What If It Get’s Worse? Get Ready Anyway.

Weather Report: The Economy–What If?

The Economy–What If?: Here at PrudentHome.com we’ve been caught up for the last couple of weeks in concerns about swine flu, a preparedness-book review and the status of world food production. Bits and pieces of economic news crept in here and there, expected increases in unemployment and bankruptcy filings as well as some possible adjustments in the credit card debacle, but something around the edges seemed to be growing; a distinctly more positive economic outlook from the government.

We were kind of surprised with all the “green shoots” talk from almost every government official and thought that just maybe there was some co-ordination involved: as in a clear plan to “blue sky” the current and future economic situation. We weren’t the only ones.

Michael Panzer over at financialarmageddon.com (a good daily read) observed the same phenomena and raised an interesting question regarding not just the coordinated “blue sky” chatter but also about the economic recovery plan itself: “What If It doesn’t Work?”

Here are some highlights from Mr. Panzers 5/8/09 post:

• Mr. Panzer notes that among “realists/cynics …it’s not hard to figure out the game being played in Washington and on Wall Street.” The game being played is one of buying time: buying time until the economy turns around, businesses adjust and turn around or until the clock runs out on this administration and it turns the problems over to the next.
• “Those pulling … the strings are also trying to make use of programming techniques that have long been advocated and employed by “personal development” gurus and neuro-linguistic programming (NLP) experts — that is, get people feeling better about themselves and believing in the vision of good times ahead, and they will act in such a way as to make it happen.”
• “The U.S. Government has done everything in it’s power to avoid the perception that it has lost control.” “And if the stock and bond markets continue to go straight up and if risk premia fall, then the ’Big Brother” approach taken could be vindicated.”
• “But what if, just what if, the economy HASN’T (caps ours) turned the corner? What if job losses continue apace, residential mortgage defaults continue to rise and corporate bankruptcies spike?”
• What if the problems in sophisticated financial instruments such as CMBS‘s, RMBS’s, and CDS’s don’t get straightened out in a timely manner?
• What if “… the Chinese government gradually reduces its net purchases of US Treasuries, and also shortens the duration of its Treasury portfolio?’ What if “… the US Treasury continues the printing presses, the Chinese would gradually build a compelling argument … as to why the US Dollar should no longer be the global reserve currency and the basis of exchange in oil. Profligate spending coupled with fewer willing buyers will drive up US dollar long rates, debase the currency and set off a very unpleasant inflationary cycle.”
• “The Administration and Congress have clearly taken the path of least resistance. … The path taken looks and feels good today, but potential troubles lurk just below the surface.”
• “Is there a monster in my closet? Well, maybe …”

The concern for prudent homes all across America is our country’s economic well-being. In the largest economic arenas, individual families have little play. But we can do much in our own homes, among our own families and neighbors, to mitigate the effects of this economic crisis and perhaps that will be enough.

Until next time; keep your eyes on the horizon as the weather’s changing fast.