The Big Muddle

Note: Once again I'm late in posting something I wrote. Between packing, working, moving, working, unpacking and assembling furniture, I've had very little time to write or update my website lately.

The following article from the Motley Fool pretty much sums up how I feel about the federal government dipping its nose into my business: Bring Back Our Free Markets.

As I’ve gotten older (and coincidentally earned more), I’ve become more fiscally conservative. My social views are completely independent of my fiscal views. The thing the two have in common is that less government is a good thing. Government’s job is to ensure defense of the people, ensure rights are protected and to provide infrastructure. These come in the form of the military, the courts and public roads and utilities. After that the free markets forces rule.

That’s not to say I’m completely against government regulation. Some regulation is required but within reasonable limits. One area that was somewhat deregulated with disastrous results was allowing banks to leverage themselves and get in over their heads. I think regulation is such areas keep a check on the human nature of greed. Just because I believe in free markets doesn’t mean I believe that people who run business should run wonton over their customers and clients.

In the current bailout plan, the government is delaying the inevitable. GM and Citigroup should be allowed to fail and reorganize under bankruptcy laws. It will be one giant suppository for the economy but it will eventually lead to a better system. There is no sense in propping up failing businesses. GM has been a black hole for years and throwing money down that black hole will not help. Time to let the patient die.

How will this all shake out is still a big question. Despite all the gloom and doom the American economy will emerge from this mess.

No one knows the answer to the $64,000 question: When will the economy bottom out and start rising? The answers, according to self appointed experts and the lot, run all over the place. The predictions run from the end of the year to decades. My guess? Some where in between. In other words, I don’t know and neither does anyone else. We just keep on, to use John Mauldin’s term, muddling through.

Speaking of Mauldin, the article Reality Bites by Michael Lewitt comes via Mauldin’s “Outside the Box” newsletter. It paints a bleak picture. In my opinion, it probably is the most realistic scenario playing out. Then again, what do I know?

All I know is I will continue to invest my money in what I believe are companies that are wrongly undervalued and that will rebound in the long term. My time horizon for my personal portfolio is nil. I’m not counting on it for my retirement. It’s something I do with a little bit of my income. I hope to earn money on my investments but I won’t be devastated if I lose it.

That’s it for now. I’d like to update my blog more often but I’m balls to the wall at work and trying to move. It’s a bitch. I can start moving on March 21st but I don’t have to be out of my current place until the end of the month. I’ve started packing now so the end of the month won’t sneak up on me. Now if I can just get away from work long enough.