Good Economic News From High Places
I’m feeling better about the economy these days. While I hesitate to read too much into one good week on Wall Street, I do take solace in a couple of encouraging events that suggest there is more good news to come. First, a couple of takeovers in the pharmaceutical industry. In addition, Berkshire Hathaway announced that they were resuming takeover analyses adding that opportunities abound.
Stocks are now selling at pennies on the dollar having given back over a decade of gains. If that isn’t enough to attract massive inflows of capital to all but those that think the world is in fact coming to an end, the prospect of a market on takeover steroids and M&A growth hormones certainly will. Ben Bernanke said the most important thing for the recovery today is the stabilization and health of the financial sector. A stock market with a renewed pulse will increase the likelihood of opportunities for much needed non-governmental equity infusions into our beleaguered banks.
Speaking of Chairman Bernanke, he said this evening on 60 Minutes that he saw the economy reaching bottom and stabilizing in 2009 with a recovery in 2010. I have two important takeaways from that comment. First, assuming the Chairman is being appropriately conservative for an individual in high office, I feel good about my earlier prognostication that a recovery would begin this summer. Second, since we have nothing to fear, but fear itself, perhaps Mr. Bernanke’s somewhat optimistic assessment might encourage others in high office to start leading and stop talking down the market and perpetually covering their own reputations by referring to the mess they inherited. Bravo Ben!
He was even so bold as to say this was not the next depression. If we could fine every half wit each time they paralleled today’s economy to the Great Depression one dollar, we could fund the well deserved bonuses to the AIG executives. Speaking of which, why are we putting our honorable military personnel in harms way when we have highly compensated AIG and Merrill Lynch executives. Why don’t we air drop them into Tora Bora and tell them to flush out the Taliban for us using their incredible cunning and instinct.
There was one more tidbit I heard on Bloomberg late one night last week. An analyst in Japan referred to the same phenomenon I mentioned in my last post regarding the consumer leading us out of the recession. He used the term “austerity fatigue”. That is the insatiable human desire to spend money and how after a period of time, the most cost conscious, fiscally conservative and self disciplined individual will burst if they don’t spend money frivolously. If this is true of the most disciplined people on the face of the Earth just think what will happen in the most undisciplined most self indulgent country in the world.
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