We recommend that readers review our article from January, where we explained the need for timely action and Presidential leadership. TheStreet.com kindly moved this to the public site.
Perhaps they will do the same with some of my recent commentary.
Meanwhile, here is the key takeaway:
The US brand of democracy is reactive, not anticipatory. It requires strong Presidential leadership to succeed.
As regular readers of “A Dash” know, we feel that the current President, hamstrung by an unpopular war and low ratings, cannot provide the needed leadership.
It is an unfortunate intersection of a major problem with a lame-duck President. A Parliamentary system might have avoided this problem. Or a stronger President.
Astute citizens are belatedly realizing that bailouts are not just about the companies in question. The impacts affect us all. Nearly everyone owns real estate or stocks in a retirement program. Even if you do not, there are issues relating to local tax revenues — money for schools and public safety.
We are about to discover whether the patchwork of incremental solutions, with heavy reliance on the Fed, can meet the test.
The normal relationships between stock prices and company fundamentals has been suspended. In our conversations with fellow professionals there was a consistent theme:
No one cares about the normal metrics. No one believes any earnings forecasts. There is widespread fear about the economy.
While our official posture (via the TickerSense sentiment survey) is bearish, we are nibbling and looking to do more.
If and when this changes, history suggests that the move will be sharp and swift. Art Cashin has often used the analogy of a cattle stampede. We shall see.
Originally published at A Dash of Insight and reproduced here with the author’s permission.