The Death of Trickle Down
Obama’s speech last night pretty much put Trickle Down away for this phase of the 72 year economic cycle. Trickle Down created a lot of economic activity but in the end the bottom-line numbers showed that it was best at debt creation as it did not pay its bills. It failed the assets minus liabilities test.
Now we enter a 2 to 3 year transition phase before moving on to a an economic policy that creates positive asset minus liability numbers. Maybe it will be termed Trickle Up, as it will be based on the building of an economy from the bottom up. An economy with a solid infrastructure and self sufficient green energy resources can trade with the world on a sustainability basis; ie. trading goods and service we need for the goods and services they need. Junk dealers need not apply.
This change in direction is going to mean reevaluating your portfolio mix over the next few months. You probably have some time to do this as most sector charts look the same, squashed by sellers fleeing to the safety of cash or gold. We will be looking at areas of interest as this unfolds.
Also, John Mauldins letter of February 23rd (see Mauldin link on our website) includes a speech by Paul Volker on the new banking system he sees evolving. If you haven’t noticed before, I like Volker and this speech is no exception. Hopefully Obama is using him for the big ideas and will let Geithner be the technocrat behind the scenes who massages the numbers and put values on assets for the implementation of the banking program.
The EMA ETF Fund NAV was 892 at yesterdays close. No position changes are being contemplated at the moment.
8:07 AM CST