This too — gulp — shall pass.
That may seem like little more than wishful thinking a day after the Dow Jones Industrial Average plunged nearly 500 points minutes into Tuesday’s session. Yes, the economic horizon is cloudy. But there are enough breaks in those clouds, especially in our corner of the country, to see some sunlight.
If you’re feeling financially panicked, consider:
— The Dow rallied more than 300 points Tuesday after losing more than 4 percent, closing with an easier-to-stomach loss of 1.1 percent.
— That rally was fueled by the Federal Reserve’s morning announcement that it was cutting a key interest rate by three-quarters of a percentage point, a bold move that followed steep losses this week in global financial markets and showed the Fed’s resolve to keep U.S. markets from spinning out of control.
— Congress and the White House appear close to agreeing on a plan to inject at least $150 billion into the economy, putting cash in the hands of people and businesses who will spend it quickly and give the economy a needed jolt.
— People are working. Boeing fueled tremendous job growth in Snohomish County last year, and as long as the 787 production schedule doesn’t slip a lot further, those good times should continue.
— Mortgage rates remain low, and Tuesday’s action by the Fed will likely keep a lid on them for the time being. That should help the local real estate market, which usually starts emerging from the winter doldrums in February or March. A strong housing sector creates jobs and boosts government revenues.
— If you regularly invest in a 401(k) or other retirement vehicle, remember that when stock prices fall, your money buys more shares. Then when stocks rebound, your balance grows faster. The time to pull out of stocks and stock mutual funds, most experts say, is not when the market has taken a tumble.
For now, it appears that panic is the greatest danger. Band-Aids are being applied, and they should help.
For the long term, there’s a simple lesson to be learned — again — if anyone’s paying attention: Excesses carry a price. Early this decade, it was the “irrational exhuberance” of the tech boom that quickly turned bust. This time, it was greed and a lack of oversight that combined to create the sub-prime mortgage crisis.
Alas, the lure of a seemingly free lunch remains hard to resist.
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