Looking into the abyss of the financial crisis, there is opportunity long-term.  For now, we will have to become resilient and take cover as the economic headwinds gear up once again; for the greatest opportunities can only be revealed when you’re willing to look your greatest fears in the face and challenge them.   You can do this while protecting yourself.  But avoiding the issues or denying they exist is no way to live.  There you have pretty much read the gist of this entire post,  in case you’re short on time that is.  If not and you want to know more, read on.

Every once in a while it’s a good idea to take a step back from the daily grind of life and gain a more objective perspective on the world around you.  Over the past couple weeks I have done just that.  I had the opportunity to take several days off, enjoy a trip to the beach and listen, read and collect my thoughts.  Sometimes I have to remind myself that as much as I think I may know, the financial markets are the collective voice of the people.  The best you can do is to observe, listen and gain insight that leads to more effective decision making.  Right now a lot of people are attempting to guess what will happen next.  It’s frustrating for there is no precedent to where we are today. This is not a rerun of the 1930’s or Japan II.  If it were that simple, life would be predictable and it just never is.

No matter what we want to believe or no matter how strong our opinion, the markets are always right and telling us something.  I’ve noticed this tends to frustrate a lot of people, a lot of the time.  You can witness this when you hear people telling you what is definitely going to happen and how amazed they are that it hasn’t yet.  As we move further away from the immediate, things do become somewhat easier to predict.  This is because as the results and data become available they form trends.  But we live in a world of wanting to know everything yesterday.

Right now, it seems we are in the middle of the financial crisis whether we want to admit it or not.  Most of us aren’t used to this after witnessing 1980-2000.  Financial Stimulus can only “work” (prolong the inevitable) for so long.  What is the inevitable?  It may have crossed your mind that the amount of government intervention via bailouts has done little to help the employment picture.  After all, unemployment remains around 10%.  No matter what anyone is telling you, we are in for more fireworks.  No one or regime throughout history has ever been able to solve a debt crisis with more debt.

The “funny thing” is that as much as we want to bemoan Bernanke and the Federal Reserve, his and the Federal Reserve’s #1 mandate is and will remain to protect the banking system, not the U.S. Consumer.  If you understand this (why the Federal Reserve makes it’s decisions) you begin to understand a lot of what is happening in the capital markets and the pace things go. That is what is going on now.  But the Fed has it’s limits too.

The markets are sorting all of these things out, weighing the magnitude of the last few years and how this will effect the future in terms of Social Security, Medicare, pensions, stocks, real estate and more.  If you’ve noticed, there is somewhat of a calm feeling out there.  Sort of like everyone catching their collective breath.  And, that’s probably a good thing for we all only have so much energy in a given day.  But I do not think this will last too much longer.  What is “upon us” is not as simple as predicting inflation or deflation or at what date will things get back to “normal.”   We are going to be forced to make decisions.  That is what happens when you put things off and avoid making them in the first place.  And the more you put them off, the more they are forced upon you.

For now, it will be best to take care of your own affairs and not worry so much about the direction of the stock market or when to buy that new house.  There are things that are good and productive to focus on while this economic storm blows over.  In my upcoming posts, I will write more about these “non-market” ideas, for it is not good for the mind to focus on the negative day in and day out.

More importantly, you have got to see yourself as independent from all of this and become resilient as financial crisis’ create the most significant opportunities.  Do not fall asleep now when things are just getting interesting.

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