Ravengate
Partners - Stock market, economic and political commentary by Patricia Chadwick

We all know that the economic statistics for the next few months are going to be lousy at best, but there is a bright spot in our economy right now and that is in the movie houses.

This realization came to me during the week after Christmas as I went nowhere (deliberately) and spent my time making soup, reading books I received for Christmas, venturing out for a daily three mile walk in what ranged from snow and sleet to 60° gorgeous sunshine, curling up with newspapers, and catching up on movie reviews, that after nearly a year of what seemed to me to be totally vapid movie offerings, there was suddenly an entire year’s worth of movies that appealed to me.

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Monday’s Wall Street Journal had an encouraging article regarding Federal Regulators’ putting curbs on interest rates that banks and credit card companies can charge consumers on their balances. This is very good news, and would only be better news if it could be implemented now (rather than mid-2010 as indicated) and if rates could actually be rolled back rather than just not allowed to rise. In fact, it is surprising to me that there is not more consumer advocacy on the subject of credit card interest rates. They are utterly abusive to consumers while reaping extraordinary profit margins for the lenders.

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For Americans traveling in Israel at Thanksgiving time, as I am this year, they are in for a special treat, because hotels and restaurants offer turkey dinner with all the fixings, something that happens in few other foreign cities. And the Israelis really know how to cook turkey American style!

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There are ‘stock’ people and there are ‘bond’ people. I am a stock person and have been all my life. It suits my personality because stock people are optimists. We see the glass as half full. We like to buy and hold stocks for the long term because most of the time things are going well and we make money. We are different from bond people who tend to be cautious and are much more likely to be pessimists. They usually see the glass as half empty.

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There’s no use trying to pretend now. The economic news that poured out last week is ample evidence that the US economy is in a recession. The headline news on the job losses told the story loud and clear and what will follow will be a steep decline in corporate profits which will really be serious losses for many companies and industries, not just the beleaguered automobile sector of the economy.

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This past Saturday, walking down “Main Street” in my town, I popped into the local bookstore (okay it was only Borders, rather than Diane’s, the best bookstore in the country) hoping to support the local economy just a little bit. I had a book in mind – it was Peggy Noonan’s newest publication, entitled, “Patriotic Grace”. I was in no particular hurry to own the book, as it was to be a present for my mother when she turns 80 in three weeks. I paid $21.15 and walked out.

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There really is some good news out there. First, the price of a barrel of oil has dropped from $147 to $63, (this morning) its lowest level since June 2007. In fact, the price of gasoline is now no higher now than it was just a year ago. This favorable trend will act like a tax cut to consumers, putting real money in their pockets. Moreover, consumers can face the upcoming winter with far less trepidation and can take comfort in the fact that as things stand now, their heating bills will likely be more like last year’s.

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Or put another way, beggars can’t be choosers. Over the last few weeks, the world witnessed the impending annihilation of the financial markets worldwide with grave ramifications for capitalism globally. It was scary. And then help came in the form of Government intervention through a massive injection of equity capital into the banks. The UK led the way, and once it had taken that giant step, the U.S. had no choice but to follow suit.

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We are heading into a full blown recession now and I cannot imagine that it will be ‘short and sweet’ as the last two were. As Rome burned last week and Nero (aka Congress) fiddled away, Main Street got the picture and started a boycott, not out of spite or anger but out of fear. Parking places were suddenly easy to find on Main Street because the shops were empty. Talking to people who have their life savings invested in stocks, bonds and cash, one can palpably sense their fear. I cannot remember a situation like this in the forty years I have been in the investment business.

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It came home to me loud and clear by mid-day yesterday why so many members of Congress simply could not vote in favor of the rescue bill before them now. The responses to my blog yesterday on CNBC.com “Why You Should Write Your Congressman” (Main Street, Wake Up… on my website) were easily ten to one in opposition of my support of passage of the bill. The language in some of the emails was simply unrepeatable and the vitriol and anger brought me back in time to my study of history. I had an image of Robespierre at the onset of the French Revolution with hordes of angry French citizens railing against the Crown.

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