This is particularly true in profits, which have been boosted by unusually bullish factors such as falling interest rates, falling oil prices and big improvements in productivity. Accounting gimmicks also helped to bolster profits, and some of that is now getting undone. The beauty of our free and flexible economic system is that the checks and balances seem to be in place, and some good things are already happening in the economy. Monetary policy has changed with the interest rate cuts made this year and more cuts are probably on the way. Fiscal policy will change too as tax cuts are likely to happen.
Politicians are fully aware of the risks and want to turn the economy around.
Federal Reserve Chairman Alan Greenspan is also working to lessen the fear with his comments. Moreover, lower interest rates are stimulating the housing market, and safety nets are in place in terms of consumption. Consumers are still spending and that accounts for around two-thirds of the U.S. economy. Our unemployment rate is very low because our work force is not stratified and offers a lot of mobility. In addition, the nation s competitive position remains very strong.