Monday, January 19, 2009

Inauguration Day 2009 - Looking for a New Beginning

The 'Helicopter Economics Investing Guide' is meant to help educate people on how to make profitable investing choices in the current economic environment. In addition to the term helicopter economics, we have also coined the term, helicopternomics, to describe the current monetary and fiscal policies of the U.S. government and to update the old-fashioned term wheelbarrow economics.

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President Obama hit all the right notes in his inauguration speech today. His spot on rhetoric needs to now be followed up with matching action ... and that won't be easy. The global financial system is in disarray. As far as economic policy is concerned, the concrete plans of the new administration look like more of the same, albeit with a different focus from the previous administration on who gets the bailout funds. There isn't yet any indication that the groundwork for a new economic structure, the only viable long term solution, is going to be put down. Until that happens, economic policy will essentially be an attempt to hold up a flawed model that is collapsing because it is permeated with rot.

We were reminded of the global aspects of the Credit Crisis yesterday with events coming out of Britain. The Royal Bank of Scotland was down 67% in Monday's trading as the British government upped its stake from 58% to 70% ownership. Some commentary in the press worried about full nationalization, as if 70% government ownership wasn't close enough. The bank lost $41 billion this year, the most ever for a British corporation. The British government announced a more comprehensive second round of bailouts for the banking system, following the first round which took place only a couple of months ago. Not only does it appear that there is no such thing as a single bailout for an insolvent financial company, but the same holds true for an insolvent financial system.

While average people poured into the nations capital and crowded the streets and Washington Mall, the well connected were having a different Inauguration experience. In an contrast worthy of the waning days of Versailles, images of the bejeweled and elegantly appointed rich and powerful partying in Washington's balls can be contrasted with the state of California delaying payments to the aged, blind and disabled because its coffers are bare. The state also has indefinitely delayed tax refunds to individuals and businesses that overpaid their 2008 taxes. In theory, the government can't just take your money in the U.S, but this might just prove to be in theory. California officials claim the state is facing insolvency within weeks.

All Americans should be happy that the U.S. is finally moving beyond race as a barrier to full participation in U.S. political system and should look forward to the day when an East or South Asian, Latino, non-Christian, or a Gay or Lesbian candidate can be a serious contender for the presidency. Successful systems only continue to be successful because the most talented rise to the top and getting rid of discrimination is the only way to insure that this happens. The talented at the top seems to have been a lacking in Wall Street for some time now and this is one reason things have gone so terribly wrong with our financial system.

NEXT: Banking Bloodbath Covers Wall Street in Red

Daryl Montgomery
Organizer,New York Investing meetup

This posting is editorial opinion. Like all other postings for this blog, there is no intention to endorse the purchase or sale of any security.

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