by Jeff Feldman.
It was quite remarkable to watch the market trade down on Tuesday, while the Secretary of the Treasury was testifying before Congress. Just ten years ago, that testimony would not have broadcast live and 20 years ago it wouldn’t even have made the news. Now the market is analyzing testimony in real time. This morning I saw a self-promoting ad on CNBC, better known as bubblevision calling its reporting “Fast, accurate, and actionable.” Actionable is what we are all about today. Instant gratification is a requirement.
When Jim Cramer does his “Lightning Round” on Mad Money, he prefaces by vowing that he has no prior knowledge of the callers or the stocks about which they will inquire. He wants us to know that absolutely no preparation or analysis has been done to support his pronouncements. This is, of course, to demonstrate his prodigious knowledge about the stock market. But is this offering really preferable to his getting advance notice to prepare well researched opinions? What about the callers? Wouldn’t they be better off if his responses took into account their portfolios and financial situation? Can you imagine a doctor conducting a “Lightening Round” on live television? “Let’s go to Joan in Indiana. What ails you Joan?” Would anyone act on such advice? Is your money any less important than your health?
It seems we have moved beyond the old joke of “ready fire aim” to simply, “fire at will,” with predictable results. Perhaps recognizing this mentality, Secretary Geithner did not give us actionable information. The absence of same caused the Dow to decline 400 points.
Consider what would have happened if he had given the market what it was looking for? Imagine, if it became apparent from his testimony, that the bank stocks are under valued. How much money would have piled into that trade?
After the testimony, the pundits paraded onto the screen to proclaim they want certainty from the government on the value of bank assets before they will consider investing in them. This is the equivalent of the 19th century American pioneers proclaiming, “we will not settle the west until the Government takes care of the Indian problem,” or the astronauts demanding a Government guarantee of their safety before taking off for the moon. We must be willing to take some risks without being backstopped by the Government. Note that Intel announced yesterday the intent to spend $7 billion on new plant and equipment. No guarantees. No assurance it will work out. Businesses need to start looking forward without regard for government action. If we start investing in the industries that will solve societies greatest needs: healthcare, clean tech, education, and efficient transportation to name a few, we can begin the road to recovry. Some businesses will succeed, many will fail and we will all be better off. There are no quick fixes to the hole we are in. There is nothing that is fast and actionable. This is a slow difficult grind. Those that say it is too risky or too difficult miss the point. Our country and our way of life are at stake. Those with excess capital can’t hoard their way out of this.
Their capital is worthless without a sustainable economy. And that sustainable economy is achievable. Lets turn off CNBC (making us immediately smarter) and go to work.
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