Where's The Bailout Money?

Yesterday the House passed the $819B stimulus package. And are you sitting down for this... the vote was cleanly divided along party lines. Nice job of coming together people! Another whopper of a surprise... it was full of useless pork barrel spending! Wow! Who could have guessed that would happen?

Now the bill will go the the Senate, where they will pass their own version, and then they will fight it out some more. The Democrats are saying that it is more important to pass something, anything, than it is to get the bill perfect. Is this really their tactic?

I'm disappointed on many fronts:
1) Where are the adult decisions that Obama wants to see?
2) Where can we find hope that pork barrel spending is slowing down?
3) How can we find a way to muzzle Nancy Pelosi?!

I've got an idea- let's rush to approve billions in government spending without taking our time to walk through each line item. I'm sure the politicians that put it together can be trusted! It's not like they are constantly busted for sex scandals and bribery! I'm sure they can get along and make mature decisions.

Or maybe we are already seeing the reality that regardless of Obama rhetoric, the same old machine, with the same old conductors, are driving this train.

Job Cuts!

Wow. Over 200,000 jobs have been cut in January alone. That is a ton! And these are not McDonald's cashiers that are losing their jobs (partially because McDonald's is the best performing company in the DOW!). No, these are high income jobs that are being shed.

On my quick trip to Atlanta this week the airport conversations were all regarding job securing, or the lack thereof. I'm sure there are some people that are embarrassed about being out of work, but the situation is now common enough that most feel free to be vocal about their predicament. I continually heard conversations like "After 14 years with KFC they are trying to lay me off without any severance.", or "I thought I was safe, but they laid me off with 40% of the company."

I can't imagine that this will help the housing market. The jobs being cut are exactly the types of jobs held by people that own their homes. These are suburban dwellers. These are people that have been scraping to build a better life and get a rung up on the ladder. Now they are in the tough position of needing to admit as quickly as possible that the rung below them on the ladder is their new home for the time being. Those that admit this fact early will be rewarded for it. Those that stay in denial and try to han gon might just lose everything.

So what should we do? The bright spot is McDonald's, believe it or not. Between the Dollar Menu and strong international market share this company is thriving. So meet me at the Golden Arches for lunch, and maybe we can buy a few shares for our kids.

"This is the thanks we get?!"

Typically, the first 100 days of a new presidency are marked by media coverage that is critical of the new administration. This is the time when the nation wants to know if the campaign promises will be upheld. But that can't happen this time around. The media was so involved in Obama's election that they feel personally invested in his success. In fact, the media felt that a change in political direction was important enough for our country that it justified the disclosure of their "highly educated opinion" regarding the next president. They showed their cards and placed their bets with Obama. And they won! Their arguments for Obama were heard and acted upon. Unfortunately, the success of this gamble has had two negative consequences:
1) Consumers now realize that the media is biased, which means we cannot trust them nearly as much.
2) Now that the media "won" the election they don't know what to report on. Gloating won't work for much longer, and they can't tear down their hero without admitting some mistakes of their own.

The good news in this situation is that Obama will enjoy a time when he is free to change his stance without the media climbing all over him for it. The bad news is that the media has ceased to perform its primary job - providing visibility and increased accountability. Without those functions being performed the media will lose a big portion of relevance.

This is the primary explanation for why so many media companies are going bankrupt. Sure, online news coverage is a factor, but the bigger story is that media is just less relevant. Less relevant equals less profitable.

I can hear reports nation-wide saying "This is the thanks we get?!".

Friday in Obama-land

I really only have one question this morning. Has Obama fixed it all yet?

After talking with folks returning from the inauguration event in D.C., I'm stuck by how much they remind me of love-struck teenagers. I find it part inspiring and part creepy. Mostly creepy. I love the optimism that is in the air, it certainly is refreshing. But I'm also certain that extreme optimism is dangerously close to denial.

I found President Obama's speech on Tuesday to be excellent. He sent clear messages and underlined the maturity that we as a nation will need to face the challenges in front of us. I believe that we will be able to look back at that speech in years to come and marvel at how accurate that message is. But the crowd didn't seem to be embracing that message. In fact, when Obama mentioned that terrorism is a real threat and that America must persevere, the crowd seemed somewhat surprised by the reminder that we are still a country at war. It was almost as if some supporters had been hoping that an election victory would solve that pesky little problem.

Here are two quotes from the president's speech that I think say quite a bit:
1) We will not apologize for our way of life, nor will we waver in its defense, and for those who seek to advance their aims by inducing terror and slaughtering innocents, we say to you now that our spirit is stronger and cannot be broken; you cannot outlast us, and we will defeat you.
2) At a moment when the outcome of our revolution was most in doubt, the father of our nation ordered these words be read to the people: "Let it be told to the future world...that in the depth of winter, when nothing but hope and virtue could survive...that the city and the country, alarmed at one common danger, came forth to meet [it]."
America. In the face of our common dangers, in this winter of our hardship, let us remember these timeless words.

These quotes provide me with the most hope I have yet held for Obama. But will his supporters feel the same?

CNBC

The morning show on CNBC, Squawkbox, had as a featured guest this morning Jeff Sandefer. Jeff is all about free markets and encouraging entrepreneurship, which he does primarily through his organization, The Acton Foundation. Jeff also happens to be my boss.

Here's the video from CNBC:
http://www.cnbc.com/id/15840232?video=1009110584

I immediately noticed that the hosts of the show didn't know what to do with Jeff's comments regarding our need to separate real entrepreneurs from the "financial engineers" that have gotten the U.S. economy into so much trouble. It comes as no surprise that the financial media is hesitant to blame the industry that has provided them with so much to talk about. But at the end of the day the finance industry has created a huge mess because it simply forgot to associate numbers analysis with real products and real people. Unfortunately, we have had to admit now that commission fees on financing activities (although lucrative at times) are not a primary driver of value.

DOW on the way to 6,500

I know we are all tired of the economy. I know you don't want to hear this. But the Dow is not done bleeding. I predict that we will test the 6,500 area in the next 5 months.

Why? Three reasons:
1) The trend is lower, and as they say in the trading pits, "The trend is your friend." Fighting a trend can be deadly.
2) Lack of positive news. Without a reason to go up we will most certainly drift lower. staying in one place is something markets are not good at.
3) Banks are sitting on the bailout money. The liquidity issue we have attempted to address by sending money to banks may have helped the banks be more stable, but that has yet to translate into banks lending more.

What should you do? Stop looking. The train will come whether or not you worry about it everyday. So stop worrying.

And hey- maybe I'm wrong!

Launch

This blogging thing is here to stay, and I want in. Maybe it is the act of sharing, or maybe I'm just ranting and sending it into cyberspace. Either way, it feels good.

Today felt like a good day to start. 44 years ago blacks got the right to vote, and today we will swear in our 44th president, Barack Obama. I am hoping that the momentum he has will translate into progress, but I am not in agreement with most of the ideas he has presented to date. Hope and fear. Hope and fear.

So where do we go now? Is there going to be a national hangover after the inauguration frenzy? Will the realities of war/economy/health care, which we have tried to forget about recently, come back to haunt us like a bout of food poisoning? Or will we believe that moving forward is enough for now and refuse to sink any further? I'm skeptical at best. I'm waiting for the next bailout wave to quickly grow to over $1 TRILLION! (sorry for the CAPS, but TRILLION! is a huge concept). I expect another wave of layoffs/firings/bankruptcies amid slow consumer demand. I expect at least 2 more large fraud scandals to emerge from Wall Street. And in all of this I feel like a steady tax-payer that is being ask to pick up the tab for someone else's poor judgement. Regardless of my respect for the presidency, there is not faster way to disenfranchise me than to force me answer for the mistakes of others. Screw the stock market. Let it go down. Going down is 1 of only 2 things that a market can do.