Five Themes You Need to Know for 2008: Final Report Card
Kevin Depew's daily Five Things You Need to Know to stay ahead of the pack on Wall Street:
With 2008 now quickly drawing to a close, it's time to revisit the Five Themes for 2008 we outlined at the close of 2007. Below are those Five Themes, along with my assessment of how they fared this year.
Theme One: Deflation
"If 2007 was the year of inflation worries and stagflation nightmares, 2008 will be the year of deflation. A common misunderstanding is that falling prices causes deflation. No. Deflation causes prices to fall, falling prices do not cause deflation. And while the price of crude oil, gold and other commodities has certainly been a trend follower's dream, the trend is only your friend until the end. We have deflation right now, it's just that no one is talking about it.
A decrease in the supply of money or credit and a decrease in the demand for goods related to the inability to access credit is a perfect deflationary cocktail. You will know it in financial markets characterized by a rising dollar, falling interest rates, and ultimately a declining stock market. Looking ahead, we will be talking about deflation by the end of 2008, not inflation."
There is no question deflation is front and center on almost everyones' radar when the word is showing up with increasing frequency in major newspapers such as the New York Times and USA Today.
Grade: A
Theme Two: Consumer Recession
"It hasn't happened since 1991, but after 16 years prepare for a "consumer recession" to make headlines."
Now that the recession has been formally announced, it's time to begin thinking about what emerges on the other side. In addition to the changes being seen and felt in social mood, there will be a host of different attitudes toward consumption, debt and finance that show up and influence an economic recovery.
Grade: A
Theme Three: The Coming Cleansing
"Granted, a common theme for every new year is "getting in shape," and "kicking vices," etc. but I like the metaphor of this week's cover story in Time Out New York, "Get Clean!" 
It covers everything from ridding one's body of antidepressants, religion, codependency, sugar, to being late and, of course, the obligatory drugs and alcohol advice. Alas, there is no mention of financial "cleansing," but perhaps by June there will be. After all, deflation is simply the cleansing process by which malinvestments are liquidated and destroyed."
Expect the "Cleansing" theme to gain even more traction throughout 2009. It will become an operative word in rebuilding the financial infrastructure that has been destroyed by too much debt and too little savings.
Grade: B
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We need to bring home our factories, our offshore corporate head quarters, our financing of our national debt.
We need to rebuild infrastructure but it doesn't need to be more new roads or bridges with out first rebuilding the old ones that need it most. We need better sewer systems and water systems. We don't need to rechrome our capital buildings or build lavish libraries as that is just an excessive waste. Build sewer systems that capture methane gas that is use to generate power. Dump our lawn clippings in those systems for more methane.
Build home furnaces that actually work. Mine is 99% efficient at burning gas but 75% of it goes up the fffen chimly. And why can't the furnace heat the Hot water at the same time.
We need to force the illegal's home so Americans can have their jobs back. What's the point of Home Land Security if we are undulated with 30 million illegal's who we know nothing about.
We need a real health care system that focuses on keeping people healthy not making them dependant on medicine. We are a fat nation of couch potato's because no one wants to work. We sit at our desk and look for ways to avoid taxes or swipe money from our neighbors in the markets. Get the corn syrups and starch and sugars out of our diets and force our kids to eat vegetables. We are looking at an epidemic of fat folks with diabetes and other health problems. We are an aging population compounded by sick young adults and an oncoming scourge of mad cow called altztimers.
We are retarding our kids with chemicals, lead, fat foods, drugs and alcohol. We are making ourselves sick with all the chemicals we surround ourselves with in our everyday use.
We won't have all the answers for all our problems but just a little common sense can go a long way to solving some of them. Put some of our problems back to state level so people feel they have a better say on problem solving.
One other thing! Will someone time the God dam traffic lights! I spend more time sitting at traffic lights in the city then I do driving. Talk about efficiency. NOT.
Have a wonderful day
JPM
If you expect the corporations to relinquish their stranglehold on the government, you are sadly mistaken. You may get some handwaving in June and maybe we'll call it a "reform," (think bankruptcy reform, immigration reform, Social Security reform, etc), but it will be little more than an excercise in PR.
I give the whole Minayanville site an A++. Having a place to discuss these financial issues is of great value to me. Keep up the good work!
Plus, it has saved me a lot of bacon. The honesty and integrity displayed is paramount. If you had gotten all A's, I would be suspicious. No one is 100% right in their ideas. That's why there are Stops. We are all human, including Warren Buffett.
Happy Holidays!
P.S., I'm sure Toddo is somewhere warm with the "models and bottles". Ha, Ha. We may be entering an age of austerity, but one can always "Party like it's 1999", by renting the lifestyle for a short time.
JPM
I look forward to a return to government not mattering. If I live so long!
I think 2009 will be the year that the govt initiates a selective breeding program the produces not spenders or savers, but taxpayers.
If started immediately, such a program could be producing grandchildren in time to rescue Social Security, Medicare, and TARP. Once the tax-paying gene is isolated, cowples could be cowpulating and procreating huge herds of non-savers and non-spenders who will labor 16 hours / day to contribute 92% of their earnings to the tax collector. If this program fails we will all be B.F.ed (Barny Franked).
Thanks again for steering us in the right directions this year. I look forward to hearing how the new year will play out!
I think your best column this year may have been the one that focused on the pure contrived stageplay of Paulson begging Pelosi on bended knee to "save the globe". They'll make a movie of that scene one day soon, no doubt.
All the world's a stage...
once again, i think you did a great job of bringing into focus the things that mattered and continue to matter.
regarding your theme 5, i think one thing that almost nobody figured on was the level or form of government's response. the levels of grease the government has unleashed on the deflationary grease fire have been astounding, almost as astounding as the haphazard way it was applied. it's caused so much uncertainty that even sectors we'd tend to favor are getting sacked and clubbed.
plus, talk about a crisis of the real! can someone tell me what actual GDP is sans credit? i think we're all going to be astounded at how big a part credit has played in our economic growth.
so what's on your list for '09? i've got some ideas i can shoot your way if you want.
cheers and have a happy holiday season, pep. you and the whole MV crew deserve it.
Mr. Depew, prescient advice, wish I had read it in June or earlier.
Joan, Ronald, Jim - I hear you. The sheeples and cowples breeding program was created and accelerated by FDR and LBJ. Welfare, HUD housing, WIC, Food Stamps, inner city and suburian developments close to the stores and malls, paying women more per month for having babies without Fathers and Husbands, etc.
Keep up the great work. Merry Christmas Kevin, and good health and good wishes to you and all your family.
I wish all the best for you your family and the rest of the crew at the ville and look forward to what you see in your crystal ball for next year.
