Uncertainty and the Bear Market

By Edwin L. Young, PhD

Let’s say that I am a Day-trader.  Now, I am exploring the market and the following few sectors and, first, I look into oil corporations and ancillary or supportive industries such as manufacturing pipelines and transports, including shipping and ports dependent on oil, drill manufacturers, refineries, and chemical companies using oil derivatives; next I  look into housing, real estate, construction, materials manufacturing, lumber and metal and plastics, and land developers; then into automotive, auto parts, dealers, rubber, glass, factory machinery, mechanics, service stations; next into healthcare, pharmaceuticals, information technology, medical instruments; then insurance, health insurance, managed care administration, fund investment brokers; next into energy, coal, nuclear, copper, and electric energy grids; then into wars in the Middle East which could rapidly scale down and end, military contracts with major corporations would dry up, labor supply would burgeon; next into gun control, if it should succeed, and control of international weapons sales could succeed be interdicted thereby shriveling the gun manufacturing industry;  next the war on drugs could be won by wiping out the poppy fields of Afghanistan, Columbia, and other countries, and the DEA and FBI might arrest the implicated bankers and thereby close down the US billion dollar capitalization of drug cartel lords, while addictive drugs like marijuana could be decriminalized and prison populations would wither to a small percentage of the present and those costs would dwindle, while a new industry of care for the addicted would burgeon; next the migrant worker problem might be solved while simultaneously solving the porous border problem thereby adding to the increase in a non-blackmailed labor supply and these factors, along with returning war veterans, would cause a resultant drop in wages; finally, I look at giant agri-businesses and their GMO patents which could be outlawed and the food processing-production-distribution mergers of giant agri-business could be dissolved and outlawed and small farming that returns to natural produce raising techniques would once again be revived, on and on.

            Everywhere I look, I find that enormous changes such as those above are about to take place.  Oil may and should be replaced with solar, hydrogen, and wind.  Autos will be transformed with hydrogen-electric motors.  Healthcare may change to a universal, single payer system in spite of enormous efforts by lobbyists to prevent this.  Pharmaceuticals may change to competitive bidding.  Stem cell research could eliminate the need for a vast number of the most profitable pharmaceuticals and dramatically reduce long-term, exacting healthcare and institutionalized nursing costs.  Big banks may be nationalized and their services trimmed to eliminate both speculation in hedge funds and reduction of risk by dispersing into derivatives that avoid accountability.  Big business and corporations might no longer have to fund healthcare insurance and even pension funds could be transferred to something like a universal social security system, therefore dramatically reducing their costs to corporations and security to workers.  The need for stockbrokers would diminish, once again, as was the case with the information revolution and internet trading,.  These are just a few of the changes America faces from the near future and on into the next two decades.  Each of these, and the many I have passed over in respect for brevity, will be accompanied with vast and interconnected changes in all of the interrelated ancillary and supportive industries.  There will be vast redistribution of money throughout the economy.  There will be vast dislocations and redistribution of the work force.  New types of occupations will spring up and old ones will fade.  Such dramatic shifts have occurred before but perhaps never to such magnitude nor with such uncertainty about what the future will look like.

The seemingly, deficiently educated soothsayers on CNBC and their self-serving, market maven, invited experts on the Stock market and on the Economy are obviously playing their jingle-jangle comments, analyses, and predictions to an unsophisticated and unwary investor audience.  Assuming that I may be at least partially correct in my economic diagnosis, and still assuming that I am a Day-trader, would I not be riddled with uncertainty at every click of my mouse.  Would not my being in this dire condition greatly retard my inclination to choose to invest in any stock in any sector of the economy.  Rather, would I not be a fool not to take a very intransigent, very long, wait-and-see approach?  Would you not serve prospective investors better by tamping down your superficial analyses and explanations and your pseudo predictions of market behavior.

Finally, would explaining to the public the vast complexity of the changes to the economy that are in the offing and the impossibility of attaining any semblance of certainty for the foreseeable future be a better way to serve your audience?

Humbly and Sincerely, I submit my question,

Edwin L. Young, PhD (non-economist and non-trader)