Monday, October 06, 2008

The golden fleecing

It is just conceivable that Ben Bernanke, Henry Paulson, and the rest of the federal stickup gang actually believed that the Bankers' Comfortable Retirement Act of 2008, popularly known as the bailout bill, would put paid to the economic crisis. More likely, they and El Presidente didn't want to be seen as do-nothings in the face of the ghastly financial mess they had a controlling interest in creating.

George Bush said it was a plan for Main Street, not Wall Street. Nancy Pelosi said, "All of this was done in a way to insulate Main Street and everyday Americans from the crisis on Wall Street," and "the party is over. No longer will taxpayers be forced to bail out reckless investors." Not till next time.

If you were watching the tape today, you may have noticed that so far the medicine (price per dose: $850 billion) doesn't seem to have been very therapeutic. Investors — smart money, dumb money, it didn't matter — gave the bailout a New Jersey salute.

This blog has been quiet for a few days because, among other reasons, I really didn't want to do another economy posting. It's not my field, normally. But for some time to come we're all going to have to be very involved with economics, like it or not.


If you have an investment portfolio, it's relatively easy to put up the storm windows; just go to cash equivalents (money market funds) or Treasury Inflation Protected Securities (TIPS). You won't make any money, and you'll lose to inflation (even with TIPS, which are based on a manipulative formula that understates the rate of inflation), but you'll keep most of your dough. Or you can go bargain hunting — risky, but there appear to be some extraordinary values in commodities and energy. The market currently loathes them (loathes just about everything), but it is their nature to move in extreme cycles. I took some shares of El Paso, a natural gas play, when they sank to a ridiculous $9.68. They could go lower.

The economy ought to be just background noise, something we need to think about a few times a year, but that isn't the status quo. You've got to pay attention and have a strategy. Best of American luck to you, friends.



zazie said...

Please, for an ignorant French lady : what IS a New Jersey salute ? If it is really too rude for you to write, just tell me so ; I'll find a solidly disgusting French equivalent ; we've got such a rich slang!

Rick Darby said...


"New Jersey salute" is a slang expression for a very rude hand gesture. The term is not actually used widely in American English (except possibly in the vicinity of New Jersey), so you may not be the only person who was puzzled, but it struck me as colorful when I heard it.

New Jerseyites, like New Yorkers, tend to express themselves directly and forcefully.