“Our clients come to us for advice on how to protect their future. We take that level of trust very seriously.”
- Dan Junkin

We've Been Here Before - Second Quarter, 2008

Dan Junkin

Today’s economic and investment circumstances seem — well — pretty scary.

Contractions in the recent past have seemed to be driven by a single issue — the oil crisis in the 1970's, the savings and loan debacle, the Asian Contagion, the high tech bubble and bust.  The current one just seems to pile up daunting challenges. 

It all seemed to get going with the housing decline and sub-prime borrowing.  Then it spread to the big commercial and investment banks.  From there it has infected consumers — due to the loss of value of their housing.  And finally, we have rising oil prices jumping into the melee.  It almost doesn’t seem like a fair fight.

However, if we stop and review those earlier single-issue confrontations — the truth is that they too involved many complicated issues.  The earlier rise in energy prices led to inflation and a slowing economy.  The savings and loan debacle seriously impacted housing values.  The problems in Asia and Russia threatened our credit markets.  The high tech bust directly affected commercial real estate.

We have been here before – that is the point.  We are not facing the end of Western Civilization or another great depression or — in all likelihood — a serious recession.  The rising cost of oil will encourage conservation and innovation.  The retrenchment of the sub-prime and related debt will allow us to work off excess debt our society had built up.   The Federal Reserve has taken a variety of helpful steps which will ultimately aid in encouraging the economy.  There are some signs the worst of the housing collapse is behind us.  Some early signs in the stock market (for example, a recent surge in small cap stock performance) have often signaled a turn for the better is not far off.

None of this is meant to say we are not facing a serious situation.  However, our citizens, our investors, our structures have faced times like these in the past with ingenuity, perseverance and innovation and we have grown stronger in the process.  It will happen again this time.

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