December 22, 2010

Getting Back on Track, or “Every Silver Lining Has a Cloud”

Filed under: Uncategorized — DoNP @ 4:41 pm

The past few months have been exhilarating.  The economy is recovering, no doubt.  But we’ve gone from jaundiced to anemic with no healthy outlook in sight.  Voters swung the political pendulum back the to the right, but only time will tell if that swing causes the changes we need most.  Our president is anemic too, worsened by the political drubbing he took last month which was hastened by his detachment from issues Main Street cares most about.

To get back on track we need a confidence-builder, like a fake punt or an on-side kick.  We need some innovative financial devices like those that sparked the economy in the years leading up to 2008.  We need financial devices designed to free-up capital that’s tied-up in long-term, slow-producing assets; junk-bond backed derivatives that reduce reserve requirements on financial institutions so more capital can be put in play; cutting edge securities that back sub-prime real-dollar investments with paper insurance policies designed to circumvent the regulatory requirements that tend to bog-down business in general.  In other words, we need to get back to the “irrational exuberance” and the days of run-and-gun capitalism…where mortgage rates are 7-9 percent, prime rate is 6-8 percent, gold is $300 an ounce and Jim Cramer is yelling about a Dow at 30K and a NASDAQ at 10K.  We need infinite PE’s.  We need the IPO market to open up to pre-revenue Silicon Valley startups; we need venture capital going into pre-product companies at $50mil pre-money valuations; we need Facebook to buy LinkedIn for billions and Google to buy Facebook for a trillion.  We need Microsoft (or Oracle) to just BE the CLOUD.


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