CapitalistMarks

Bold prediction

Posted on 13. Feb, 2009 by scott in economic daydreaming

The above picture is of the New York Federal Reserve Bank.? Seeing it got me thinking about what the Fed is supposed to do.??I think their duty is similar to that of a doctor.? They aren’t really needed until . . . well until they are needed.? Then their duty is to follow?like the medical oath of hypocrates.? It goes something like this “help all you can and do no harm”.

The truth is this is also the responsibility of the?CEO of our country.

And this past week both Obama and his designee in the Treasury (who used to be the head of the NY Fed) have done anything but.?

This country needs confidence – in the economy – in our leaders – in our politicians and particularly in our President and Secretary of Treasury.? They failed in the last few days.? All we heard from them was doom and gloom.? Forecasts of darker days ahead.? No promises of recovery.? No hope.? No reason to give any of us (except the wealthy) desire to spend — let alone hope.

Yechh . . . it was awful . . . like when my mother made me take one big (think shovel here) spoon of cod-liver oil every morning while growing up (in the cold Norwegian winter.??I hated it.? But you know what?? I grew to be 6′5″ and healthy.?? I have to think?that stinking oil (from the liver??) helped.

Hmmmmm.

We took our medicine this week.? And it wasn’t good.? The news was all bad.? 7.6% unemployment, consumer confidence very low (56.4 which was lower than in january for crying out loud), more bank failures, bickering in congress, the Presidents presumed cabinet falling apart with another Sec of Commerce dropping out etc.? our President really needs to be the ‘Cheerleader in Chief’ but he was much more of a ‘naysayer’ this week and that never helps.

Well it got what he wanted . . . a $800 bill stimulus package that won’t start having an impact for many months.? Was it worth it??

Time will tell.? Understand this though.? The lower the markets and the economy go the harder it will be to climb out.

But . . . and here comes my bold prediction . . . it won’t matter anyway at this time.? Times are changing.? There has been enough damage.? Confidence can’t really get much lower (remember there are still 90+ % of our workforce gainfully employed). The dark days have hurt? enough already.? Tomorrow the sun is going to shine.

Things (a lot of them) are going to get better?despite the?stimulus our leaders have given us.? It will all prove to be a big waste and add to what will be a $13 TRILLION deficit by 2010 (at least).

Prediction:??beginning next week the stock market will start upward and in a big way over the next weeks and months.? Pent up demand and optimism about the future will dominate.? It’s time to buy if you have any spare change (and some high flying stocks are trading at prices change will buy).? The dow at 10,000 by April.? 12,000 by late summer.? Even higher by the end of the year.? The NASDAQ at 2500 by year end (now that is bold).? Oil up to, in a big way — a double by late summer — say $65 to $70.? From there higher, unless we really do start a Manhattan project for oil independence (which was promised by Obama but i’m still waiting to hear a single world about it).

Prediction: by spring, say May or June, the economy will start to follow the up trending market.??New unemployment numbers will begin a steady decline (say under 400,000/moonth ?in June and under 300,000/month in September).? By fall confidence will be back and the world economy will follow.? GDP?will fall the first and second quarter (I say by a total of 4.5%) and turn positive after that.

None of this is the result of the stimulus (any impact it may . . . notice the may . . . have is at least 9 months away).? Some of the improvement?may be a result of Fed and Treasury action (we still don’t know what they will do but if they do it right they good times will get even better and faster).? Banks lending, auto companies?surviving, etc.? but it will happen.??I am counting on it.? I am confident.?

take hold . . . be bold . . . the time is right.??Our country has too many hardworking, honest and good people to let the few idiots and crooks have control our destiny.

?

by the way, thanks to flickr’s epicharmus for the photo

Tags: confidence, economy, market, new york fed, president