Lessons from the Credit Crisis

I once read a study that made a convincing argument based upon centuries of historical data that most economic progress is possible only when there are extended periods of domestic tranquility and stability. In other words, entrepreneurs, the lifeblood of any nation and the nascent seed of corporate giants, aren't going to set up shop if they are worried about car bombs blowing through the front windows of their bakery or cafe.

This same theory should hold true in individual households. You, of course, know it by a different name - consumer confidence. If people feel reasonably certain that their country is not going to go to war, that they will probably have a job now and in the future, and that the economic system is still functioning so that those who save, invest, and pay down their debts will prosper, they will buy houses, start businesses, send their kids to college, pick out a new wardrobe, take piano lessons, go out to dinner, and everything else that makes our global markets function. Continue Reading ...