Jzneff on 2009

Believe it or not...this is a general economic calming were going to get in the next few months. Things are going to start looking a little more normal.

A lot of indicators have recently shown flat or even improving results in the economy. It's only very recently and only very few...but it's the start of the high water mark for panic.

First, the most beautiful thing to see was the massive shift in our trade balance. We only have numbers through November, but we've gone from a trade deficit of 60 billion per month this summer, to recently in November it was under 40 billion per month. Down from 70 billion in the summer of 2006. 30 billion dollars is staying in the American economy each month compared to 2006, rather than to China or Saudi Arabia.

Here's a chart for that one http://www.bullandbearwise.com/TradeBalanceChart.asp

Second, banks are starting to relax their lending standards finally. No, they aren't back to 2005 yet...but at least some banks are starting to grab a little risk. It isn't hugely evident in real estate yet...but wait until April or May when the loan companies relax more and put a bottom under the housing market. The bottom has already been reached for the very low end, but only because investors are buying up properties like crazy right now at bargain prices.

The middle to high end houses will begin to stabilize in value once a floor is set under the low end. Any semblance of stability in housing price is sure to get people to consider buying, because people have been saving money like mad since last year, and because there are some massive bargains right now.

Here's a chart for the loan officer's survey http://www.bullandbearwise.com/OfficerSurveyChart.asp

Third, we can't forget the luxury of cheap commodities. Every kind a business needs is cheaper than last year. The oil bubble popping has made shipping more cost effective. Oh, and many companies are now significantly lighter now due to dramatic layoffs...so these things point to corporate profits beginning to stabilize.

Last, but perhaps the indicator people watch the most, is US equities. The Dow Jones number is very much reflective of the people's opinion of the economy. I suggested that 7800 was somehow a floor under the Dow in October, and it hasn't closed much lower since. If there's no further change in the financial markets (ie huge bank goes under) then there's no real reason for the market to drive beneath that point.

Don't trust me on the stock market? Then maybe you should ask the Oracle of Omaha.

http://money.cnn.com/2009/02/04/magazines/fortune/buffett_me...

So that's what's happening in our economy. Our trade balance has shifted towards the positive, housing is approaching a floor (except in CA, Vegas, AZ, and FL, still overpriced). Corporate profits will be stabilized for most (some retailers and others may drop, but the ones who are left standing will be stronger). US equities are on the floor, and are unlikely to drop much lower. Hence, the bottom.

Forget the distractions. Forget Obama, even his spending spree isn't going to kill us. Devalue the dollar some...yes, of course...but it isn't killing it.

Why is it so important that the rEVOLution be a step wiser than the rest? Because it allows us to plan. Rather than planning to survive and be content to pick up the pieces....we have to be ready to carry on the fight if the economy recovers. Perhaps we are content to try to prepare everyone for the impending disaster...but we have to do our best to prevent the disaster.

This thing is not beyond saving, our country still can be saved.

Instead of preaching that the end is near...preach a positive message. Tell people that Obama's bailout money could just give everyone their income tax back from 2008. Wouldn't that be a real stimulus to the economy? The Endowment for the Arts is nice and all...but to call that an essential part of the economic rescue? Please...

Be the voice of opposition to what these morons are up to...but realize this. Wealth redistribution in this manner is akin to pulling buckets from the deep end of the swimming pool and pouring them into the shallow end. It churns the water a little, but you aren't going to make the shallow end any deeper.

The game they're playing is called slowly kill the dollar...don't be content to assume they're going to succeed.

Tell people about getting rid of the income tax...everyone tends to love that one. Tell them if we brought home all of the soldiers stationed around the world, that we would save more than what we pay in income tax.

There is more pain ahead for the economy for sure...but we're on the way back up. Welcome back to the 1980's folks...remember we have to wake people up before it turns 1994 again ; )

Keep up the fight...we have to be the ones to win this.

www.jzneff.blogspot.com