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

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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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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Dear American Taxpayer and Voter,

For your own sake, I implore you to get over your anger at Wall Street fat cats – they have already lost more money than you will ever make. Neither you nor your Government gives a hoot about the loss of their personal wealth. Those fat cats have always known that theirs was a high risk career, which meant that in the good times they made scads of money and in the bad times they stood to lose it all. You could say they live by the sword and die by the sword and right now you are witnessing many of them dying by the sword.

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Last Friday, behind closed doors, Treasury Secretary Hank Paulsen and Federal Reserve Chairman, Ben Bernanke, gave Congressional leaders the Armageddon scenario for financial markets and the US economy and provided an emergency solution in the form of Government intervention. Because they are not fools, our Government leaders saw the light and in a televised speech they announced that they would set aside politics and join forces to enact legislation to secure the viability of the financial markets. That was last Friday.

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As we all struggle to understand the overwhelming loss of human life from Tuesday’s tragedy and to assess all that it means for the American way of life as we have known it, I find it troubling that so much of the immediate “punditry” emanating from Wall Street is suggesting that the economic outlook has suddenly worsened seriously.

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