The Sickness

I may be a little sick.  All the financial turmoil going on is really, really exciting for me.  I wish I had a job on Wall Street right now.  The rapid change of things would keep me up and going for days.  So, yeah, I probably am a little sick.

Again, I must sing the praises of Steven Pearlstein.  His article today on cleaning up after the “category 4 financial storm” is both insightful and scary.  He comes out and says something I have been mentioning to my wife, and thought I had mentioned on my blog, but I cannot find it in the archives, so I must have forgotten.  What was it he said?  To paraphrase, that the entire economy has to de-leverage itself.

Right now all the players in the economy from conusmers to business to the federal government are living on borrowed money.  Well, everyone’s willingness (and ablility) to continue lending is drying up, quickly.  We all need to start living within our means again.  And by “living within our means,” I mean living on the money you have left after making all those debt payments.  It will be a long, slow process, and with the reduction in spending, a recession is practically inevitable.

The alternative is a finanical market flailing around trying to figure out who is strong and who is weak.  Of course, the flailing will just continue to weaken strong companies and outright kill the weak ones.

I have a feeling we will see a large batch of mergers and buy-outs as the market consolidates the weaker companies under the stronger ones and companies band together to survive.  This will be bad for consumers for awhile as the number of suppliers of services, like banking, declines, they gain power, allowing them to push consumers around more.  However, hopefully this will be like a wildfire and burn off all the dead wood, allowing fresh growth to come in and repopulate the market.

Hopefully I will be able to look back on all of this and tell my children I lived through (and prospered in) interesting times.

I’m Back

Okay, I’m going to try to keep this up to date again.  I think I have a lot to post on this one. 

First, Greece was awesome.  I have to go back.  However, I will share with you the travel tips I learned:

1.  Before going to Greece, bone up on your Greek.

2.  Even more importantly before going to Greece, get on a StairMaster.

3.  Don’t fly Air France.  Every flight of theirs we took left late, and they managed to lose one of our bags for a few days.

4.  There is less internet access in Greece than you would expect.

5.  There are more historical sites there than you can see in three weeks.

As for more current news, school starts August 25th.  I’m excited to be going back, because now I get to take all the finance courses I want to take, instead of all the other courses I had to take.  I have a very strong affinity for things I want and a very strong repulsion for things I have to do.

Oh, and the economy still sucks.  Again, Steven Pearlstein has a great column on the economy.  I think it’s funny how I’ve been reading how people don’t understand why consumer confidence is as low as it was in the 70s when the economy is better.  What people aren’t grasping is the difference between the micro and macro view.  In the macro world of economics, the broad measures aren’t as bad.  The GDP is still growing, for instance.  However, in the micro world, people are getting laid off, they aren’t paying their bills, and everything is getting more expensive.  So, we have a disconnect between the two sides of economics.  I have a feeling the micro is going to pull down the macro, though.  If peoples’ personal finances are not doing well on a growing scale, then the economy as a whole is going to have trouble recovering.

So, there you have it, my prediction of doom and gloom.  Things will get better once the economy isn’t so levereged.  When people and companies are borrowing so much money, it’s hard to gauge how something like the Fed increasing interest rates to combat inflation will change things.  Let’s hope for the best.

Obama is a Cylon…

… He has a plan.

Steven Pearlstein – There’s the Beef – washingtonpost.com

Pearlstein does a great job of debunking the FUD that Clinton’s campaign has been spreading about Obama’s lack of substance to his message of change.  The plans themselves are pages and pages of dry reading, but Pearlstein does a great job of pulling the substance from them.  So, if you are considering voting for or against Obama, give the article a read.  Information is the lifeblood of a good democracy or republic.