I HAS SPOKEN !

This past week we’ve witnessed unprecedented swings in global financial markets affecting both professional investors as well as the general public, especially those with investments in 401Ks.

It’s far from over.

General Motors is trading at 1950 prices while Ford Motors is less than $2.00 per share. The feds bailed out AIG for upwards of $120 billion while a government bailout package of $700 billion is expected to “rescue” all other failing banking firms.

Reality check. How can we expect $700 billion will cover the mounting losses yet to be announced when AIG alone accounts for $120 billion? AIG is just the beginning. GM is on the verge of bankruptcy. Wachovia is bought by Wells Fargo to avoid failure.

Where and when will it end? Let’s take a lesson from history, which often tends to repeat itself.

In the early ‘50s post-war era, the country was facing the possibility of a recession. Charles Wilson, CEO of General Motors announced “What’s good for General Motors is good for the country”. In 1953 Dwight Eisenhower appointed Wilson Secretary of defense pointing the country to a “war economy”, a semi-command type economy which is directed by corporation executives, based on military industry, and funded by state social spending …. in order to “save” the US from a depression. This defense strategy created jobs and shored up the country’s economy. The arms race ensued and the cold war era began.

With little hope that the $700 billion package will hold back the dam, we should expect and be prepared to return to a “war economy” as the domestic and global markets fail utterly like so many dominos. As a result we will see the beginnings of yet another arms race. Only this time we have many more world powers in the game as well as rogue nations threatening to enter the race as well.

The complexity of global market swings in financial markets, increased plays for sovereignty, political polarization in the US and global terrorism are creating a perfect storm of unprecedented proportions.

In the 1953 comic strip Li’l Abner, Wilson’s line was modified by Al Capp’s character, General Bullmoose, to read …. “What’s good for General Motors is good for the USA”.

Today, what’s bad for the USA seems to be bad for General Motors.

We will survive the trials we are going through, but the course we take to get through this mess will be very different from that which we are led to expect.

To borrow yet another phrase from Li’l Abner’s Mammy Yokum …. I has spoken!