The Good Thing About Economic Crises...

It is another sideways day for the Dow today as it continues to trade atop its 30 days moving average, reinforcing the intermediate neutral trend that it is in now (see my post yesterday). I would expect a short pullback soon but remaining within the framework of the intermediate neutral trend.

Well, since everyone's talking about how evil economic crises are, let me shade a different light about how economic crises are good and necessary. As an economy grows, the economy gets filled with all kinds of newer, more competitive, more innovative and more competitively priced products and companies. Because demand is strong in a heated economy, less competitive companies with their less efficient and more expensive products continue to make a living albeit at a much slower pace. However, it comes a time when an inevitable economic crisis hits and these less efficient, less competitive, old tech companies face tremendous pressure as consumers get clever about the way they spend money and then BAM, these companies close down, resources get distributed to more competitive firms, workers move to more competitive factories producing more competitive products and eventually, consumers get more of the better things in life. In this sense, economic crises are like the sinkhole of the economy where every once in a while, it clears out the trash and makes the economy even better after that. In this sense, I really don't see why those old tech, less competitive companies who are already having problems with the competition before the crisis begun are being helped by the government to continue their less effective products and ways. Yes, short term unemployment will result with their close down as these companies tend to be quite big but once these workers find employment in better and more competitive firms, they will be better assured of employment security going into the future. Think about it. Some pain are necessary, avoiding them turns progress backwards.