Economic mess:The true nature of the problem.

To understand the current economic mess, to understand any mess we must find out not just the all too clear apparent surface cause; but also all the major and minor causes of the mess. Also we must find out the exact extent of the mess; we must not let the herd mentality take over and create panic. It is in a situation like this when we are looking at the glass as more than half empty that we should realize that America's glass is still not empty and that the glass size is itself huge. In spite of the Govt.'s trillion dollar expenses the amount the Govt. is putting up is a small portion of the GDP. Also the Govt. is set to buy up portions of the companies. Didn't I hear that it is now time to buy stock as it is at the lowest? America is like the Titanic. America is not just one ship it is an armada of Ships. Even if one goes down there are plenty left. Also America has the ability to build many more ships. The main idea is that we keep cool by looking at the big picture and invest...

Notice how the stock market is driven by the herd mentality. Its activities are described in just black or white terms. It is always either a 'bull market' or a 'bear market'. It is fundamentally always driven by greed and euphoria or fear. What is required is that all those connected with the trading of stocks must be given a sound course in ethics and emotional intelligence.

You can compare the current financial mess with a hurricane. What do you do when a hurricane hits your neighbor hood? You leave for a safer place and come back when the disaster is over. More important each company stock is like a separate house. When a hurricane hits it destroys some houses and leaves some intact. Similarly you make sure your portfolio is as diverse as possible. So you loose some and you save some. When a hurricane hits you don't sell your house. Similarly when there is a big slide it is always because of panic and because every one wants to sell at the same time. So the stock slides faster and faster. If everyone left the stock alone then the slide will not happen. So you don't join the herd you wait it out. Never trade out of fear as fear is a -1 brain activity and fear will always result in -1 results. And when every one becomes afraid it becomes a disaster and the herd mentality kicks in. Then it becomes -1 results on a mass scale. So when you are in it be in it for the long haul. It will take time but the stock market will recover.

The stock market has gone this low because of real problems which have been exaggerated by the herd mentality. Just like water seeks its own level the American stocks will hit the rock solid foundations of the 13 trillion dollar economy and will sooner than later bounce right back up. So lets not panic and make the situation much worse than it actually is.

The fundamentals of the market are being dragged down due to fear. One must realize that no matter how bad the economy is it is still a 13 trillion dollar economy. If every one cools down and takes an objective assessment we will realize that the current situation requires some fundamental changes in the way stocks are assessed and traded as follows:
1) The PE value must never be allowed to be more times than a certain limit no matter how good the image of the company.
2) There must be a cut off line to how much the individual stock can be allowed to fall in a single day.
3) Each stock exchange must be closed for the day if the average falls below 250 points.
4) All complex calls and puts that the common man cannot understand must be banned.
5) All those caught in fraud transactions or misrepresenting company profits/financial health must be bared for life from the trade. Must be fined and must serve jail time.
6) There must be a salary cap for all top officials.
7) Bonuses must also have a cap.
8) There must be a ceiling on all back door bonuses like stock options for executives.

Every major firm must have an oversight office paid for by the gov. to watch the interests of the stock holders. I am no financial wizard but I know this that executives who are so well educated and who understand that they are in a position of public trust; they cannot be allowed to get away lightly when they betray this trust. All -2 and -1 behavior must be severely punished.