I'm Going Back To Tennis Camp
I go away for two weeks and all hell breaks loose. Andrew, Pete... I thought we discussed this before I left: No major changes while I'm gone.
Not only did I go to tennis camp, but I spent the past week or so in Yosemite National Park feeding my soul. No cells phones, no e-mails, and no newspapers. As a result, I had...and wanted...little information about Fannie, Freddie, Lehman, AIG, the still-increasing deficit, the election, or the Washington Redskins. And I thought yesterday would be a day to catch up.
So just a few brief comments on the craziness.
1. There seems to be a substantial change in the reporting on the financial situation. There was a certain almost arrogance and swagger just before I left. The mantra was that Bear Sterns was the beginning of the end of the problem. I don't hear that now.
2. There also seems to be a change in the perception by those not in financial services --Main Street -- about what's happening. The economic optimism that was starting to creep into the polls and election now appears to be nowhere to be found.
3. There's nothing ilegal about losing money unless fraud is involved. I don't think there will be too many Bernie Ebbers-like perp walks any time soon.
4. President Bush's statement yesterday on the current situation was close to pathetic: just three paragraphs at the start of an event with the President of Ghana. It had no impact and provided little assurance to markets and individuals who needed to be reassured.
5. The tone of Hank Paulson's press conference also was not reasurring. He got tough questions asked with a far more accusing attitude and he seemed far less in control. I kept wondering how different it would have been had Bob Rubin been there.
6. By the time you read this the Dow may have recovered some from yesterday's 504 point drop. But it started today just above 10,900, which is remarkably and unbelevably close to the 10,570 level that existed on the day George W. Bush took the oath of office in January 2001. That's an average increase that's well below the rate of inflation during the Bush administration and it means that lots of people are far less well off today than they were before. Pension funds, retirement accounts, etc. have all taken a big hit.
7. I was asked repeatedly yesterday what impact all this would have on the election. My first reaction is that it's hard to imagine how this can be good for the Republicans. And some of the early responses from the GOP campaigns was that this all started before George Bush took office, that it was Bill Clinton's fault, that it was Alan Greenspan's fault, that it was anyone but their fault. I'm not sure that will fly.
8. You can't help but wonder why a Bear Sterns bailout was acceptable but a Lehman (and AIG?) bailout wasn't. Paulson didn't answer the question when he was asked (and asked, and asked) yesterday and what he did say doesn't make a great deal of sense. He indicated that the Bush administration was thinking about the moral hazard issue and decided that Bear, Fannie, and Freddie were enough government involvement in the economy. To me, that raised even more uncertainty about what can be expected from this White House at a time when the last thing we need is uncertainty. It's almost the worst of both worlds from the Bush administration and may eventually be seen as a Herbert Hoover-like blunder.
Finally, my topspin backhand is much better. Thanks for asking.