What Happens Now, After A Near Perfect Storm During Bush

Not sure, but there are many items in my hope chest. Today I pick the one I put squarely in number one position, knowing that events that can occur while I write this, can rearrange priorities immediately. Remember when American deaths in Iraq and fear of terrorist attacks on the homeland, were at the top of public concerns fairly recently?

Stabilize housing prices. Although lower prices truly do favor new buyers, not so if they continue lower. Prices are crucial because they are a persistent cause of loss of confidence almost everywhere, along with continued and resultant unmeasurable risk in all credit markets, so housing prices must be at the top of any economic list.

It seems pretty clear now to most of us, that we have come through a decade of out of control financial engineering by clever and motivated business men and women of all ethnicities, in the US and around the globe, by Democrats and Republicans alike if the truth were known, while regulators, lawmakers and almost every level of government, Democrats and Republicans alike if the truth were known (didn’t I just say that?) were asleep at the switch, or unable to to convince the establishment of the risks very clearly articulated by some, while these clear forecasts of financial disaster were met with denial by too many Democrats and Republicans. This theme is beginning to sound familiar to me, how about you?

Contributing to the now obvious impotence of those we entrusted to do the right thing, is an obviously antiquated regulatory system which encouraged and allowed “regulatory arbitrage” in the pursuit of unsustainable profits and growth in housing stock and prices, general asset price increases and nominal debt and other trading markets in general.

Regardless of anything I or anyone else says about the current financial catastrophe, an Obama administration must tackle that issue quickly and importantly in a way that really stabilizes home prices, preventing continued growth in foreclosures and importantly do it in a way that sunsets the governments conflicted position inherent in any sovereign government owning and managing too much capital which belongs in private hands including publicly traded stocks as well as privately  held companies.

The world will unfortunately, sooner or later, begin to see and experience the negative side of sovereign ownership or heavy handed control of operating businesses such as banks, oil companies or car companies and other industries like mining and manufacturing. So all the while avoiding my predictions of such problems, the Obama Administration et al must stabilize housing prices before our economy can begin to think in terms of new growth. And growth, a sometimes demeaned result and pursuit of capitalism, is important in a world with population growth and increasing expectations and desires of the growing ranks of worlds poor and as well as the growing middle and upper classes in economic terms. The American Dream, by the way, is wrapped around economic growth.

Income disparity in the US may already be eclipsed in many parts of the world while many current governments, as owners of vast amounts of capital stock, will make “corporate” decisions their population will sooner or later not approve of. Too much control, like any power, corrupts the holder of that power and lack of separation of business, government and for that matter, religion, will be the combustion of future tragedies.

So much of that power is in the hands of many who see the US as an entity to emulate in growth and to overtake, economically or militarily, when possible. That seems to be the way of the world, long before the US came on the scene and such ways would exist in the absense of the US, and many of us believe those undesireable ways would exist to an even greater degree in the absense of a strong America.

President Elect Obama: may the necessary wisdom be with you and those you appoint and delegate important decisions to. Start with housing prices, but do it quickly because there are aggressive issues not waiting patiently in the wings.