![]() The "green shoots" are here and by now must be in full bloom! No doubt this would be the cheery, collegial chortle if Fed Chief Ben Bernanke was to sit with 60 Minutes again. Sixteen months in a recession is a very long time. Since recessions rarely last this long, it makes sense for government officials to pronounce the death of the recession because, well, just because that is what politicians do.
For two years, I have tirelessly spread the message and warned our client that tough times would come, and come they did. Now we are told that the worst is over so where does that leave the prophets of doom-and-gloom?
If the recession is truly over (but I seriously doubt that we are anywhere close), I am going to miss some things. We were just settling in for a long winters nap but now we are told we should be getting the spades and hoes to tend the "green shoots." I had always thought that recessions were a normal part of economic cycles and should be welcomed to clean up the excess. These days, governments hate recessions because the voters leave en masse. Recessions also allow the incoming party to claim victory in the name of brilliance. Yep, I am going to miss this recession; it was fun while it lasted. Read on for more laments.
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1) I will miss the banker bashing. Now that things are so rosy, there will be no one to blame. Blame only happens in bad times but in good times everyone is a hero. Think of how much fun it was cursing AIG for those obscene bonuses.
2) We were starting to enjoy inexpensive and productive pastimes like reading, visiting with friends and even some lost arts like bartering. We were actually finding ways to enjoy life on a shoestring. Now we will need, once again, to resort to house lust, car lust and keeping up with the Jones. Those credit cards will escalate again except that the days of 0% interest have been replaced with interest rates of 29.99%.
3) Us doom-and-gloomers (I call us realists) were starting to earn some respect. I mean real bona fide respect. Now with the optimists holding court again, we will have to get used to looking for rays of hope. Every bad economic report will need to be gone over with a fine tooth comb to find rays of sunshine. Besides the optimists got us in trouble with all the bad loans but they have promised to be good the next time.
4) We loved cheap travel, airfare, hotels and even some restaurants. Now we have to get used to paying ridiculously high prices again. Plus not fighting crowds was so nice. Oh well, we will be surrounded by the masses once more as the good life gets crowded again.
5) Prices had been falling and we thought that was what people wanted. After all, recessions are all about cheaper prices. Now the government has decided that inflation is necessary and prices need to go up. Doesn't everyone want low prices? Guess not.
6) The Federal Reserve Board and all the central banks have been good time Charley's. They lowered rates so all of us can refinance or buy homes at the cheapest interest rates in 40 years. They created an environment of more cheap money. They even announced today that the ideal interest rate is now -5%. I am not making this up and I have never seen anything like it. But as sure as the sun comes up in the morning, all that will change. Interest rates will go back to the good old days. Remember how exciting it was to get a CD for 15% interest? Cheap credit card rates at 29.9% will be a thing of the past just as we are starting to get used to them.
7) All those high end stores that had 75% discounts were fun. At least I heard it was fun. Now those discounts will disappear and Bloomingdales can go back to selling things at full price. The days of deep discounts will be missed. Now we will buy in panic for fear that the next week prices will have doubled.
8) We have been getting healthier the past year. Gardens are all the rage. People are buying organic and obesity has been declining. When prosperity hits full force we will all be unhealthy and fat again!
9) The topic at parties will once again be about rising home prices. Astonishment at how much our homes were jumping will be in vogue again as the eco-gardens go away. Our sons and daughters will again make us proud when they go into investment banking with extra prizes awarded those who land jobs at AIG, Goldman Sachs and Bank of America.
10) We will have to get used to a new lingo and jargon. Quantitative easing was a mouthful especially since it means printing money but hey, in finance sexy slogans are best. Now we have to get used to quantitative tightening which means the printing presses will stop and no one will get wealthy when that happens. Countries will sell their bonds and interest rates will skyrocket. That will keep people from buying that house you had your eye on but then you won't be able to afford it if you wait too long.
11) What about service? Have you noticed that salespeople in department stores are nice? They actually appear out of nowhere instead of disappearing into thin air. Waiters wait, ushers usher, dispensers dispense and valets valet. Soon when GDP rises, service will tank sending grumpiness on the rise again.
12) What about scapegoats? When times are tough, scapegoats abound. We bashed George Bush real good and Gordon Brown in England is under fire. Congress wants to investigate the stock market debacle. Heads must roll in tough times. In good times, we all have so much money we don't need to play the blame game. Of all things, we surely don't want to see scapegoatism go away.
13) Oil demand will rise. In this recession, oil demand plummeted and costs dropped. Gasoline prices dropped in half or more and we all cheered every time we went to the gas pumps the past six months or so. When prosperity becomes all the rage we will be cursing each trip to gas up. We will go back to being wasteful and leaving huge carbon footprints wherever we go. Heck, we might even run out of oil and build lots of coal plants and nuclear facilities.
14) Russia, that old arch enemy from the Cold War will become a threat again. When oil is under $70 a barrel Russia cannot pay her bills. Once oil prices go up they could be a threat again. And what about Venezuela? We have silenced Hugo Chavez so much that he is shaking hands with our President but let oil go up and he could get crazy again. Let's not even mention Iran.
15) The curse of the 21st century has been our profligate spending and having to depend on China for financing. This year we have imported less from China thereby reducing our dependence on them. All hell will break loose. The dollar will plunge and we will be borrowing freely from China. They will happily take our dollars and Treasury bonds knowing that the day they call President Obama and demand that he give up the White House is drawing nigh.
16) Speaking of China, they will not only control the White House they will control everything. When a few billion Chinese speak the whole world will listen. Mandarin may well become the official world language and their currency will be desired by all nations. The dollar will be something we tell our grandchildren about.
So let the good times roll. But don't be surprised if the "green shoots" that Ben sees are different than the "green shoots" that I see. They may be the shoots of another crisis. Don't get spoiled thinking everything is fine; a healthy dose of skepticism is good. In the meantime, stay positive, stay healthy and be well; the next few years will be interesting indeed!
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