The Next Bull Market Starts ... Tonight?

Today, President-elect Obama officially became President Obama. One of his first actions will be to sign his epic stimulus plan into law. If all goes according to plan, this event marks a rare chance to get in on the ground floor of what I believe could prove to be a government-fueled market rally.

Money on the sidelines
But first, consider this: Investors are sitting on a mountain of cash right now -- $8.85 trillion, to be exact. They're sitting on the sidelines ... waiting for something.

That mountain of cash represents a nearly two-decade high. According to Bloomberg News, the ratio of cash to market value is at its highest level since 1990!

Is that much cash enough to fuel a monumental rally?

Cash, meet catalyst
I think so -- and I think the rally it creates will produce investment wins we'll still be talking about decades from now.

The president's unprecedented plan -- what The Wall Street Journal calls "Obama's New Deal" -- is designed to reignite the economy and address urgent infrastructure issues that can no longer be ignored. These problems caused blackouts in New York City, the levees failing in New Orleans, Minneapolis's I-35W bridge collapsing into the Mississippi River, and on and on.

But this isn't the FDR dam-building of the 1930s. This is a vast 21st-century project designed to improve existing infrastructure and invest in modern technologies like clean energy and broadband -- creating millions of jobs along the way. And a select few industries and companies could benefit disproportionately.

Which companies benefit most?
You probably recall how energy independence was a hotly contested issue on the campaign trail. It should be no real surprise that Obama's "New Energy for America" plan calls for an estimated $150 billion investment in "repowering" America -- specifically with alternative energy projects.

But before we flip the switch and go 100% green, we need a bridge to our clean energy future. This means boosting production of "alternative energy" sources we can tap right now. One obvious beneficiary is natural gas, and one company in a good position to cash in is the No. 1 producer of natural gas in America, Chesapeake Energy (NYSE: CHK  ) .

You see, unlike the nebulous "bailout plans" that are propping up financial institutions such as Citigroup (NYSE: C  ) and Bank of America (NYSE: BAC  ) and struggling automakers like General Motors (NYSE: GM  ) and Ford (NYSE: F  ) , Obama's New Deal isn't a bailout. It's a massive investment that will hand billions of dollars' worth of projects to healthy, competitive companies like Chesapeake Energy. That endeavor's worth investing alongside.

Equitable access to information and technology
But Obama's plan doesn't stop with clean energy. It also seeks to improve the lives of Americans everywhere with real, tangible benefits -- like high-speed broadband Internet access that can narrow the so-called digital divide.

Believe it or not, about 50% of Americans still don't have high-speed Internet access. That means that the United States -- where the Internet was invented! -- ranks 15th (slightly below average) in terms of adequate citizen access to broadband service.

Just as Roosevelt's New Deal brought electricity to rural areas during the 1930s, Obama is planning to bring high-speed broadband Internet access to "every community in America," to ensure that even lower-income areas have access to information and technology resources. That could be good news for companies like Comcast (Nasdaq: CMCSA  ) , who could vastly expand their customer base and broadband infrastructure to meet Obama's ambitious goal.

It's also good news for IBM (NYSE: IBM  ) . When Obama's transition team asked IBM whether investing in Internet infrastructure could create jobs, CEO Samuel Palmisano reported that expanding broadband access, digitizing health-care records, and improving the electrical grid could create almost 1 million new U.S. jobs!

And it's no coincidence that Obama reached out to IBM. As a world leader in building energy-efficient "green" data centers, it's well-positioned to scoop up some of those lucrative government contracts for expanding our broadband infrastructure.

Are you in the right stocks?
But clean energy and Internet infrastructure are only the beginning of what Obama plans to achieve -- and his New Deal is projected to create between 3 million new U.S. jobs by 2011!

In fact, if the president's jobs plan moves along, economist Mark Zandi told the Journal that by 2010, what's currently predicted to be a 1.6% decline in gross domestic product could turn into a 1.9% increase.

So why not wait until 2010?
Let me be clear: No one knows for certain when the next bull market will start. One thing I do know, however, is that by the time you read about a recovery in the paper, the lion's share of the profits will already be booked.

That's why right now may be your golden opportunity to get in early on the next bull market.

Yes, I believe in buying stocks in these uncertain times, but not just any stocks -- I'm specifically talking about stocks with competitive advantages, competent managers, and tailwinds from the Obama New Deal.

But you must act now.

New deal, familiar Fools
Of course, if you'd rather not go it alone, I invite you to check out a trusted, independent resource: Motley Fool Stock Advisor.

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Ryan McLimans owns shares of IBM. Chesapeake Energy is a Motley Fool Inside Value selection. Bank of America is a former Income Investor recommendation. Yes, The Motley Fool can have a disclosure policy.


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  • Report this Comment On January 20, 2009, at 5:13 PM, GamecockStuey wrote:

    The budget of the Federal government was listed at 2.6 trillion last year. They have had all the money they need to fix 'infrastructure.' They just choose to spend it elsewhere. The bridge in MN collapsed due to an engineering flaw, not neglect.

  • Report this Comment On January 20, 2009, at 5:34 PM, GigMaster wrote:

    Alas, young kool aid drinker. You know not what you're talking about.

    As GamecockStuey aptly pointed out. The Government has been taking our money for years for such things as infrastructure maintenance. What do you think the Corps of Engineers and the DoT are for? They wasted our tax dollars. They'll waste them again.

    Spend a trillion and all will be well? Bull. You can be that a good slice will wind up in the pockets of cronies and not in the infrastructure.

    Next what makes you think that 2 months of "planning" has hatched a coordinated plan to solve our problems? This $1T give away is being rushed through to take advantage of our crisis mentality. This will be a half-baked give away nothing more.

    Any real projects they actually commence, will end up costing three times as much guaranteed. After all we are talking about Government programs.

    Will signing of a $1T spending binge spark a rally? Possibly. Many blind fools (small f) don't see how this is going to play out, and they will rush in for the final kill by the high rollers.

    We can't solve an excessive spending and debt problem with more excessive spending and debt. The banks are insolvent and soon the Federal Government will be too.

    Have another sip of kool aid and take some soma while you're at it.

  • Report this Comment On January 20, 2009, at 6:10 PM, XMFTheNew wrote:

    Shytid,

    Thanks for your comment. I agree the government can easily skyrocket the costs of projects and waste money (exhibit A: the Pentagon's "$600 hammer")... And that most of this $1 trillion plan is in the form of a tax-cut to get us spending again and cure our recession blues…

    But I also know of a tiny town in Wisconsin called Lynxville. During the Great Depression my family helped build "Lock and Dam #9" on the Mississippi River as part of FDR’s infrastructure program in the original New Deal. It kept that tiny town alive during the Depression by providing jobs to its residents which in turn made it possible for my Grandmother to finish high school.

    So while Obama’s plan to repower America could be prone to government waste, we need “something” to reignite our economy and our “mentality” as you put it. I think a GOP-led tax-cut and billions in energy projects that could provide millions of jobs for small-town America could be just that catalyst.

    - Ryan

  • Report this Comment On January 20, 2009, at 6:33 PM, dockofthebay wrote:

    This is a bit of a digression, but I hope that Obama focuses on eliminating such abuses as the speculation which took place in oil futures from 2007 well into the summmer of 2008. Anyone could see that this meteoric rise in oil price was not based upon supply and demand.

    Yet, our government stood back and allowed the likes of Goldman Sachs and Morgan Stanley, as well as hedge fund operators and sovereign wealth funds to make life miserable and very difficult for many millions of Americans. It was unconscionable on the part of Wall Street It was also unconscionable on the part of our government for not stepping in to stop the abuse and damage to so many honest and hard working people.

  • Report this Comment On January 20, 2009, at 7:41 PM, mberan wrote:

    It was 72 degrees here today suddenly at noon, the birds were chirping, global warming had ended, cars were all suddenly transformed to solar power.....it's the power of Obama!!!!

    Nothing will change! Congress is the issue. Congress caused this mess with Fannie and Freddie.

    Oh, only one problem with the power of Obama, the market was down 300+

  • Report this Comment On January 20, 2009, at 8:44 PM, pmbarrett wrote:

    This is a joke, right? Because it certainly is funny! This so called stimulus plan BHO is offering is NOT a stimulus plan it is a political spending plan. None of the millions of jobs he "thinks" he can create or save are even going to happen in this year. The "green" jobs he thinks "he" can create are in technologies that have yet to be perfected, or even proven to work. And how, pray tell, are the 600K jobs "he" is going to create in government going to offer any economic stimulus to our economy?

    The ONLY way to get out of the financial mess we are in right now, is to manufacture our way out! And since we don't manufacture anything the rest of the world wants, it could be a long time before we see economic freedom again. Hell, we can't even feed ourselves anymore. Our farmers are consumed growing crops, that we stick into our fuel tanks at government subsidized prices. We now have to import such basics as tomatoes, oranges and wheat.

    Before you go writing some pie in the sky article about how BHO is going to turn this disfunctional country of ours, you maybe should find out how we got out of the last depression/recession. It wasn't by shuffling papers and selling credit default swaps, or refinancing mortgages. We sold other countries product, product that we now import. Economics 101. Learn it!

  • Report this Comment On January 20, 2009, at 9:27 PM, XMFTheNew wrote:

    pmbarrett,

    I agree that corn subsidies for ethanol are completely ridiculous. And I buy local meats, milk, and vegetables from farmers every Saturday in my hometown in Virginia. Agriculture is one area where America should excel. The fact that we import so much food is insane! (I think that very reason is why Obama won Iowa).

    I interpreted Obama's plans to be we can make our own cars here, grow our own food right here and we aren't even doing that. Americans making products for Americans. That could be a huge growth industry in itself. And our biggest import that used to be homegrown?

    Energy. We can debate which technologies are proven and which aren't... but sitting on the sidelines and continuing to send a half trillion dollars overseas ever year for oil and then claiming their isn't a solution doesn't sound American to me. Last century, science and education were the cornerstones of American industry. We became a superpower. Politics aside, I think I am agreeing with you.

    Because frankly the government writing a blank check to the banks and institutions that got us in this mess in the first place disturbs me. I wrote this article to shine light on a program I hope could actually give us something tangible… new jobs. And doing what America does best – which is definitely not shuffling papers around but building and innovating.

    Thanks for your comment,

    Ryan

  • Report this Comment On January 20, 2009, at 9:32 PM, trenton1ryan wrote:

    <I think so -- and I think the rally it creates will produce investment wins we'll still be talking about decades from now.>

    Ryan, today's market action should tell you that the above is a daydream. We are in way over our heads, and though something needs to be done, spending our way out of it won't work. It will only bring inflation on that much sooner.

    I've been saying the same thing in all my posts on this topic, namely, that this mess will take 3-10 years before we see any measurable daylight. We didn't get here in 6 months or a year or 2 years and we won't get out of it in any of those time frames either.

    Where are the sober MF writers??

  • Report this Comment On January 20, 2009, at 9:33 PM, GigMaster wrote:

    Ryan

    I appreciate your reply and thanks for taking my sarcasm in stride.

    I can tell you're proud of your family's accomplishments during the depression, and you should be.

    I don't deny that Government spending during the depression kept some people fed, but it didn't solve the depression. In fact, many economists believe that massive spending prolonged it.

    If you look at the terminology of Government spending, in just the past 20 years we have gone from talking about 10's of millions, to 100's of millions, to billions and now TRILLIONs. The federal debt is going parabolic. Tax revenues will not keep up and foreigners will begin dumping our bonds.

    What happens then? Default and/or hyperinflation. It will be ugly. We are only at the start of this problem.

    Consider this: 2008 saw 2.3 Million mortgages slip into default or outright foreclosure. If we multiply that by the median home price from 2007 of $220k, we are facing a problem that exceeds $506 TRILLION!

    The banks are done. They are insolvent. The Government will soon follow suit. In the short run, the fat cats will get a whole lot fatter.

  • Report this Comment On January 20, 2009, at 9:55 PM, beyondgreen wrote:

    The high cost of fuel this past year did serious damage to our economy and society. After a brief reprieve gas prices are inching back up again. Our nation should not allow other nations to have such power over us and our economy . We have so much available to us in the way of technology and free sources of energy. WE seriously need to get on with becoming an energy independent nation. We are spending billions upon billions in bail out dollars. Why not spend some of those billions in getting alternative energy projects set up. We could create clean cheap energy, millions of badly needed new green jobs and lessen our dependence on foreign oil all in one fell swoop. I just read an eye opening book by Jeff Wilson called The Manhattan Project of 2009. It would cost the equivalent of 60 cents per gallon to drive and charge an electric car.If all gasoline cars, trucks, and SUV's instead had plug-in electric drive trains, the amount of electricity needed to replace gasoline is about equal to the estimated wind energy potential of the state of North Dakota. Why don't we use some of the billions in bail out money to bail us out of our dependence on foreign oil? This past year the high cost of fuel so seriously damaged our economy and society that the ripple effects will be felt for years to come. www.themanhattanprojectof2009.com

  • Report this Comment On January 20, 2009, at 10:18 PM, Seano67 wrote:

    I do agree that energy independence *has* to become an absolute national priority, and President Obama seems pretty determined about making it one, so let's keep our fingers crossed.

    It's a serious risk to national security to be so beholden to foreign powers (and many of them not particularly fond of us) in an area so vital as energy.

    We've got to learn to become self-sufficient, and that is going to require some sacrifice. I've done it myself, when I got rid of my car in favor of a bicycle and public transit. I'm in much better shape physically, and feel better about myself too. Hey, some people out here are trying. I think a lot of people are actually. Americans are driving significantly less (or at least they were as of last month), even as gasoline has gotten cheaper and cheaper.

  • Report this Comment On January 20, 2009, at 11:10 PM, pmbarrett wrote:

    Ryan , thank you for your response. Yes, we agree more than we disagree, however, I will continue to disagree on the GOOD that government can do to resolve our country's problems.

    The government sector has none of it's own working capital, it has to take from someone else (taxpayer) in order for it to "invest" in any economic initiative. That means that it has no real vested interest in seeing the initiative work. (Just look at how well our government managed Freddie and Fanny). In order for government to have a positive affect, it needs to just offer tax credits/rebates and incentives to the business sector, then get out of the way!!!

    As far as energy, "green jobs" are a long way down the road. We all want independence for the weird beards in the Middle East, but right now we have 535 Americans in Washington, DC standing in the way! Drill everywhere we can, tax it accordingly and use those revenues to fund the next phase of energy independence. Stop spending what we don't have!!!!

    As you can probably see, I am no fan of BHO, but he is our President, and if he actually has some viable ideas, I will listen. But, if he thinks we can spend our way out of the current mess, well, then it's just more of the same old, same old. It hasn't worked in the past.....and it will not work in the future!

  • Report this Comment On January 21, 2009, at 4:24 AM, lasvegaslf wrote:

    Simply put , we need jobs here in America so the US citizen can work again !!!

    Give us jobs , and we can start to slowly buy again - other than the basic essentials.

    If the government can get some people back to work , great ! Unfortunately , the companies laid off by the thousands , so anything will be welcomed .

    Maybe bring manufacturing back to the USA?

  • Report this Comment On January 21, 2009, at 4:40 AM, dividendgrowth wrote:

    The move in US$ and US Treasuries says that foreigners are DESPERATE for them.

    If you follow the market since September closely, US$ always rallied when bailouts or new spending plans were announced.

    The strength of a country's underlying economy primarily determines its currency. Trade deficits are secondary.

  • Report this Comment On January 21, 2009, at 5:18 AM, NotaDoc wrote:

    I think what realy needs to happen to spark our economy is getting executive pay back in line. It is absolutely rediculous for anyone to be earning 200+ times what the average worker is making. When working class wages start to catch up, most of these "problems" will go away.

    Notadoc

  • Report this Comment On January 21, 2009, at 11:27 AM, andys2i wrote:

    Okay fundamentals are not great, but the sharp falls are caused by pure panic. I think we have yet another golden trading opportunity and I am using UYG ( http://www.savingtoinvest.com/2009/01/banking-on-rally-for-q... ) to double my play on a financial sector bounce. Just wait and watch.

  • Report this Comment On January 21, 2009, at 12:34 PM, markkauffman2000 wrote:

    GigMaster wrote: "Any real projects they actually commence, will end up costing three times as much guaranteed. After all we are talking about Government programs."

    YES, yes, yes! Government BAD WASTEFUL!! Private industry - GOOD, EFFICIENT, TRUSTWORTHY!!!

    We need all of our public programs managed by private industry - like those who run Enron, the auto, and the banking sectors. These people are good, honest, and hard working. They are the only ones who can lead us back to... Actually we shouldn't even have public programs! Everything should be private!!! Then everything would be wonderful and we wouldn't be in this mess we are in!

    (Who's drinking koolaid???)

  • Report this Comment On January 21, 2009, at 1:25 PM, PauvrePapillon wrote:

    “I call upon all responsible, productive people to work hard and sacrifice so that we can redistribute their incomes to those who will never be able to find a decent job because they refuse to buy into bourgesoise middle class values like staying in school or learning a trade or finding a husband before starting a family but are, nevertheless, the Ones We Have Been Waiting For because they will get on a bus and go vote for me whenever and wherever I need to send them.”

    His Exaulted Excellency Barack Hussein Obama (FIBPOTUS)

  • Report this Comment On January 21, 2009, at 3:33 PM, PVHamilton wrote:

    This is idiotic. There is not going to be an infrastructure rally; case in point, FDR's new deal was an epic failure for its goals. This won't be any different. Consider, the people who are really giddy over Obama tend not to have any money in the market. The people with this cash on the sidelines think Obama's plan sucks.

    And the only people willing to bet on a rally are like those who wrote this article and are expecting all the "money on sidelines" to jump in. it's not happening people, give it up.

  • Report this Comment On January 21, 2009, at 3:37 PM, xPhr0z3n wrote:

    What's wrong with a little optimism? The world is not ending and I thought he made an excellent point by saying that the time you realize it's a bull market, the major gains are already gone. Good article, it's nice to a positive article about our future

  • Report this Comment On January 22, 2009, at 6:59 PM, SnapDave wrote:

    GigaMaster,

    Your math is a little off. It should be $506 billion not trillion. But, we’d be lucky if that was all. You also have to consider CDS’s and made-up instruments that are solely for gambling on mortgage (and other debt) outcomes. Then there is accelerating credit card debt. And remember all those private equity deals on highly leveraged companies that are now facing declining sales?

    However, I don’t find fault with the author trying to find who will benefit most in the coming years. The alternative is total financial Armageddon in which case nothing matters. Why not plan for less dire outcomes?

  • Report this Comment On January 23, 2009, at 1:29 AM, trenton1ryan wrote:

    <What's wrong with a little optimism?>

    Because things are going to continue to get worse, and pretending they're not is for the pollyannas. I voted for Obama, but it was more against McCain and Palin than it was a vote for real change. The man is smart, but he's got Clintonites all around him and way too much for any man (or woman) to deal with in one lifetime.

    We're going through a purging process, and it's going to be ugly and it's going to take time. Credit markets will never be the same. Anything (or anyone) too leveraged will face the grim reaper-mark my words.

  • Report this Comment On January 23, 2009, at 9:51 AM, sarahoneill wrote:

    Broadband penetration is so important not just for the US and our economy but for our standing in the global community. But if people won't use it, there's only so much good it can do. There's an interesting article about why people don't use broadband or the Internet at all <a href="http://www.atelier-us.com/e-business-and-it/article/new-broa....

  • Report this Comment On January 23, 2009, at 10:30 PM, louisryoshin wrote:

    Financial Market speaking, we're still in a down wave -with the next leg down to 7000 ish probably in the first quarter - so stock invesments may not be such a good move when the entire market drops. However after that, we can have a bear mkt rally back up to 11,500, in 2009. And then the forcast is to have a drop to maybe 5700 on the DJIA - maybe to 2012, and THEN a huge rally of 4000-5500 pts.

    In the meantime, yes, it's a good idea to put the government money it keeps printing into refurbishment of foundation of society. I'm an electronics engineer, so all these goals from Obama's backers are a good idea - I say backer's because Obama is the spokesperson for the large corporations who have already invested in solar, wind, and internet - and the larger companies will indeed get the money to expand into these areas.

    I wouldn't call it a giveaway, but rather, a way for these large companies, including the energy-oil companies - to grow. That's always how it is, so it isn't necessarily bad, as long as it does indeed provide jobs that pay well.

    One of the problems with Pres Reagan's increase in jobs orientation was that it increased low paying jobs - just look at how many gasoline stations in Los Angeles, for instance, were knocked down for mini strip malls that featured fast food restaurants. At the same time, industrial producation jobs went overseasSo this administration's ideas are at least correct. And this is a contraction and consolidation from the excesses of the fifth waves of the grand supercycle. Hence, there will be fewer chain stores selling electronics and computer equipment, and circuit city goes out of business.

    For whatever reasons we put in it, such as too short a time frame to reorganize, .the collapse of the paper credit bulge of the past 25-30 years which made an even stronger wold wide interpenetration of economies, means people have less money to buy so many gadgets - just as companies are buying fewer of the newest fastest more bells and whistles computers - the trend of the workd society is - sincere - save more and not spend unwisely - and handle the world wide needs - it is in fact a popular rebellion against the wastefullness of UN-EFFICIENT excess. (Not just in-efficient, more like totally unneeded.)

    China wants to build more dams and other things with concrete cement. The US wants to build more non-carbon renewable energy sources, and also, bring more of our education of our own populace abck up to speed. At the same time, build the new Ares Super Rocket to bring the US back up to more stature in space - which will also feed the economy with well paying jobs in large industry - as the Apollo-Saturn program did, and as the building of war vehicles and planes did in WWII, which is what trul got us out of the depression of the 30's - with 1942 being the bottom of Wave 2 - which then grew Ameerica's industry into 1965-1966, which was the actual peak of the US's Actual financial strength during the last Supercycle - from 1932 to 1999.

    So the idea is correct, and Obama got his foundational wealth support to get elected from companies like GE and Exxon-Mobile because THEY are poised to make the money in this new program.

    I think it will succeed in the long run because the American multi-nationals are invested in it to happen.

    My own preference is also to further replenish the atmosphere and water supplies incl aqufers and desalinization stations - outside every major coastal city and huge water pipelines from them and a canal from the Arctic to the great lakes.

    I would also like to see more trash to energy large factories in major city areas, to not only create another source of energy, but to start clearing out the landfills that have, for a decade or two, been overflowing. And more tidal power and river power - such as St. Louis, Kansas City, Memphis, New Orleans, all having large energy producing generators from the Mississippi River current.

    Building all these doaens and hundreds of large structures will require new companies, which can employ the laid off workers, including managers and book keepers and security guards, from car, airplane and other companies, as well as inner city people.

    Accordint to more complete information than the gov't puts out, the real unemployment rate in the US is now about 17%. In the depression of the 30's the economic bottom had a rate of 25% - for a Supercycle correction bear market. With a Grand Supercycle correction it is estiamted by Elliot Wave analysts to be 33%.

    Obama and every other actual "leader" (read - NOT bad CEO) wants to employ lots of people, and raise the tax base as well as the corporate profits. JUst look at all this potential - 1/3 of the US adult population can be put to work in large amounts of industry.

    That's the optimist - but we are still in the beginnings of the Bear Market - so the hype for the purchase of stocks is not really a solid bet right now - because the prices are about to drop again - THAT is of course why all the money is till sitting on the sidelines. And there Is a lot of money available.

    It just takes SOLID industry of planning and good financial and company plans that are believeable by the folks with theis money.

    Venture Capital investment is indeed also way down, and that means not only is there less money because of the credit collapse, but because the people with the money want assuredness they will get paid back, just like there will be millions of ars sold in the US next year, just many millions less than in years past. And you can get a loan from a bank if they are as assured as they can that you will pay them back in full - because that is how banks make their money.

    The overall trend in a Bear Market is less international trade in how things were done for decades, and more of each country to rebuild itself where it needs to. The international shipping volume is now down 70-80%. Nobody is buying this "stuff." The international matrix of industry will be the obvious extension that is already going on, energy, communications, and technology.

    And in a country there CAN BE labororers learning oil, shale oil, and natural gas hands-on developing - and at a lower wage than it used to be - and the companies supplying the equipment to get it out of the ground - including the pipes - will also take less money and drop their employee rolls - and then oil and natural gas will be more available and at the lower price that is coming.

    This is what a major bear market and Consolidation does in a natural action due to the contraction of the money supply. Deflation means it takes less dollars and less pesos to buy the same stuff. We all know that.

    This IS the trend that is unstoppable.

    All we have to do is harness the trend by getting

    behind the wage and raw cost. Including dropping rents even more - and THAT will require the biggest change - how to readjust the mortgage and banking industry - with homeowners and apartment building owners to keep their buildings and charge less - and BE CHARGED less - including for food their families eat.

    Often, the last thing to drop is the rental cost and housing cost - but it is dropping along with the financial sector very fast.

    If I was God for a Day (a la Jim Carey, etc, in the movies) the major action would be to manage this drop so that no one loses their homes, mpost people get more job employment to pay for the appropriate housing cost, and the commercial (not investment)banking industry gets re-organized internationally without too much more loss of theitr own employees.

    Lou

  • Report this Comment On January 24, 2009, at 5:19 PM, beertrain wrote:

    Ryan,

    I have to admire you on the basis of igniting the masses!! I agree in part with most of the commentary by the other Fool members in that your article paints a rosy picture and is not based in reality.

    If the Great Depression is the Case study, then all your readers need to go back to history class. The short of it is as follows: FDR did not get us out of the depression based on his econmic spending programs. In fact, the economy was still floundering prior to World War II. FDR was re-elected on the basis of promising to keep America out of the war with the Germans, not on his "brilliant" economic stimulus programs. The fact is, America did not emerge from its economic difficulties until AFTER World War II.

    I am not suggesting World War III as the solution to our problems, however, do point to the idea of spending your way out of a deep recession has not been demonstrated as an effective solution.

    In my opinion, the economy will not rebound until we restore consumer confidence. To accomplish this, we have to bring stability to the economy whereby people don't fear their job will be cut next. The greatest obstacle to accomplishing this is the ability for small businneses to obtain capital at a reasonable rate. We would expect the banks to assist in this endeavor, howver, look at them! I am predicting 2009 will be remembered as "the year of the bancrupcy".

    We are a misguided group. In example, the Government and others believe that loaning more money to GM will solve their problem. The fact of the matter is GM is not selling cars and not because they are bad products. GM can not get better until the curent inventory is liquidated (i.e. sold) and consumers go about their business buying cars. So......if consumers are not buying the current models at steep discounts, what makes you believe they will buy the more expensive "green" cars? If GM goes to Chapter 11, how many parts suppliers and services companies will be impacted? This will not be the trickle down economics discussed by Pres. Reagan, but will be the floodwaters of a broken levee.

    FDR could not fix the economy with the last "Great Deal" which invested in infrastructure and many other ideas submitted by the current administration.

    For those who don't know.......Einstein's definition of insanity: You do the same thing over and over, but you expect a different outcome.......... The new "Great Deal" looks alot like the old "Great Deal"so what why will you expect the outcome to be different?

  • Report this Comment On January 26, 2009, at 10:59 AM, DaCheeze wrote:

    Pmbarrett, obviously you slept through Economics 101, because if you were awake you'd know that we have not been a manufacturing nor agararian economy for some time (for the most part). We have become a service-based / consumerist economy starting in the late eighties to present day. To think we can manufacture our way out of this is ridiculous, and ignores the fundamental shortcomings of our market economy.

    1. The unaccountability of corporate governance. CEOs are getting away with murder at investors expense, and now at taxpayers expense.

    2. The eroding of the US tax base by outsourcing of jobs overseas to low-cost regions. Less people who have jobs in this country means less people to pay taxes... etc,etc. Outsourcing also fuels the trade deficit as well, so more money is leaving the country than is returning.

    3. The reduction of R&D in this country, and the transfer of that technology to other low-cost regions.

    4. The destruction of savings for the sake of consumption... and the rise of debt, both public and private. Individual savings is at an all-time low. The US government is at an all-time high thanks to the Bush administration. This has led to...

    5. The devaluation of the dollar compared to other currencies. Now the dollar buys half of what it used to.

    6. Intense speculation and lack of oversight in the housing, securities, and commodities markets.

    7. Lack of accountability and transparency of government.

    It has been a continued mix of factors that has led to where we are now... but I also feel there is alot of fear out there as well... I think this is awesome time to line your portfolio, if you haven't mortgaged your home to buy a big-screen TV and third car. :-)

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