Features

NEW YORK — Christmas came early for investors in 2000. It came in March, as a matter of fact. Stocks were rising, confidence was soaring, homebuilders and carmakers couldn’t keep up with the demand. 

People exuded the spirit of the season. No gift for the family was too expensive – a cruise, a vacation house, trip to a theme park, a week of skiing – and you could always borrow the money and pay back later. 

What a wonderful discovery the wealth effect was. You didn’t have to worry about your future because your stocks and your home equity were making you richer every day in spite of your efforts to spend more. 

You could feel the vibrations of exuberance, of confidence in the future. Confidence breeds confidence, it was explained, just as a rapidly rising stock generates even more momentum. The evidence was there. 

The experts agreed: Materialism was great, even if occasionally it might mean overlooking a minor value or two. At no time in recent economic history were more experts giving their expert opinion that the economy would continue to boom, stocks rise and inflation behave. 

You really couldn’t blame Santa Claus for misreading the calendar. Besides, people were telling him that Christmas wasn’t just for December anymore. Get with it, they told him, this is new new Millennium. 

Just then, as ordinary people and experts prepared for a summer of fun, the cold winds of reality swept down upon the marketplace and stripped away its pretentions and revealed it as a pompous phony. 

The reality is still hard to grasp – the Nasdaq is down about 50 percent from its March high, while the broader Standard & Poor’s 500 is off by 15 percent or so. 

The housing price rise has slowed, cars are being cleared from lots by discounts and rebates, inflation has infected some areas of the economy, dot-coms are failing, consumer confidence is down four straight months. 

More subtly, the economic commentary that never ends, only recently illustrated with positive observations and opinions, is now filled with negative items, making things appear even worse than they are. 

There is no recession, but there are plenty of forecasts of such. The New Economy still exists, but you might have the impression is has gone puff. Jobs are still plentiful, and wages and benefits are actually creeping up. Though weakening, profits are still being made. 

You don’t have to look hard to find comments about getting coal in your stocking, but if you do look hard you can spy the glimmer of gold in the future. Confidence may be down, but it can quickly rebound. 

A great deal of what’s wrong about the economy has been made right, even if not totally. If need be, Alan Greenspan, the Federal Reserve grinch, may turn gracious and inject new vitality into the economy. 

The slowdown could worsen, but it isn’t yet at recession level; the expansion continues, but at a slower rate. Americans are more realistic and smarter about possibilities than they were in March. 

And they are likely to be far more inclined to do their homework, understand their own finances, and assume personal responsibility instead of taking the word of those whose shingle declares they are “expert.” 

Reality beats the dreamworld at Christmas, when hopes converge with the emergence of a new day. 

John Cunniff is a business writer for The Associated Press.