Issue 3 2009: March
NOT EVERYONE IS NEGATIVE
Douglas Kass, founder and president of Seabreeze Partners Management says "I think we're at the beginning of the end of the bear market ... I can see in the not - to - far distance the bartender standing in sunshine and mixing pina coladas." Bob Doll, chief investment officer for equities at BlackRock money management firm predicts the S & P 500 stock index will be up 15% or more by the end of 2009. He cites the amount of cash in money market funds which now exceeds 40% of the stock market's total value - an all - time - high. "Historically, cash reaches its maximum when the market hits its bottom." Mr Doll is amused to be called a bull. "I think I'm being cautious" he says. ..... Aaron Pressman, Business Week
ICE STORMS, THE POSITIVE
The ice storms that pummeled large portions of Kentucky several weeks ago, left thousands of people helpless and without power. But their Amish neighbors, who have lived all their lives without the benefits of electricity, came to their rescue. Amish families lent out kerosene lamps, cooked meals on wood-burning stoves, and provided advice about making do without modern appliances. "Best neighbors we've ever had," said 76-year-old James Hutchins of Mayfield, who was without power for almost a week, "and we've been around a few places." .....The Week
PRAWO JAZDY
Irish police were recently alerted by an internal memo to stop issuing traffic tickets to a mysterious Polish immigrant named Prawo Jazdy, who had already accumulated 50 unpaid tickets. Prawo Jazdy, the memo noted, is Polish for "driver's license." ..... The Week
A BRIEF HISTORY OF KEYNESIAN ECONOMICS
More than half a century after his death, British economist, John Maynard Keynes is back in vogue. What is Keynesian economics, and can it pull the world out of its slump? ..... The Week
THE CORE OF KEYNES ECONOMIC THEORY
Keynes viewed recessions and depressions as symptoms of economic distress that must be treated. He also challenged the prevailing view that governments should always strive to balance budgets. Keynes said that the proper response to economic slowdowns was to boost demand in the marketplace, and if the private sector was not investing sufficiently to create demand - as was the case throughout the 1930s - then government should fill the void by spending. It mattered not whether the government was building trains or pyramids - the point was to create jobs so citizens would have more money in their pockets, which would increase demand for goods and services and propel the economy forward. .....The Week
DID THIS THEORY EVER GET A REAL - WORLD TEST?
Yes. It was called the Great Depression. FDR followed Keynesian principles by spending heavily on public works projects. Unemployment slowly declined through the 1930s, and the economy began to revive. But it wasn't until the largest spending program of all - World War II - that the Great Depression came to an end. After the war mainstream economists were more or less "Keynesians." Time Magazine wrote in 1965 that Keynes' ideas had become so widely accepted "that they constitute both the new orthodoxy in the universities and the touchstone of economic management in Washington." .....The Week
KEYNES FALLS OUT OF FAVOR - THE OTHER SIDE OF THE COIN
In the 1970s global economic distress defied a lot of Keynesian thinking. Those models suggested that the ills of inflation and high unemployment had an inverse relationship - if one is high, the other would be low. Government could supposedly keep both at modest levels by adjusting both monetary policy (interest rates and the money supply) and fiscal policy (taxation and spending). But in the 1970s, unemployment in the U.S. hit 8 percent and was accompanied by 16 percent inflation. Out of control government spending was blamed. Keynesian theory lost its mojo, replaced by the conservative policies identified with economist Milton Friedman. While Keynes emphasized demand, Friedman stressed adjustment of interest rates and the money supply as the primary lever of economic policy. Rather than trying to micromanage the economy, Friedman said the government should lower taxes, lower interest rates, and get out of the way, letting the pursuit of wealth drive a return to economic health. .....The Week
WOMEN BANK ROBBERS
More women are robbing banks. Last year, 6.2 percent of all bank heists in the U.S. were commited by women - a 25 percent increase from 2002. "Here's a crime that you can commit easily," says crime historian Robert McCrie. "It's an equal opportunity crime." ..... CNN.com
JIM'S STETHASCOOP
"Unemployment is capitalism's way of getting you to plant a garden." .....Orson Scott Card, author, as quoted in the Montreal Gazette
MILT'S MORSEL OF THE MONTH
"Seven days without laughter makes one weak." ..... Mort Walker, cartoonist, as quoted in the York, Pa. Daily Record
