Investing for hard times, not End Times

This is not the way the financial Armageddonites wanted to start the year.

A global stock market rally? Don't people know that an economic collapse is coming?

All over the Internet, the idea of imminent cataclysm is a popular read nowadays. The issue is not just recession or depression but The End of the U.S. economy as we know it.

Michael Panzner, a veteran Wall Street trader, operates the website Financial Armageddon. He has a book of the same title.

"No Cause for Optimism," reads the latest post on Panzner's site. It's about the employment outlook, but it might as well be about everything, from his standpoint.

On the Wall Street Journal's website the last few days, the most-viewed story was a piece about a Russian academic who believes that economic hardship in the U.S. will lead to civil war and the breakup of the nation in 2010.

California and other Western states will become part of China or under its influence, the professor asserts. The Northeast, he says, will want to join the European Union. Texas will go to Mexico.

Understandably, the events of 2008 just emboldened the financial Armageddonites. They were, after all, partly right: We lived through the worst banking crisis since the 1930s, which in turn triggered a severe recession and the worst stock losses also since the '30s.

Stocks have bounced since late November, but that's no assurance that this bear market is over. In December, an index of U.S. manufacturing activity plunged to its lowest level in 28 years, a report Friday showed. So the economy's cliff dive is continuing.

We know that the federal government is throwing trillions of dollars at the financial system and the economy, trying to make sure Great Depression II doesn't happen.

The Armageddonites say it won't work. More to the point, I think many of them don't want it to work.

Why? On The Times' Money & Co. blog, and on countless other investing and economic websites, many people who take the time to comment on the U.S. financial-system disaster see it as the inevitable comeuppance for the nation's borrow-and-spend mentality of the last 25 years.

Americans who didn't borrow to the hilt, didn't lease a new BMW every year, didn't live far beyond their means, are bitter about the friends, neighbors and family members who epitomized those excesses -- and who now want federal help, including via mortgage modifications, lower interest rates and jobless benefits.