Americans are an optimistic people. We don’t see problems, we see opportunity. When it is raining we look for sunshine. All of which makes it hard to post items running against the notion that the recession is over and all is well. People who make their investing and trading decisions based on what they read in the paper or see on TV are taken to the cleaners by the ‘sell the news’ insiders.
The stock market has had a nice rally since March. Banks are booking big profits, and paying big bonuses. GDP is growing. Corporate earnings are expected to increase over the next few quarters. Yet we are hearing about a recovery with modifiers such as patchy, slow, and jobless. It is these modifiers that inspire caution.
You will see in these posts potential problem areas or flies in the ointment as some might say. I devoutly wish that all the cheerleaders are right and it is up, up, and away for the economy. But I remember the 70′s and the inflation. I remember the bitter medicine of high interest rates Paul Volker fed the economy to kill it. I remember the tax cuts and pro-growth years of Reagan. It is to Bill Clinton’s ever lasting credit that he left the Reagan economic engine alone to work its magic and make his reputation.
I have seen Keynsian economics in action since the days of LBJ. Like a vaccine it has been used repeatedly since the great depression. However, the flu adapts each year to the current batch of vaccine and comes back again. Disease is becoming resistant to antibiotics. It is natural that economies will adapt to Keynsian stimulus so that over time it no longer works as it did previously. We are seeing that with the Obama stimulus, where the multiplier effect is not there as hoped and it is under performing.
I present thoughts and materials here on Riding on the Right for you to consider. It is not my wish to be a wet blanket, or a cranky voice in the wilderness.
What you see and read here is in the spirit of Buyer (investor/citizen) Beware. No one will truly look out for your best interests but you.
