henny penny

The sun is going down. Just like last night, and all the others before it. In fact, that is kind of the definition for "night". Tomorrow the sun will come up. In fact, I'm planning on it. I'd set my alarm if I didn't have a 11-week old who makes my schedule for me.

What if the sun doesn't come up? What then? I'm not sure it matters. We'll all be frozen in place soon enough.

Today the DJIA closed at 7,552. Over a decade of growth wiped out. The Dow first opened over 7,500 on June 10, 1997. The sky is falling. The sun is setting. The world is ending.

But it's not.

I happen to believe the economy doesn't make us. We make it. Don't get me wrong, it's a WHOLE lot bigger than any of us. But our aggregate power is profound. After all without us there is no economy. But it all seems so complicated. And so dangerous. And so dramatic.

In it's simplest pieces, economics isn't so complicated.

• I want something you have and we negotiate a price. A bunch of us want it and you have the only one, you'll get more for it. I want one and you and a bunch of other people have them, I'll pay less. Extrapolate from there.

• A dollar today is worth more to me than a dollar tomorrow. Extrapolate from there.

• I know how to combine things into a new thing. That new thing may be worth more to someone than it cost me to make. Extrapolate from there.

When I think about how our economy pieces together in all its profound intricacies (think sub-prime mortgage crisis and the derivatives of derivatives), I can't get past one fundamental truth: how we act as individuals defines the market. It's all about individual action. And we all act based on our personal confidence.

I play golf. Maybe too much. I'm pretty good. The ball often goes where I want it to. But here's what I know: if I tell myself what not to do, I almost always do it. When I lack confidence, my performance always suffers.

Right now, in our economy, we are assuredly in the midst of a recession. Now there's talk of deflation and there's talk of a depression or even a Depression. But the only thing I see for certain is that we're in the midst of a profound national psychological economic depression. The overwhelming majority of us have never felt this way before. It's scary and it hurts. We have lost ALL our confidence.

Many kids are scared of the dark. Monsters in closets or under the bed. Mysterious noises. Lying alone with nothing but vivid imagination and no concrete sensory input. At night, in bed, the answer is sleep. Wake up in the morning and sun is up.

In our economy, though, we can't afford a national slumber. No napping through the scary parts. The sky isn't falling. It's just night-time. Our economy cycles, and while policy can certainly impact the amplitude of the cycle, it's always going to cycle.

The economic sun will come up. We will hit a bottom. We will see growth return. Our retirement accounts will re-fill.

So what do we do in the meantime? Let's act the way that makes things best. Be brave. Take a flashlight under the covers and do what you can to improve.

• Spend more time with family and friends
  
• Spend more time improving your community
  
• Don't stop spending all together - stop spending poorly
  
• Support local businesses
  
• Give time instead of presents

In the end, if the economy doesn't come cycling back toward us it's as if the sun didn't rise: we'll all be frozen in place.

Why act like that now?