Are We There Yet?

Is the economy coming back? Is the worst over? Can we pull our money out from our mattresses and any other places we may have stuffed it?

Well, the good news is...maybe.

The bad news is...if you pulled your money out of the market already and have it sitting on the sidelines, you may have missed the only upward climb of the year.

I think all the money that has been injected into the system and Obama's ability to sound (generally) calm and that he has a plan has at least calmed enough people who realized there might be some bargains to be had. However, I think they have been had. So there may not be any more easy money to make in this market. We are now about 20% above the low points of the Dow, Nasdaq & S&P and the Nasdaq is actually (barely - 0.63%) positive for the year, and although that generally signals a bull market, I think we just recovered from over selling.

From this point forward, we will need positive results from the bailout / stimulus and that might take a while. We could also have the dropping of the other shoe (resetting of Adjustable Rate Mortgages, Iran, etc.) which would cause another flurry of selling, but I think we will be sticking about where we are. However, that doesn't mean the volatility has subsided, just that we will keep returning to about the place we are now.

Because the voting public looks for signs, the markets rising in the same timeframe as the release of the President's budget and Geithner's plan for a public/private investment in the toxic loans probably makes a lot of people feel calmer about the potential for those plans. No doubt that the Obama Administration has bitten off a lot, but there was a lot on their plate.

Stay tuned.

You Can't Handle the Truth

Could we handle being told not only how bad things are, but how bad they could get? Really, do you think so? I don't.

As a nation, we complain that things aren't better yet. That too much has already been spent. That the President was talking too negatively about the future of the economy. We were not feeling good. Guess what, we shouldn't. We, the people of the United States, have been borrowing too much to be able to spend too much. Plain and simple, that is why we are where we are.

The Chris Matthews Show asked and attempted to answer several very important questions this weekend.

- What is wrong?
- Was the Stimulus Package large enough or will we need more
- When will the Economy turn around

Erin Burnett gave the spot on answer on what is wrong. We, (the royal we) borrowed too much money. We bought more that we could handle and now we have to pay it back. It will get worse and we are not prepared to hear that, so it isn't being said because in this case the truth would not set us free, it would have us running for the exits.

As I posted a while back there is very likely to to be another stimulus bill. However, it may not be called that. They are going to see how things transpire before they decide, if, what and how much.

Fed Chair Ben Bernanke said this week that the economy would start rebounding before the end of 2009 and be in full recovery in 2010. That is slightly optimistic, but it appears we will be able to point to one or more signs of a recovery before we wish each other a Happy New Year. The timing of when people 'FEEL' that we are in a recovery will determine the outcome of the 2010 elections. When James Carville selected the phrase, "it's the economy stupid" as the Clinton campaign rallying cry in 1992, it wasn't just for that moment in time.

Erin Burnett further shared that a Chinese CEO she spoke with said the world loves the American entrepreneurial spirit and "We need you to pull your socks up because the rest of the world is looking to you." Reports earlier this week that the Chinese were cautious about future investments in the US are almost certainly not predictive of future action. They really need us to succeed and will hang in for a long time because they don't have many great second options.

Also demonstrating that they can't handle the truth are members of the former Bush Administration, in particular, Dick Cheney. Although during the Obama Inaugural, he appeared to be doing his "Old Man Potter" impersonation, Dick Cheney is really an old-style Tuna fisherman. He strongly believes that all actions are justified to accomplish the goals of the mission. If some dolphins get caught in the nets while enroute to achieving their goals, so be it. That is the cost of business, just as long as the price isn't paid at home. This weekend on CNN's State of the Union, Cheney castigated Obama for ordering CIA investigators to abide by the U.S. Army Field Manual's regulations for treatment of detainees and for denouncing waterboarding, saying that he thought e thought Obama has made Americans less safe with those actions. Dick Cheney has been speaking his mind on several news outlets recently trying to spin luster onto the Bush Administration's legacy by tarnishing the activities of the Obama administration. I have visions of Ed McMahon and Doc Severson going on the Letterman Show and trashing Jay Leno shortly after he took over the Tonight Show.

The Obama Budget - Too Much, Too Little or Just Right?

You can read all about Obama's proposal for the 2010 budget online, but at 142 pages, it is quite a lot to swallow.

I am amused by the commentary about it and I think we can learn a lot by stepping back and looking at the range of what is being said.

There are claims that too much is being spent and the deficit will rise. There are comments that not enough is being spent. Some think that Obama's attempts to also plan to shrink the deficit are in error.

I find that when comments come in from all sides (too big, too small, too many tax cuts, too many tax raises, etc.) the plan is probably in the right space.

About the only thing that most people agree upon, even Democrats (begrudgingly) is that Obama is trying to take on too many things at once. That it is an overwhelming number of activities that will pull the president in too many directions. I believe they are correct...for most presidents. Obama is smart and seemingly able to surround himself with a lot of capable people who are there for more than their loyalty. Almost everything in his budget is an echo of a campaign promise. It also appears that he is aware that the most effective time for a president to enact legislation is in his first year in office. By putting a lot of his ideas directly into the budget rather than launch them as separate legislative issues is actually quite brilliant. The Budget is a non-binding document and therefore can not be subject to a filibuster.
What the Congressional and Senate Budget and Appropriations Committees wind up putting forth and agreeing on remains to be seen. As time moves, on we also will see if Barack Obama's desire to take on everything at once is viewed as the second coming of FDR or leaves everyone with heartburn.


It is not certain if this will work, if this is the right mix, or how it could be improved upon. One thing we know is that Barack Obama will not go down in history confused with Herbert Hoover.