….it is meant to recover with vengeance but this could go down the drain when crisis explodes on Obama’s presidential legitimacy andterrorstrikes. edwin a. sumcad/01/03/08.
Here’s how it comes through this year’s Crystal Ball:
Presidential Legitimacy and National Security
Right now there is a legal challenge lodged in the U.S. Supreme Court whether or not president-elect Barack Obama could be seated as a legitimate president of the
United States. But even we assume that the U.S. S.CT veers to the left on this issue and plays ostrich by burying its head in the sand saying the matter is a “political question” and just let it go, the public loses confidence on the presidency, the people turns to a revolutionary mood, and the country stands on the edge of chaos.
Thus crisis looms ahead. National security will be the call of the day.
The National Economy
Like any other economists in development economics, my analytical outlook on the economy is almost always put to challenge at the beginning of the incoming year.
This is what concerns me most: Once crisis takes its hold in the country, terror will take advantage of the confusion … it could strike while the iron is hot so to speak. This could happen while the economy is on the road to recovery.
How the national economy bounces back does not require scientists to the moon to ponder upon and calculate. The capital market faces a remarkable challenge on the road back to normal. But the rally will be strong in a turn for a bright economic outlook.
“As the closing bell rang” for 2008, the “third worst stock market year in history has ended”. To economists worth their salt, this market declaration is about unanimous.
But like the predisposition of the UN-ILO-World Bank under which I was trained, my economic prediction for the year 2009 is in a way rather taciturn … meaning passive and cautious but at the same time upbeat. I was looking at the New York Stock Exchange as traders confer at the final day of trading for the passing year. At the Merrill Lynch trading station, it was on
December 31, 2008 when the day of optimism for the coming year started as the new stewardship of Bank of America takes effect
January 01, 2009.
I took that as an index of “mergers” or “consolidation” if you may, that is badly needed as the terribly battered economy tightens up to excrete the air of “bubbles” in the market, and businesses regroup and prepare to surge in 2009.
In the pipeline, “nearly $9 trillion in cash is on the sidelines, waiting to be invested.”  The market will become so buoyant in a way never seen before in recent years as if we are looking at it for the first time with a great surprise as it bounces back with vengeance in the wake of a financial turbulence that brought havoc to the local and international landscapes.
I don’t buy for a moment, the wailing of the counselors of doom that the economy would hardly survive a recession in the magnitude of the 1920s-1930s this year because of the underpinnings of financial institutions that got a terrible beating. That kind of pessimism is generally shared by doomsayers, not by optimists who see the vibration of life in the future rather than the dead side of the glass of gloom seen darkly through one’s Crystal Ball.
But because many market players were badly hurt in 2008, caution is what is holding back, and the return to normalcy is in this sense what I describe as “sticky”.
Fear of another market collapse is a kind of financial paralysis that the economy will get over with. When the results of the massive stimulus re-ignite the economy, the bogeyman would eventually be laid to rest.
The bogeyman still walks the street and scaring investors while nervous people are running out of their wit. Fear slows down recovery when there is nothing to fear but fear itself. The nagging belief still persists that the people’s tax money now being used to save the tilting market about to submerge and drown us all, is going down the drain.
That the U.S. Federal Reserve is just stealing the people’s money is a revolutionary campaign that is starting to run wild. This mantra from the dark side orchestrated by the Left that the Fed has launched an invasion to destroy America by printing useless American counterfeit money ads fuel to the revolutionary mood of the people that buy this fancy ideological confectionary like Truffles, See’s exquisite gourmet from the candy store.
Notice that self-styled revolutionaries had already launched their attacks against the U.S. Federal Reserve. An attack against the Fed is an attack against the American people because the Fed is a tripartite composition of banks, the Executive Department and Congress. The Fed performs only government, not private, functions. [underscored]
One of these functions is to print money under the mandate of this jointly working tripartite authority of the people themselves. The private bank component cannot do it alone – printing money like a drunken monkey addicted to money. It is the American people that act through them. It is absurd to accuse the people of printing and stealing their own money to destroy themselves! Such logic can only rise from the catacomb of a dead brain if not coming from Mars, the Red, war planet.
Accusing the American people, acting through the Fed, of Operation Bernhardt, to destroy themselves [?] is a tall tale of the year 2009. Angry bucket kickers believe this story, and will buy even the
Bridge if the Left sells it to them.
“Fixing” by the Treasury and the Federal Reserve, has been going on for the public’s peace of mind since Congress passed the law on rescue package or bailout. What emotionally beclouded critics hardly understand is that the people’s money in the Treasury is “borrowed” by the Fed with interest [“fixing” and “borrowing” are layman’s terms used in lieu of the technicality of instrumentalities and procedures they stand for]. It is the American people’s ingenuity of the twenty first century to create an economy through the Fed that makes this nation the greatest, mightiest and the wealthiest on the planet.
We need to understand that this massive amount of funds is pumped into the financial sector to rescue banks and lending institutions in order to create and sustain liquidity without which mega corporations that produce wealth and millions of jobs, will not be able to function, and the economy will ground to a halt. If this happens, you may expect some kind of explosion, maybe similar to a nuclear bomb that would cripple the financial system and eventually wipe out the economy.
When the economy begins to expand as a result of this massive “financial infusion”, the “borrowing” private sector or the so-called “bailed out” entities will begin to pay-off their “loans” with interest to the Federal government through the Fed. Your money which cynics think is going down the tube is actually rerouted back to where it came from so to speak, meaning it earns and/or multiply x-times [multiplier-effect].
Why do you think on record
Japan wanted to participate in this huge super bailout? Those who understand what sound investment means know the answer, like they know the back of their palm.
It is unfortunate that the gargantuan rescue package is still the bone of contention among the arguing fearful innocents, which probably will continue until the middle of this year when recovery is clearly felt. I feel their concerns which by their very nature are humanly legitimate.
However, the premise of my own version of recovery is simple: Fed’s major focus will be on expanding its balance sheet, while Congress will force banks and lending institution to lend funds after receiving the stimulus. The Obama government’s stimulus program is now being calculated to be over $500 billion, and may actually end up more within the range of $800 billion-$1 trillion.
By experience, the housing industry will automatically correct itself. The inventory of unsold homes with quite a number of foreclosures will be sharply reduced as the level of building permits falls. A dramatic improvement in housing inventories will be one of the pleasant surprises in the overall economy by the middle of this year, assuming terror does not disrupt the system.
Granting that terror does not strike, decline begins when Obama starts his wealth redistribution program. The 5%-10% top corporations that are barely recovering will begin to feel the brunt of siphoning of income through taxation. And the cycle of economic boom and recession starts all over again.
The socialist philosophy of running the economy will be tested whether or not the wealth-generating sector of the economy will accept or reject it. If Capitalism holds the forth, it could lead to anarchy.
This leads us to the next level of analysis. If the problem of national security preempts recovery, then rewind this economic prediction back to where it started as if we have never met. That grim economic scenario is another story to tell.
When Al Qaeda, and the likes of American bomber Bill Ayers claim their reward by supporting Obama win the presidency, and as a result a dirty nuclear device explodes in
Los Angeles or
New York, then that is another subject of predictive analysis as to what the future will ultimately be.
Overall, we are a nation of risk-takers. We make history. It started late last year when the nation veered towards the left by electing Barack Obama president of the
© Copyright Edwin A. Sumcad. NWS access
January 3, 2008.
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