The Good News, and the Bad News
The good news is so obvious that half of the stories in the media are completely missing the point:
We have likely avoided global economic oblivion. The Republicans, who are largely at fault for this horrible experience, have been incessantly whining about spending, self-dealing, and anything else their focus groups can come up with: how truly ignorant, and dangerous to the world.
We, the world, owe a debt of gratitude: first, to Ben Bernanke, who came in modestly, faced a completely frightening task, and did it well, while ignoring the many partisan voices that had no backing in intelligence or data.
Second, to Hank Paulson, who also was and remains a subject of criticism, for many imagined wrongs, while he, at the time, was the only officer awake on deck. Imagine having been Paulson, surrounded by economic idiots like Bush and Cheney, and staring over the edge into what not only seemed like, but really was, the Abyss. Thank you, Hank, for scaring DC just enough to get their jowls out of the troughs and do some meaningful things to avoid disaster, without scaring the world so much that the sky fell in.
Even more to the point, we have Barack Obama, and his hand-picked team of professionals, who since the early days have quietly, every morning, looked into that same Abyss, and reduced its depth by a few miles. No one is getting any thanks for this, so I would like to go on record for appreciating the difficulties, intellectual, emotional and political, that these chosen financial professionals are experiencing dailly, and conquering as they go.
So that is the Good News: by accident, we had an expert in place in a Bush administration riddled with amateurs. And we chose Obama, who did what we hoped, and picked the best people in the country to take the wheel.
The Bad News: it isn’t over. We’re about at the half-way point now. We are not going to repeat the Great Depression, I think, and that is great, but this is the moment of second-greatest danger, as everyone assumes we’re OK, when we are not there yet. What I mean by this: there remain plenty of actors on Wall Street who were doing intellectually dishonest things to “make money” without creating value, and who are ready tonight to go right back at it, hammer and tongs, without a second thought. Wow! Really?
One example of this is in the oil pricing story, where the same schemers are now back again, driving up prices without a thought: why should they care if their personal antics, worth a few bucks in income, put a heavy tax on the global economy? They just don’t get it. Since they don’t, I hope someone in Washington will, and will decide that price manipulation of energy is a federal felony worth prison time. More to the point, that they will seek out such miscreants and put these white collar criminals behind bars for a very, very long time.
Given that the worst is over, but the battle is not, now is a good time for our subscribers, members and blog readers to be vigilant, careful, and not to act as though risks are now history. Plenty of small banks will fail in the next year (watch out, Georgia); California will likely go bankrupt in some form within 90-120 days. More people will lose their jobs, and retail in the U.S., our largest economic input historically, will be in the gutter.
But for those who are careful and paying attention, there are already opportunities, globally and locally, in U.S. real estate, in commodities (copper in China, anyone?), in large scale opportunities in alternative and clean energy. The world is changing in fundamental ways, and that is always the best time to make money.
So, again: Thank you, Hank, Ben, Barack, and Tim. The world owes everything to you, after we twice ran the Monkey in the Cockpit test.
Whatever the angry men on radio and TV are shouting out this week, you saved us from that darkness over the edge that Hank saw the weekend after Lehman failed.
For those who are serious about making money, there are today more ways of doing so than there have been for many years, and these are real, rather than fraudulent. And for those who are serious about world affairs, we are back in adult, professional hands, and none to soon. Now we just have to be very, very careful.