It's Amazing What 12 Months and a Bottomless Checkbook Can DoOctober 22, 2012 Posted by: Joe Morgan, CFA
Do you remember
The 21 st night of September?
Love was changing the minds of pretenders
While chasing the clouds away
- Earth, Wind and Fire
OK, so it was two days earlier on the 21 st ,actually, that the Treasury Department announced a temporaryguarantee for the U.S. money market mutual fund industry - but theelements of the universe got it close.
Now here we are almost a year later with this program about toexpire and several other government support programs waning. To besure, last September 19 felt like the financial world wascollapsing, a far cry from today when we merely realize thatcollapse is a possibility - and not even an imminent oneat that.
We have certainly come a long way in the last year.
First, we dipped further into the abyss as payrolls fell fasterthan ever seen before, lead by construction and finance jobs, butsoon followed by most every other sector. Then the markets cameroaring back from their depths as the second derivative of growthturned positive (meaning our journey toward the wall slowedsomewhat, but did not reverse).
Today, it is fair to say our situation "feels" better, though Ican't fully describe what that means. Maybe it's the 50+ percentrecent rally in the stock market that feels so good, but losingnorth of 200,000 jobs per month should never really "feel" good.And the fact the market remains 40 percent below the highsexperienced in the fall of 2007 certainly shouldn't feel good.
I think more to the point is the fact that investors no longerbelieve we will have a collapse of the financial system. Proponentsof the government's strategy during this time will argue thecountless alphabet soup of programs should be lauded and that theplayers in this tragedy - Bush, Paulson, Bernanke, Obama andGeithner - should be given credit for tossing aside the "freemarket" in this obvious time of stress. (OK, for most it's hard toput Bush and Obama together in that sentence, but as they say whereI'm from, "facts is facts!")
Opponents of such tactics will argue the recovery could come soonerand be stronger if the government had never "meddled"...Read More