The Seed of Recovery

I have a theory; a hunch is a better moniker, that our economic recovery will germinate from a small and isolated seed of confidence. To paraphrase, extrapolate and else wise apply the teachings of a favorite advisor and author of mine, Nick Murray, our economic recovery’s timing is unknowable, it’s manifestation inevitable.

We can undeniably trace the origins of our current crisis to a seed delivered to the fertile soil of our economy via a turd laid by liberal Democrats of the Carter era, and germinated by the blue thumbs of the Clinton era. My hunch is that our nation’s, and in turn the world’s economies will be restored in much the same way.

That seed however, will be seemingly small and insignificant in its time but will retrospectively be shown to be the beginning of the end of the worst crisis since the Great Depression.

I could be; probably am wrong – but this morning I read this…

Stocks Post Best Rally of 2009 on Improving Citigroup Outlook

Citigroup Inc. said it was having its best quarter since 2007, spurring speculation the worst of the banking crisis is over. Treasuries fell, while oil and copper gained.

and this…

US Consumer Confidence Edges Up in March

…it occurred to me that this is a very large, visible bank exhibiting a rare and precious commodity of late: profits and optimism and at the same time consumer confidence exhibits a slight, if temporary uptick.

Now don’t be fooled for a moment into thinking that our nation’s financial crisis is going to vanish overnight. Rather, be prepared for multiple fits and starts – to reuse the President’s recent and widely panned phraseology – but I believe, even if this is not that seed, a future forensic analysis of our inevitable recovery will reveal an initial catalyst such as we have seen today.

An ever-so-slight restoration of confidence will lead to a loosening of lending and spending which at the same time will allow real estate and the financial markets to establish their lows in earnest.

An excruciatingly slow, uneven but evident march to recovery will ensue.

And the World will breathe a collective sigh of relief.

Or…

…none of the above is coming and we’re all screwed.

I suffer from Optimism, despite all it’s flaws and blind spots, so I’m going with the former.

…for now.

7 thoughts on “The Seed of Recovery

  1. Via Derbyshire at NRO’s Corner I found this: http://newsroom.ucla.edu/portal/ucla/FDR-s-Policies-Prolonged-Depression-5409.aspx?RelNum=5409
    No study like this is definitive but it certainly underscores Obama, Pelosi, and Reid’s naked partisanship in passing the so-called ‘stimulus’ bill. When Bush asked congress to declare war he made certain that it was via bi-partisan legislation. Obama rammed through his porkulus bill with the opposite of bi-partisanship.
    Obama talks about the economy, and the ignorance he displays, coupled with a punitive attitude towards the investment class, makes the Dow drop. Bernanke talks about new accounting rules to bring a surer ground to financial market and the DJIA soars.
    Obama’s actions may very well replace a needed, deep market correction with a depression.

  2. It doesn’t matter how well Citi does. Whenever the economy starts to show any signs of recovery, Pelosi, Reid, and Obama will kick the legs out from under it.

    This is their one chance to “prove” that capitalism doesn’t work…

  3. It was inadequately regulated capitalism that got us into this current crisis.

    Time alone will tell which theory was correct as to correcting the failings of the market place.

    I believe in capitalism, but I don’t assign it divine omnipotence in it’s operation.

  4. I believe in capitalism, but I don’t assign it divine omnipotence in it’s operation.

    Holy poo on a pole! Want to know what makes the free market work? Go to the bathroom & look in the mirror. It’s you pal! It’s me, too! & Mitch, Terry, Mr. D, & even his arrogant unholiness Angry clown & his assistant Penigma. We are the market, everyone of us.

    It is not because of some belief in a divine power that keeps the free market moving. When Adam Smith talked about the invisible hand, he was talking about the people participating in the market. Consumers, producers & investors who all participated, & who’s collective inputs & outputs make the most efficient & appropriate changes & corrections in the market. Even an atheist can believe in the free market.

    It was inadequately regulated capitalism that got us into this current crisis.

    You can’t prove that. No one can. Our market is almost completely regulated, & there has only been additions to that regulatory morass in the past 8 years… in fact, over the last 20 years, regulation has gone UP not down. Finally, I don’t care whether we have a free market or utter tyranny, markets, planned or free, have ups & downs. But a free market has the correction mechanism built in, a planned economy has despots who think their wisdom is better than yours trying to do the work. Free markets correct faster because they are more efficient & the collective wisdom of the participants will sort it out.

    The mess we are in now has more to do with the politically powerful (who happen to be the planners & regulators) letting their friends & donors get away with utter stupidity & making sure nothing bad would happen to them. In a free market, they would not have been able to do this for long & if they had, they would have failed miserably long ago. It was the “wisdom” of the despots who allowed this to happen & continue, & it is these despots who have made sure that their friends do not suffer from their stupidity.

    That is why we are in this crisis. You really want to give these despots more power?

  5. Mr. Shirt, It is obvious that the finacial market meltdown was due, in Dog Gone’s words, “inadequately regulated capitalism”.
    The nice thing about the phrase “inadequately regulated” is that it does not mean under-regulated, it means incorrectly regulated.
    Sometime around the turn of the millenium banks were allowed to open branches in other states, provided they passed a review that indicated that they were writing mortgages to a desired level of poor people. During the Bush administration financial institutions were allowed to keep a smaller asset/money loaned ratio. In july of last year new, conservative mark-to-market rules were put in place.
    The combination of regs turned the finacial securities industry into a train wreck.

  6. Terry,

    That’s pretty much my point though. I understand what you are saying, & agree with that angle, but the typical refrain “inadequately regulated capitalism got us into this” is usually inspired by those who are asserting that the market isn’t regulated enough, & needs more regulation. Maybe even nationalizing.

    What you outlined above is exactly what I was driving at. The despots in power of the regulation, & regulating, can & do bend & twist their powers to benefit those who benefit them. Which is why a true free market is the answer.

    The Planners, the despots, cannot regulate their wishes on to the market, forcing their desired distortions of power & greed upon the market. It is the ability of these despots to impose these distortions that got us into this crisis.

  7. “It was inadequately regulated capitalism that got us into this current crisis.”

    Yep. And it was the Dems who created the entities that invented the new financial instruments that weren’t regulated, and the Dems who blocked every attempt by the Bush administration to regulate them. Yet somehow this is the Republicans’ fault.

    Sorry, no. If there is any single individual to blame for this, it isn’t Bush, and it isn’t Greenspan. It’s Barney Frank.

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