Monday, the House voted down the bailout to the financial markets.  The reasons for this down vote are many, more than I will address here.  What must be addressed is that there is now a crisis that has not been faced in this country, indeed in this world, in generations.

I have long been of the opinion that the market will take care of itself.  However, there has been too much interference by politicos on both sides of the aisle to allow the market to correct itself on its own in a relatively short amount of time.  Apparently, the House will address the bailout later this week and vote again, and this time it should pass.  Why then and not Monday?

On Monday, the stock market tanked with a 777 point loss.  That translated to a net loss of $1 TRILLION dollars.  Now some may say that it serves the "big corporations" right for sticking it to the little guys, but what most people don't understand, or refuse to understand, is that they are all dependent on the financial well being of those big corporations.  Most of us have some sort of retirement account through our employers (yes I know there are exceptions), the every popular 401(k) accounts.  Well, how do those make money?  How do they grow so that when you and I retire, we will be able to draw from them?  Simple answer:  they are invested in the stock market.  So yesterday, $1 TRILLION was lost, some of that was my money, some of that was your money.

That is why the bailout will be approved later this week.  People should wake up and realize that this crisis has gone beyond the norm.  They also need to realize that the bailout does NOT fix the problem.  The market needs to be allowed to fix itself.  This bailout will be a stop gap that should give the market a chance to correct itself.  What everyone needs to understand is that the correction will not happen overnight.  It will still take time for the problems areas to clear themselves.  How long will that take?  Who knows?  Personally, I feel that the next several years will give us a slower economy. 

What will make this all work, is for everyone to stop looking in the short term, here I am using short term to mean less than two years.  This correction will take some time.  We have to allow this to proceed in its own time.  Overall, our economy is still strong; just look at the past.  If you plot the growth of our economy, it continues to rise over time.   Look closely at that plot and you will notice that the line is jagged, and for every "jag" up there is a "jag" down.  Every one of those down "jags" is an economic slowdown of some sort.  It has to happen; it is what makes the market grow.  An illustration of how this works can be seen in power lifting. In that sport the competitor lifts a weighted bar to shoulder height. At that point, the competitor readjusts hand and foot placement to carry the bar over their head. That is where we are now, the shoulder height. 

Let’s allow the market the time to correct. Let’s give it the tools it will need. And most importantly, let it happen without interference from people who don’t know what they are talking about.

How will this play out? Haven’t got a clue. What I do know is that the market will improve and the economy will continue to grow.