A Down Economy

Quote of the day:
“Na-na-na-na-na-na
na-na-na-na-na-na-
na-na-na-na-na-na-
na-na-na-na-na.”
--Wilson Pickett

It looks like retail sales at the end of the year were not as good as expected, though data will continue to trickle in for a while.

The Fed is saying it is ready to take some significant action to lower interest rates.

There are continuing reports that home sales and prices are both down.

It’s pretty clear that we’re in a bit of an economic slowing. If it worsens, some people will need some help, but most of us will be ok.

A lot of what is being measured is not actual decline but slowing growth. Where there is decline, the setback is not to the stone age. Rather, we are seeing numbers that were common a few months ago.

Real estate is an exception, at least here in San Diego. Prices are where they were about 3 years ago.

Still, most of us will be ok. That includes homeowners who bought a place to live at any time, including at the price peak.

Even if a homeowner who bought at the peak finds himself having to move, he should be just fine. Any loss in the value of his home should be matched by the lower price of his new home.

Real-estate investors who bought for the long term also will be ok.

The only folks at risk are speculators who expected continuous upward price movement and who therefore bought with the intention of selling in a few months or years. If they can’t live in their investments and don’t have the resources to wait a long time, they’re likely in trouble.

Speculators expect great reward and take great risk to go after it. We are seeing the downside of that risk right now, as we saw it in 2000 with day traders.

We don’t hear much about day traders anymore. Many of them were wiped out in 2000. Just as many amateur house flippers are being wiped out right now.