Peter Blane

Today, the first week of 2010

Posted in 1 by wusspett on January 5, 2010

As 2009 is finally beginning to become a memory, and we all exhale a sigh of relief that we can keep our passion and anger for the past 12 months wrapped up in a year called 2009.

2009 was quite an experience for the markets and per capita.  We had the DOW as low as 6547 and as high as 10,500.  We have had the highest unemployment rate in decades – 10.2%.  A mortgage deliquency rate of about 33% and increasing.  CPI over the last 12 months increased 1.8 percent before seasonal adjustment, the first positive 12-month change since February 2009.  A year most politicians and I wish had gone better.

Now, it seems, we are taking note on what lessons we should be learning.  Ben Bernanke has a few things to say about how none of the financial collapse or the meltdown of the mortgage market has anything to do with loose monetary policy.  Unfortunately, most of his speech revealed a college student could calculate, forecast, and implement the tightness/looseness of monetary policy (check out The Taylor Rule). 

The new debt ceiling has been signed into law at 12.4 trillion – the largest amount of debt our country has tried taking on.  Although, a new ceiling is likely since this ceiling should only last through February.  So, while other governments are slowly buying our country, we will be drowning in new bond issues and inflation.  This new debt issuance is going to be interesting for our governments credit rating because it “may ‘test the Aaa boundaries’ because public finances are worsening in the wake of the global financial crisis.”  In other words: the U.S.’s ability to claim a guaranteed rate of return on it’s bonds has deminished.

For those of you out there with a level of cynicism, let’s see what lessons we have really learned from last year 🙂