Is the economy really different this time?

Since I last updated my comments, the economy and the stock market have gotten worse. I hate to use technical economic jargon, but lately the stock market sucks.

Last week, the Dow Jones Index dipped below 11,000 for the first time in two years. The Standard & Poor's 500 Index, the best proxy for the overall stock market, is below its value when George W. Bush was inaugurated seven and a half years ago. This index hasn't had a negative return during a presidential administration since the Nixon/Ford era from 1968 to 1976 (also a time of war).

Today, Fannie Mae and Freddie Mac, government sponsored enterprises, publically traded companies which provide funds to mortgage lenders, needed loan assistance from the government (i.e. taxpayers). Official inflation numbers don't look too bad, but if you've bought gas or food lately you've got to wonder about the credibility of the government's statistics.

So, are things going to get better soon? I wish I knew. When you try to predict the future, the most likely scenario is one that resembles the past. If things really are different this time, what will the economic future be like? It's unlikely that you'll guess which will be the best thing to invest in (gold, Euros, cash, baseball cards)? I get freaked out from time to time, but always come back to believing that a well-diversified investment mix is the best strategy.

Last week, it felt like it was 180 degrees outside. You didn't want to breathe the smoky air, but there was no choice. It seemed like a deteriorating environmental apocalypse had started and might keep getting worse. Thankfully, it wasn't different this time. Today, it was a delightful Sacramento summer day. Will things ever be "normal" again in the economy? Let's hope so.