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December 31, 2008
I’ve Loved You So Long
Written by Jeff Thredgold, CSP, President, Thredgold Economic Associates
One of the painful realities of life as an economist and professional speaker is that the subject matter of economics is typically viewed (with good reason!) by the general public as confusing, intimidating, and boring. As a result, trying to present weekly economic and financial information with an unusual twist can occasionally be a most welcome change.
Warning!! This week’s Tea Leaf is my semi-annual economic, financial, and political update…using today’s current movie titles. My sincere apology in advance to anyone I might offend.
Finally, the end of 2008, a year that should be placed in QUARANTINE, never to be visited again.
President Obama
The New Year kicks off with a new President entering the STATE OF PLAY. Voters of all persuasions will look to see if we collectively LET THE RIGHT ONE IN.
Many hope the new President will not surround himself with YES M(E)N and women, but will value alternative points of view. Such an issue seems to have been a problem in the Bush Administration, one now well into its TWILIGHT time.
Millions of Obama supporters admire the ROLE MODEL he projects, contrasting it with the DEFIANCE of NOTORIOUS Illinois Governor Blagojevich. The Governor’s alleged BODY OF LIES about “pay to play” corruption casts major DOUBT about his ability to survive.
President-Elect Obama strongly suggests his soon-to-be-announced nearly $1 trillion stimulus program will help the U.S. economy be FOREVER STRONG. He also suggests that irresponsible earmarks, a.k.a. extravagant and ridiculous pork barrel spending, will not be tolerated in the package…
…don’t hold your breath.
The spend-happy Congress will MILK the new stimulus program for all they can. Congressional leaders will make it clear that they run the show, and simply don’t view Obama as the CHANGELING some would like to see. Keep your eye on this “pork” issue as to the nature of the unfolding Obama Administration.
The American Consumer
The just concluded weak Holiday shopping season was NOTHING LIKE THE HOLIDAYS of the prior FOUR CHRISTMASES. While some retailers had reasonable sales totals, too many stores and malls looked like GHOST TOWNs.
Government Stimulus
The U.S. economy is still negatively impacted by THE DAY THE EARTH STOOD STILL…September 18, 2008…when U.S. Treasury Secretary Henry Paulson and Federal Reserve Chair Ben Bernanke announced that the sky was falling. Perhaps THE TALE OF DESPE(ration) they conveyed was a bit too much. U.S. employment has fallen like a rock since that time.
THE CURIOUS CASE OF (HENRY PAULSON) is one that illustrates that the skills needed to be CEO of Goldman Sachs in prior years don’t necessarily translate into those required to have great credibility in the nation’s capital. For him, January 20 can’t come too soon.
The $700 billion Troubled Asset Relief Program (TARP) has joined trillions of dollars of other economic stimulus and financial market support programs viewed as necessary. While much of this money will ultimately be returned to the taxpayer, a GOOD share will ultimately burden THE UNBORN with a higher level of national debt.
The Big 3
General Motors, Chrysler, and Ford will likely be permanent fixtures in the nation’s capital, hands frequently extended for bailout funds from the more supportive Obama Administration. They will check their CADILLAC RECORDS, GRAN TORINO data, and TRANSPORTER 3 info for places to trim costs. BOLT makers and other automotive parts suppliers will cross their collective fingers for such continuing financial support.
Meanwhile the United Auto Workers (UAW), whose average wage is 68% higher than the average U.S. manufacturing worker, will likely fudge on prior suggestions of wage givebacks, with the support of the extremely liberal Congressional leadership. This UAW struggle will be another key as to the nature of the Obama Administration.
$50 Billion Up in Smoke?
Adding to global anxiety is the unfolding of perhaps the greatest Ponzi scheme in history. Long-time money manager Bernard Madoff’s alleged trading corruption now has thousands of investors, from YONKERS JOE to PAUL BLART: MALL COP to some in AUSTRALIA, wondering whether they will ever see even a hint of their money again. Fortunately, the list does not include MARLEY & ME (sorry).
Many Madoff investors with an almost RELIGIOUS marvel at his now-phony trading results will eventually tell BEDTIME STORIES of the SEVEN POUNDS of gold…and other considerable wealth…they used to own. Many will find a QUANTUM OF SOLACE in eventually seeing this SLUMDOG MILLIONAIRE as THE BOY IN THE STRIPED PAJAMAS at one of the nation’s many prisons. He no doubt wishes he could have ESCAPE(d) 2 AFRICA some time ago.
The Middle East
The REVOLUTIONARY ROAD in Iran is likely to change as oil revenue plunges. Pro-Western youth, dealing with extremely limited job prospects, could eventually mean the end of Iranian President Ahmadinejad (say that three times quickly).
The new WAR ZONE inside the Gaza Strip and near the land of GOMORRAH involving Israel and Hamas is unfortunate, with more loss of life and human misery to come. The Israelis will maintain an EAGLE EYE as to actions of other long-time enemies in the volatile region.
The American Economy
The worst American economy since before the days of FROST/NIXON will remain in place in coming months. VALKYRIE and other eight- and four-letter words to describe limited job prospects will be prevalent in coming months. The deleveraging of the enormous financial “house of cards” built up in recent years has been extremely painful. More pain is coming.
However, THE READER of constant negativity by the national media could soon be surprised with a more positive tone. A Business Week or Newsweek cover story entitled “What a Great Time to Buy a Home” or “Today’s Great Values in Stocks” would be a most welcome change.
Modest U.S. economic growth will return, most likely later in the year. What is likely to be the longest recession since the Great Depression will end. THE SPIRIT of America is NOT EASILY BROKEN.
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