Light at the End of the Tunnel?
Maybe it’s the Christmas season, but I’m beginning to have visions of recovery ahead. My internal plan is that life will be much brighter this summer. Many experts say that we’ll have to wait until at least 2010 for good times, but I don’t put too much stock in “experts” these days. Even if they are correct, I hope that just as I didn’t notice we were in recession in the first half of 2008, I may similarly be spared recognizing that we are in recession in the second half of 2009 if that ends up being the case.
Given the recently stable if not slightly increasing stock market of late, there are others are out there that agree with me. Our best leading indicator says a recovery ahead. Unfortunately, this prognostication comes from Wall Street now having all the credibility of Governor Blagojevich.
My next indicator is the political climate. We’ve lived with deficit spending for decades with few very brief exceptions. Between wars in Iraq and Afghanistan, the bank bailout, the automotive bailout and the upcoming Obama stimulus package, we have redefined the term “spending money like drunken sailors.” I’m nt complaining. While stimulus plans have not been proven to be terribly effective, the situation is bad. After what has happened to my portfolio, no amount of deficit spending is too much to straighten this mess out.
Obama is intent on making right a disaster that, politically, will be all to easy to pin on the Bush administration. So far it appears he will spare no expense in stimulating the economy until it moans with pleasure. That’s even before he starts trying to deliver campaign promises and paying back all the members of Congress that have been restrained by the other side for so long. The next couple of years will I’m sure prove to be a virtual spending orgy. Like military spending, you can’t spend that much money without hitting on something that works.
The Fed is now giving money away to banks. One can only assume that at some point it will dawn on the banks that lending that money and charging interest on it may make good business sense. If not that, the fear of the next administration coming down on them like a ton of bricks with regulations will.
Finally, I’m an optimist. The current recession will be 18 months old mid-year. That will make it long by historical standards. Perhaps enough human suffering to punish us for our excesses. We can then, as is our tradition, marshall on in a more measured and mature manner than we have….until once again we get caught up in our own success.
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