The G20 Summit
Is it a coincidence that world leaders are arriving in London on April Fools Day for the start of the G20 conference? Projecting an image of confidence, they assure the media of their resolve to overcome the current crisis. But if they knew what they were doing, we would not be in a crisis in the first place.
Ya gotta admit... there's probably a little something to that statement.
And I will tell you right up front - I used to be an advocate of the free market. What is good for business is good for America. Let the market prevail. What is good for the market is good for all of us.
The fallacy of this presumption is founded upon the idea that those in the business world are looking to the greater good. And as we have woefully learned, perhaps the vast majority of free market participants are looking out for number one - consequences be damned. Left to their own devices, they have created, literally, the greatest financial crisis in the history of the world. Sounds pretty damned spooky, doesn't it?
Well, it is, actually. Although, it is not the end of the world. And therein lies the ray of hope.
GM facing bankruptcy. Not really good news for a vast swath of the population. But my presumption is that they will probably survive in some form. Chrysler may indeed be liquidated and sold for parts. And when home prices get so low that some people - individuals that have not taken every credit card offer that came in the mail and maxed them out; people that have maintained little or no debt and have attained a well earned credit score of 750 plus; when those folks start saying... "Ya know... we can actually afford to get into a place now"... that is when things will start to improve. And I'm starting to think that we may be approaching that point in the not too distant future.
As recently as last week, I was telling Theresa that we still have a ways to go on the down side. But with all of the news that I try to stay on top of, I am picking out snippets here and there that tell me that the collective consciousness that is public perception is finally coming to the realization that "Yes, things are pretty bleak so perhaps we should modify our behaviour." Now most people that you stop on the street probably would not use those particular words, but they would, in some fashion I believe, convey that very same sentiment.
Do I have a crystal ball? Yes, actually. I bought it when I was a stockbroker. Kept it on my desk. And a woman one time asked me if I knew how to use it! But, alas... I must answer that query in the negative. (And, yes... sometimes I really do talk like this in real life...) (As an aside, I used the word "undulating" today to describe the quality of a road, and by the response I received you would think that most in the room had never heard the term before! Granted, it's got four syllables, but certainly it can't be that uncommon... can it?)
In any case, no one will know for certain when we have hit bottom until we can look back and say, "Yup. That was it back there." But where just last week I was thinking that we had a ways to go on the down side, I am starting to think that just maybe, the stock market lows that we saw in March, may actually be the lows of this market cycle. So what does that have to do with anything? The market is a predicter of the future. If the market bottoms here, it is predicting that the economic woes that we are facing are nearing a bottom as well.
(A quick side note, for those investors out there. I saw today that GM has some bonds that are currently yielding almost 80%. 80%! But that reminded me of an old joke - a woman goes into the market to buy dinner. The butcher has T-Bone for $9.95 a pound. She says "T-Bone was just $6.95 a pound down the street! The butcher asked why she didn't buy it there. She said because they didn't have any. The butcher responded, "If I didn't have any, I could sell it for $6.95 too." Beware the 80% yield that may not be there when it's time to collect.)
2 comments:
I enjoyed your post because it included the word undulating. As for the rest of it...I'll take your ray of hope and run with it!
Hey, you should read my husband's blog (reynoldbblog on my list-- or something like that). He loses me with the same kind of political/economic thoughtfulness that you do. Maybe you could follow his and he could follow yours. (though since I don't usually know what either of you is talking about, you might have opposing views, but then you could argue back and forth.) Just a thought... :D
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