Spreading Optimism

The US stock market (as well as markets in other parts of the world) is increasing in value. In other words, stocks generally are worth more this week than they were several weeks ago. We’ve heard that the reason is “rising optimism” over the state of the world’s economy. I have to admit that my optimism has been rising too as I hear more about the improvement in economic statistics and the generally encouraging predictions from economists.

It was much different last year, when we heard nothing but bad news and dire predictions about a potentially devastating economic downfall, with some experts warning of a new world depression that could rival the Great Depression of the 1930s. People back then were understandably frightened, especially when companies started filing for bankruptcy and workers were losing their jobs by the hundreds and thousands. The concrete evidence of financial problems was impossible to ignore. No one could deny that we were in dire straits.

Now that the general outlook has improved, it’s kind of nice to think that we could have turned the corner so quickly and are now headed back to good times, plentiful jobs, and a stable future. But wait, I’m listening right now to a report on the radio that the US government is once again considering a preemptive attack on Iran to foil its efforts to develop nuclear weapons. Should we do such a thing?

I know why we would, and I know why we shouldn’t. I’ve heard the arguments both for and against it. Is Iran developing nuclear weapons? Should we believe them if they say they are not? Should we believe the judgments of the CIA or other US agencies when they tell us that Iran is definitely on its way to developing nuclear weapons? What would happen if we would bomb Iran’s nuclear facilities? What would happen if we would not?

Dollar

An easier question to answer is this: What will happen to my stock portfolio if we should bomb Iran’s nuclear facilities? Go ahead, answer that question. I trust your judgment on this one.

When you think things are going along smoothly, and our worries about the economic downturn are over, just remember that the whole thing can be screwed up in a few minutes by an act that would create an atmosphere of spreading pessimism. Whether you think we should bomb Iran or not, be prepared for the resulting economic turmoil if we do.

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