An Economic Ray of Sunshine

After yesterday's blog, I wanted to go play in on-coming traffic. But after a night of troubled sleep, the Pragmatic Pundit had a brief chance to think about things to lighten the mood:

#1--Economic help--Help is on the way. The government has announced a plan TODAY to help Citigroup work through its financial woes. Citi may be a bank too big to fail, and it is encouraging that the government has learned its lessons from letting Lehman Brothers fail. They refused to inject about $60B in funds into that bank, and it is going to end up costing $3 Trillion or so in market meltdown. Let's hope the Citi bailout specifically can shore things up. So far, the markets like it today (but it is only 12:30pm. Lots to go today...)

#2--Obama's got the team and mental make up for the job--One thing I think we are learning here is that our President Elect has the temperment and judgement for the job. It's funny how that was the question on this guy that John McCain kept bringing up. Now that we are seeing his approach, the question is, "what would we do WITHOUT Obama stepping into leadership?" He has brought out the most qualified people, from Geithner, to Summers, and has called on all experienced hands to help secure some spot-welds on the framework of our economy.

The announcement of plans to help achieve 2.5 million new jobs is a way to get people excited about working towards a brighter tomorrow, re-building the old infrastructure, in a way that helps us reduce our dependence on foreign energy.

Obama hasn't been perfect so far, but he has certainly struck the right tone with a nation that is on the verge of panic. It is reassuring, and it is hopeful.

#3--Tax relief--One interesting discussion point I am seeing is the possibility of providing the middle class tax cut without raising taxes on the wealthy. Apparently, Obama truly is a pragmatist after all (a kindred spirit!). Make the decisions that are best for the country, with a keen eye on the events on the ground. As I have said here before, it is nice, after 8 years of dogmatic ideology, to see someone who is patient, thoughtful, and can study the issues before making a decision with his head, not his gut.

The tax relief alone could be the motivator the economy needs. Let's hope it comes during the lame duck session of congress, and we don't have to wait until January 20.

#4--Some stocks are cheap--As disconcerting as the recent stock market drops are, there are still sectors of the economy that can do well here. We are going to need to rebuild infrastructure. We are going to need to rebuild our military. We are going to need builders, tools, materials, submarines, planes, etc. Defense companies and building companies should hold their value. They may not shine over the next few years, but they shouldn't crumble either. I can't help poor management, but the fundamentals for success are there.

Also, the lower one goes on the value chain in retail, the more stable the stock could be. Certainly the value retail stores have more chance to be successful in a down market, and should hold their value better. If you don't want to leave the equity market, this could be a place to hide.


I am still keeping a close eye on things, but all is not lost. I do worry about what new bolt out of the blue is coming for us today, whether it be economic or security-related. But we are resilient as a nation, and as individuals. We help our friends and family members, and as the holiday approaches, I think we have a lot to think about and reflect on positively. Sometimes, discussions on these topics around the family dinner table can be places to inspire great ideas. If you have any, please post them here.