This morning I read a short article in the Detroit Free Press explaining that black bears are gradually moving south in Michigan. Historically, most of Michigan’s bears have been known to inhabit the Upper Peninsula and the northern tier of the Lower Peninsula but recent observations by the Michigan Department of Natural Resources have placed the large–and occasionally dangerous mammals–near the mid Michigan communities of South Haven and Hartford.
I also noticed another potential warning on MSN’s Money page. It explains that the current situation surrounding interest rates may eventually lead to a sudden dive in stock prices.
The article cites experts who compare the current situation with the one that existed in 1987. That summer, a gap developed between interest rates charged by banks to their clients to fund mortgages and others loans and the federal discount rate, the interest charged by the Federal Reserve on overnight loans to various banks. Eventually the gap became unsustainable, forcing the Fed to steeply raise the discount rate. The resulting jolt to the economy caused a sudden and steep fall off in the stock market, giving us the infamous crash of October, 1987. A recession followed over the next several years. Economists are now pointing to the current situation –principally the Fed’s rate policies–and drawing parallels to 1987. At today’s valuation, a stock market crash on par with the one 28 years ago would translate to a 4,000 points decline in the Dow 30 industrial index!
It’s often been said that when the nation catches an economic cold, Michigan contacts pneumonia. What most Americans now refer as the Great Recession started much earlier here in the Wolverine State. For several years the local joke was that we were mired in a “one state recession.”
As a long time booster of my hometown, Detroit, I shudder to think what yet another severe recession might mean to the Motor City. For the first time in decades, residential and retail developments are taking hold in the downtown and midtown areas. Hope is returning to a city which has long suffered from dashed hopes and defeated dreams.
Let’s hope that the warning proves to be a false alarm, and that the bears stay clear of southeast Michigan!