Friday, July 18, 2008

The Worst-Case Model

Here's a new thought exercise for you to try out in the coming weeks. When thinking about how you would react to a severe recession and market crunch, try this new model on for size. Every time a critical juncture is reached where policy-makers can choose the hard path to cleansing the system or the easier path of trying to pander to emotion and ignore what's going on in the reality-based community, assume that through the end of the year the choice will always be to pander.

This adds a lot of spice to watching the infotainment channels like CNBC, CNN , et al. Medicare is going to bankrupt the country? Expand spending. Debt service on housing loans and credit cards are a cancer eating away at the majority of the population? Encourage taking on more debt.

I propose this model, courtesy of a recent story from The Onion:

Recession-Plagued Nation Demands New Bubble To Invest In

WASHINGTON—A panel of top business leaders testified before Congress about the worsening recession Monday, demanding the government provide Americans with a new irresponsible and largely illusory economic bubble in which to invest.

"What America needs right now is not more talk and long-term strategy, but a concrete way to create more imaginary wealth in the very immediate future," said Thomas Jenkins, CFO of the Boston-area Jenkins Financial Group, a bubble-based investment firm. "We are in a crisis, and that crisis demands an unviable short-term solution..."

If only this satire wasn't playing out as policy...

More Free Stuff from EWI

For those of you interested in the commodities markets, especially oil, EWI is hosting another Free Week at their site. You get access to their commodities analysis subscription services that normally cost in the hundreds of bucks. I'd suggest clicking on the Javascript ad at the top of this blog and at least checking out what they have to say about oil. Talk about a whipsaw in prices recently. You can view their material and make up your own mind as to its worth. I highly recommend it.

Have a safe, productive and happy weekend.

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