I was listening to a news commentary on PBS last night and the discussion revolved around the state of the economy, 8 to 9% unemployment and the housing and financial mess that we continue to face. All agreed that these are indeed tough times. However, one of the guests reminded the others that tough times are not new and that over time we have always worked our way through seemingly impossible situations.
She took the conversation back to the year of 1980 when a guy by the name of Paul Volcker was in charge of the Fed. In an attempt to control rampant inflation, Mr. Volcker hiked the prime interest rate to a staggering 21%. I remember feeling fortunate to have secured a 10 ¾% mortgage rate at the time. Unemployment that year was at 12%, and the Dow was at 800. Who would have dreamed then that we would be talking about a 10,000 Dow today, much less a 12,000 Dow? And for those of us old enough to remember, who can forget those horrible gas lines that were a result of turmoil in the Mideast? She was right. We have indeed faced tough times before, and we will work through them again.
Her view gave me pause, and I thought that perhaps there was reason for us to all be a little more optimistic as we celebrate the New Year.