ceiling limitations were passed with no debate and the spending party merrily continued on its way. Sorry folks - this is the hangover part and getting rid of it is going to be a painful process.

Finally, I have faith that the American people are tougher and more disciplined than they have shown for awhile. It is undeniable that as a country we have become soft, whiny, and selfish from our long bout with consumerism. We have elected leaders who promise to "give" us more trinkets, i.e. - "free" medical care, student loans, etc. That said, the American people have reacted faster and more effectively than the government in getting their personal financial houses in order. There seems to be fairly widespread resolve that we need to do what is necessary to fix the system, even knowing that it is going to require sacrifice on everybody's part. Clearly, the people are ahead of their political leaders in this regard.

So don't abandon hope - we're going to come out of this hard time stronger and better for it. We do need to get serious abut things, just like our grandparents did in the Great Depression and our parents did in WWII, but let's get it done and leave a better country for our children.

finance.townhall.com/columnists/larrykudlow/2011/08/09/no_time_to_panic