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ECONOMIC ANALYSIS:

Thinking About Juggling

by Fred Cederholm
The Administration, the country, and the planet need a vacation/hiatus from the bad news. The powers-that-be need time to gather public feedback on the leaked hypotheticals of the past week and re-TH*NK their game plan.
I’ve been thinking about juggling. Actually I’ve been thinking about the unfolding recession/depression, illusions, leakings, speculations, and Limbaugh. The Obama Presidency is now beginning its eighth week. The fun stuff of the Inauguration ceremonies and festivities is but a not-so-distant memory. Everyone knew it was going to be a rough ride and a long haul, but who’d of thought the 44th President would achieve the dubious honor of officially having a “bear market” so quickly after being sworn in as the nation’s fixer-in-chief? This is on top of 45%+ declines in 2008.

You see a “bear market” is defined as a 20% decline in the major indexes. The Obama team has met such criteria in a scant two months! The response of these markets is a barometer on the Obama plan for a turnaround – not a good sign. Congress gave him his TRILLION dollar stimulus package on schedule with a gratuitous surplus of pork and earmarks to boot. 100’s of BILLIONs of earlier authorized bailouts, restructurings, infusions, and slight of hands transferring “toxic” (as in worthless) assets to the Treasury - or the Federal Reserve Banking system - have transpired since January 20th. Have we tuned the corner? Is the corner in sight? Do we even know where the corner is? Unfortunately the answer to all these questions is a resounding... NO! NO! And, NO!

The current situation will challenge not only this Administration and the nation as a whole; the entire planet is looking down the wrong end of a double barreled shotgun. Despite the near record breaking declines in the US equity markets, corporate profitability, layoffs and dis-employments, goods and services consumption, and construction/real estate; the US is looking relatively good and is postured to weather out the turmoil(s) fairly well. This relativity of the dire and dour is the only explanation why essential foreign money continues to flow into the United States. For example, the severity of the situation(s) in the UK have seen just over $ TRILLION in foreign investment capital repatriate from London to the US in the past year alone. The global cash flow to the US hurts development everywhere else with the marginal or poorest nations hit the most.

Obama and his talking heads are juggling the full spectrum of plates, balls, and knives. Being BOTH fear-leaders AND cheer-leaders is dangerous. Such duality undercuts credibility, public support, and any real progress towards a turnaround. The self fulfilling prophesies aspect cuts both ways – firing up the cheers AND accentuating the fears. Thus far, President Obama himself has enjoyed amazing public support, while the bon mots for FED Chairman Bernanke are waning, and any positives for Treasury Secretary Geithner have yet to materialize! It is too early to call the impact of Budget Director Orszag at this point. His first budgetary creation is only now being digested and evaluated. Each will be responsible for the successes (or failures) of their own illusions.

The juggling gamesmanship goes beyond those mentioned in the prior paragraphs. Test marketing of coming (possible) crises and hypothetical actions or solutions are being leaked all over the DC beltway and beyond. These come from Congressional personages, their entourage(s), media political pundits, and politco-celeb-wanabees - via their interviews and sound bytes. Be forewarned that: (1). A General Motors breakup bankruptcy is a growing possibility, (2). Further infusions to AIG for their “hedge losses” will not fly, (3). The FDIC fund will need major taxpayer infusions, (4) Too big to fail (and disappear completely) will NOT apply to at least one US mega banking/financial establishment, (5) Nationalizations – regardless of how described – will occur, and (6). A major reshuffling could occur in the neophyte Obama Administration team!!!

The Administration, the country, and the planet need a vacation/hiatus from the bad news. I don’t see that happening in any foreseeable future. I do, however, feel that the coming week will be relatively uneventful in that the powers-that-be need time to gather public feedback on the leaked hypotheticals of the past week and re-TH*NK their game plan. We WILL be treated to more leaks and focus group speculations. If nothing else, there is always Limbaugh “Rushing” to stir up the...um... juggling!

I’m Fred Cederholm and I’ve been thinking. You should be thinking, too.


Copyright 2008 Questions, Inc. All rights reserved. Fred Cederholm is a CPA/CFE, a forensic accountant, and writer. He is a graduate of the University of Illinois (B.A., M.A. and M.A.S.). He can be reached at asklet@rochelle.net.


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This story was published on March 9, 2009.