After a year like 2008, everyone is hoping that the worst is over. My brother Graham told me that he and his wife, Diane had the New Year's fare of cornbread and black-eyed peas on January 1st. On a news program, I noticed that some Southerners consider collard greens to be on the "Good Luck" menu. Of the three, I can only bring myself to eat cornbread. I've never eaten collard greens and one attempt at black-eyed peas had my brain interpreting the sensation as akin to eating sheetrock mud. Not that I've ever eaten sheetrock mud but I'm sure they're similar.Luck springs eternal...
It's interesting to watch what people do to transition from year to year. To me, it's just one day following another, according to the Julian calendar. Most feel, however, that every chance we get to alter our lives in some dramatic way is worth the effort. It's a lot like the golfer twirling his driver three times while addressing the ball before swinging. Or consider the baseball player tapping the near corner of home plate four times before stepping into the batter's box (I stand guilty on both counts, your honor). Whatever works, I guess.
Being a little more practical, if anything generates a positive view of life for us, if only for a day, I say it's worth it. After all, our attitude drives the way the world appears and the way people react to us. In trying very hard to keep from drowning in metaphors and threadbare adages, it's difficult to describe how important what we perceive our future to be is in creating the reality of what we actually inherit in life. With apologies to non-swimmers, whether we think we are destined for good or ill, we are right in either case.
Having said that, the next year's experience will be driven by our collective perceptions, both economically and philosophically. With consumer sentiment at an all time low, the government will be injecting gargantuan sums of money into the economy to take up the slack for consumers that have all but stopped spending. Which raises the ironic twist that either we Americans start spending like drunken sailors, or we'll let our friends in Washington do it for us. Then, we can sit back and simply wait for the tax bill to arrive someday. And, for the most part, this tax bill will be due and payable largely by our children and grandchildren. I'm sure Generations X,Y & Z will love this part of our legacy.
The "If" Factor
If the Fed buys enough Treasuries to drive down mortgage rates to historic lows and that stops the bleeding in the housing sector through incredibly low mortgage rates; if they can buy enough corporate paper to free up the credit deadlock in Industry; if they can rid the banks of their toxic assets so that they begin to lend money again; if manufacturers survive, leaner and meaner; if we recover at least some of the millions of jobs lost over the past two years; if the market can recover some of the $7 trillion of wealth that disappeared last year - If, If, If.
Economic Alka Seltzer
America is suffering from a hangover of years of an overheated and poorly managed economy. Constantly rising values in homes, retirement accounts and personal debt had us drunk on the notion of endless gains and now has left us with a gigantic financial headache. The proverbial piper is back in town and he's looking to get paid. At this moment Americans are hunkering down. We are fixing our cars rather than trading them in. We are paying off debt. We are watching our jobs and our 401k's cautiously. We are refinancing our homes to lower the payment. When we feel confident that the worst is behind us, we'll begin to spend again to improve our standard of living. Or, as some suggest, we will become a nation of savers. Whatever the outcome will be is anyone's guess. We'll never be able to see it while it is happening. It will all become clear in hindsight. In reality, the economy will turn around when enough of us thinks it has.
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