The Role of Fear in This Faltering Economy

Role of Reputation Professor Fear By: Danna Schneider

Our economy is definitely going through some “tough times”, as our President George Bush recently confirmed in a speech regarding the floundering economy of today.

A combination of factors have created a very volatile stock market, housing market, increasing inflation and cost of living, and a faltering job market, but one key component of a failing economy plays an intangible role in facilitating and perpetuating economic instability.

That component is human fear. We can’t help it, we’ve evolved with fear as one of our main emotions, and the media and our surroundings have only helped it along by declaring “the sky if falling” with it’s seemingly nonstop doomsday headlines.

Heck, you can’t read your email without seeing the headlines on the side declaring that we are headed for worse times before they get better, costs are skyrocketing, foreclosures are at an all time high, gas prices are astronomical, and basically that everything is working against us right now.

The sky looks very dim indeed if you tune in to the nightly news or happen to be bombarded with all this fearful journalism every day on the internet, which is an increasingly popular portal for getting the news. So, has the media played a part in our faltering economy, or is it really a combination of unfortunate factors, seemingly brought on by events beyond our control?

Well, most people feel the media is partly responsible for making things worse. Take the stock market for example. Fear is the stock market’s worst enemy. When consumer confidence in the economy is low and there are other headlines that are less than favorable in the financial, retail, and last but not least, housing sectors, the stock market suffers dramatic volatility.

In fact, one of the hardest hit in the subprime and credit fiasco, whom also was recently bailed out by the federal government and JP Morgan, another financial heavy, Bear Stearns, acknowledges that fear is it’s worst enemy. They insist that their financials are still intact, but rumors that were rampant about the company’s imminent collapse forced shares down to their lowest levels in almost eleven years.

Many financial institutions are experiencing nosedives in their stock prices, and have also slashed dividends to preserve working capital, a move that is said to create a domino effect in the banking industry where other banks follow suit. This only forces prices lower on stocks, and makes it harder for them, and consequently, the market, to recover.

Most financial analysts agree now that we are in a recession, but some are still reluctant to call that card, saying that a recession may still be averted, and that we are merely in an economic downturn. I for one, believe we are smack in the middle of a recession, and I believe that part of the reason for that is the fear that is being spread about the dire straits the US economy is in, and the sense of hopelessness conveyed by these doomsday headlines.

Fear perpetuates a sense of helplessness and “waiting it out”, as well as inspires investors to back their money out of stocks and other investments, and put them into cash accounts, which only puts us further into recession. For those that have iron stomachs, it’s actually a great time to be an investor, as there are some good, solid companies selling for well below their book values and their true worth right now.

That’s not to say there also aren’t a lot of stinkers too, but if you practice due diligence in researching their individual financials and balance sheets, you may be sitting pretty when this recession is over and the consumer confidence that is so key to a healthy economy has returned.

Current Issues with the Global Economy

Reputation Professor Current Issues By: dane

Though the housing bubble deflated about two years ago, its true effects are only now beginning to emerge. In late 2006, when the economy first began to show signs of weakness in the housing market, most economists predicted that a recession was very unlikely, and that any downturn in real estate prices would be localized and mild. In reality, a global downturn is now a real threat, with the final price of the credit crunch projected to exceed $1 trillion dollars.

Not only have falling house prices in the US spread to other markets abroad, they have contributed to massive losses in other areas of lending such as credit cards, and the financial industry, which is now reeling from the US government bailout of Bear Stearns. What does this mean for emerging economies like China and India? In the short term, volatility seems to be the order of the day, with India’s fledgling exchanges rocked by jittery investors. Until financial centers and investors can regain confidence, market conditions will be exaggerated. Early trading also plays a psychological role for investors, as news developments impact Asia before Wall Street opens.

The US and the UK both face difficult home pricing corrections which will continue to hamper growth. Most homeowners expect, if not to make a profit, not to sell their houses at a loss, which is a difficult pill to swallow. And if they can’t sell their homes for what they think they’re worth, then waiting it out contributes to prices falling, thus exacerbating the problem.

While government intervention has been exceptionally forthcoming in efforts to preserve confidence in financial markets, less attention has been given to homeowners who are being foreclosed on over the next year, which is only so low because of robust growth in Asia.

Another prospect which looms over every government is the specter of inflation, which threatens to overtake the slumping economy as the number one priority for the Federal Reserve and other central banks, who have had to take extreme action to prevent further liquidity losses. The Fed has sold off over $100 billion in auctions and lowered interest rates five times in an attempt to lower mortgage interest rates, but confidence will remain shaky until the full extent of investment bank’s sub-prime exposure is realized. Stuck between a rock and a hard place, central banks are taking decisive action in hopes that the economy will level out without pushing inflation to dangerous levels.

Reputation Professor Preserve at Mosquito Lagoon

Mosquito Lagoon from Reputation Professor

Mosquito Lagoon is part of the Indian River Lagoon system and the Atlantic Intracoastal Waterway. It extends from Ponce de León Inlet in Volusia County, Florida, to the north end of Merritt Island. It connects to the Indian River via the Haulover Canal. The Lagoon divides the city of New Smyrna Beach. It also runs next to the Canaveral National Seashore on Cape Canaveral and the Merritt Island National Wildlife Refuge. The Kennedy Space Center is located on the lagoon as well.

The Nature Conservancy is coordinating an oyster restoration project, developed by the University of Central Florida. The goal is to restore about 40 acres (160,000 m²) of oyster reef habitat within the Canaveral National Seashore.the Nature Conservancy - Indian River Lagoon.