The Blog Of The Securities Industry Professional Association

The Swine Flu And The Economy

How to tell when the real Bottom has occurred

Lehman Brothers, Bear Stearns, AIG, Washington Mutual and Wachovia Failing, TARP programs, 4500 point Dow Drop, Housing Crash, Credit Crunch, Layoffs, Foreclosures, more Layoffs, Credit Crunch, More TARP money, Bankrupt Automakers, Government Takeovers, Pick a Ponzi, Bernie Madoff, Sanford, Harbor private funds, Wall Street Bonuses, 3 trillion in government spending, Wall Street Greed and Bonuses with TARP money, More TARP money, Hyperinflation on the horizon, more layoffs and finally…..The Mexican Swine Flu.

In a weird way, the Mexican Swine flu outbreak which caused thousands to skip school and don masks, may be the single best metaphor for what we have received in information from our supposed economists and bobble heads on CNBC. Although it’s a non stop run on sentence, reread the first paragraph which starts basically in the Summer of 2007 and recount if you can how many times you heard economists or the bobble heads say “ I sense we have seen the bottom” or worse, “ This sell off may have been profit taking”….as Charlie Brown once so eloquently said “ GOOD GRIEF YOU STUPID !#*@!”

The swine flue epidemic (or lack of it) in a sense tells you all you need to know about the horrible information being distributed by the media. In the summer of 2007 it was obvious we were in big trouble yet everyone kept calling a bottom. The swine flu however had the very same bobble heads predicting millions of deaths and untold devastation on our GDP and as of today two people in America have died…one wasn’t even and American but was a Mexican who came over the border for health care ( that’s another story for another time!). The American Economy has been very similar to the flu in many ways.

When the toxic assets first hit most of the nation was in denial…kind of like when you first start getting sick and you keep telling your wife that your not sick and you just have this cough because you were yelling at the football game the other day. The next stage is the “ok I’m sick but if I take 10 Vitamin C tablets and a couple Zinc tablets mixed with Nyquil shots I will be fine in the morning”. Isn’t that exactly what the Fed Reserve did when they started lowering interest rates every three days with the hope that nobody would notice the economy was really sick??? The next stage is the “Oh my god Honey, I think im going to die” stage. That’s when you curl up around the porcelain throne and in between yells of some guys named “ HERB and RALPH!!” you vow to never drink again, to eat nothing but carrot sticks and wheat grass for the rest of your life and when your wife comes in and offers you a suppository because she thinks it might help, you readily agree because you would try anything at this point and would rather pass things from the other end rather then from your mouth!!! This grotesque description pretty much sums up the whole TARP program. A big Giant Suppository for the entire country to take in order to try and stop this horrible free fall. A few days and a couple thousand coughs later….you actually stand up strait without feeling woozy and even muster up the courage to open the blinds in your room like you’re a vampire daring the sun to take you on..A couple hours later you brave it on your own and actually eat some chicken soup with some plain toast or melba…there is nothing more satisfying then some chicken broth and plain toast when you have been sick for a week.

Right now our economy is drinking chicken broth in a robe with some melba toast. Are we cured? Far from it and if we are not careful (spending 3 trillion in money we don’t have Mr. Obama) we could have a relapse but the signs are finally there for a man who has been pessimistic and calling on the house of cards to fall for two years. Why am I so confident in this assessment? Because of the reliable chart I utilize called the “demand for Broker Dealers”. We hit some soft spots and I highlighted some of the real dilemmas facing buyers and sellers over the last year. However recently the amount of qualified buyers of not just shell broker dealers but producing Broker dealers has given me hope. I won’t sit here and tell you we may not have a relapse…chances are we will, however for the fist time in over a year I am seeing strength and a little conviction amongst buyers. No doubt we still have our work cut out for us but for the first time in 2 years I actually see the light at the end of the swine flu American economy tunnel. Capital formation and the willingness to think big will always push our market and quite frankly our economy and despite what our government thought they did, the true reason we many be turning the corner is the entrepreneurs of America who never stop thinking about the American dream. In our next addition I will discuss the Bird Flu ad nauseum as it relates to the money supply….on second thought, only one flu article per year, although I will miss the chicken broth and melba toast.

God Bless!

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May 13th, 2009



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