I've learned not to believe in America 365 days out of the year, and yet, the country always comes back.  This nation has an inherent resiliency that's the product of a skilled workforce, primacy in information technology and innovation across a broad spectrum of disciplines, from farming to industrial production. Caterpillar (nyse: CAT - news - people ) and Deere (nyse: DE - news - people ) sell plenty of tractors in China.  Our profligate consumerism defines the deep hole we've dug ourselves over the past five years. None of this is headline news. Nobody minds that consumers lived above their means and that we import nearly 10 million barrels of oil daily. The dollar has depreciated 40% relative to the euro in the past six years. Without dollar depreciation, U.S. exports turn uncompetitive. Boeing (nyse: BA - news - people ) would have a hard time outselling Airbus.  This means that we face a consumer spending contraction five years in the making. This comes on top of the disarray in credit markets. Together, it's too much stress for the economy to absorb readily.  Food inflation could stick around for a couple of years. The corn crop is questionable because of the flooding this spring in the Midwest. World inventories of grain remain on the low side. Corn futures escalated from $3 a bushel to $7.50 these past 12 months, but just corrected closer to $7.  Muscled multinationals like IBM (nyse: IBM - news - people ), Intel (nasdaq: INTC - news - people ), Cisco Systems (nasdaq: CSCO - news - people ), Coca-Cola (nyse: KO - news - people ) and a bevy of pharmacological giants, even Microsoft (nasdaq: MSFT - news - people ), Google (nasdaq: GOOG - news - people ) and Apple (nasdaq: AAPL - news - people ), wouldn't be so comfortable if the dollar appreciated meaningfully. These companies are the backbone of our stock market in market capitalization, dividend-paying capacity and innovation. They are the life blood of the earnings momentum which makes our securities markets tick.  Below the multinationals, the story script goes to black. Banks, brokerage houses, Fannie Mae (nyse: FNM - news - people ) and Freddie Mac (nyse: FRE - news - people ), General Motors (nyse: GM - news - people ) and Ford Motor (nyse: F - news - people ) are walking wounded, laden with shaky assets, skimpy net worths and overleveraged loan portfolios and investments. Almost every major financial house is making new lows, and Fannie and Freddie have gone over the rapids.  With at least 100 million gas-guzzling autos on the road, oil at $100 a barrel was bad enough, but $145 is intolerable. The survival of Ford, and certainly of GM, is in question. Only their profitable foreign subsidies save them. General Motors Acceptance (nyse: GMA - news - people ), now half owned by GM, is bleeding from home mortgages and rising delinquencies on auto paper, particularly trucks and SUVs, where resale values dropped thousands of dollars on average this spring.  The entire domestic airline industry is near moribund. Fuel accounted for 20% of operating costs less than two years ago. Today, it's 50%. Management can't ground 15-year-old 737s fast enough. The industry--with one or two exceptions--has enough working capital for only 12 more months of operations unless fuel comes down fast or revenue passenger miles hold up--an iffy scenario. US Airways (nyse: LCC - news - people ) stock ticks at two bucks and change, its option value as a going concern.  There's an old joke about Archie, a terrible cartoon character who finally goes to his reward. At the funeral service, there's nobody who cares to stand up and say a few good parting words about the deceased. After a long silence, a little guy rises up and whispers, "His brother was worse."  Since institutional memory is short, it's worth recalling the worst: 1981-1982. Paul Volcker, our Federal Reserve Board chairman, decided to rid the country of its inflationary excesses. GM, Ford and Chrysler had gone along with the United Auto Workers, granting union workers annual 8% pay raises. The country was turning uncompetitive. Toyota (nyse: TM - news - people ) and Honda (nyse: HMC - news - people ) rapidly gained market share. Periodically, the Teamsters threatened to shut down the country, and its unskilled muscle men earned princely wages.  Short-term interest rates rose to mid-teens levels. Fannie Mae was issuing five-year debentures yielding 15%, and the stock market roiled in total disarray, selling at book value and yielding 5.6%, but with few takers.  Volcker's medicine worked. General Electric (nyse: GE - news - people ) learned to substitute capital for labor and became the model for most industrials in the heartland: Caterpillar (nyse: CAT - news - people ), United Aircraft, Ingersoll-Rand (nyse: IR - news - people ) and their ilk.
The bear market is taking down sectors one by one, but we've seen this all before--and made money.