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5/24/2012 6:40 AM
Need Economic Healing
Market Commentary
By Charles Payne, CEO & Principal Analyst
When my family arrived to Harlem in the summer of 1975, it was a gritty place, vibrant with life, sounds, aromas, and excitement. It was also like the wild-wild west! It was a very dangerous place that boasted corners that saw as many killings as patches of Vietnam during the war. It was a place where you needed a friendly face and a source of safety. One such person was Brother John. He ran a non-profit organization that sought to help neighborhood kids with school and life in general.
He had a special approach that was sincere and honest.
 When guys would fight on the block he'd take them around the back of the center and put on boxing gloves. A couple of rounds, a sit down, and all the beef was over and nobody got harmed. He was a community organizer, and he made a difference for so many young people. He was important to my life. He was a great man and a God-send for the neighborhood. Yet, he didn't have the kind of skill set that this country needs right now to turn it around.
I firmly believe the nation needs a person that understands how to save a great enterprise and turn it around. President Obama says Romney only knows how to maximize "profits" but I think the former governor understands how to maximize "potential." You see no matter what the president says about the economy doing better the nation isn't living up to its potential. Maybe there are times when the nation needs a community organizer, but that time isn't now. There are times we need to heal different wounds. That wound right now is mostly economic.
I never heard anyone talk about the president's work as a community organizer. I would like to hear more stories about the lives he touched. I'm sure he did a good job, but I find it curious that more people haven't told their stories. I will tell my Brother John stories forever. The nation needs an army of Brother Johns right now, but the White House needs a person that can rekindle our greatness. So, I find the attacks on Romney's time at Bain Capital so disingenuous. According to an article in the Journal, it wasn't about hit and run with Bain—they spent an average of eight years with the 77 companies they helped and brought back more than 75% from the brink. In the process I think they created a bunch of jobs, even in Chicago (see table).
R.I.P. Brother John was killed one summer day ... breaking up a fight.
Too Weak to be a Warrior or Bum
Alexander the Great: What can I do for you?
Diogenes the Cynic: Move over a little you are blocking my light
Alexander the Great: But verily, if I were not Alexander, I would like to be Diogenes
This Greek drama is lasting longer than the run of Alexander the Great and having a greater impact on the world. I find it amazing that a nation that's 0.40% of the planet's GDP could actually wield this much power. Of course I get the notion of maintaining their serfdom, which is not unlike the idea of periodically increasing welfare and food stamp benefits along with minimum wage to keep people in a hopeless state of cheap labor and high consumerism. But, at what point does Germany just say it's not worth it? I don't have that answer, nobody has that answer, but Greece is determined to find out.
No matter how this plays out, somewhere Diogenes the Cynic and Alexander must be smiling as they wonder how this modern society has avoided both of their philosophies. Diogenes saw virtue in poverty and even begged for a living while spending his nights in a tub near the market place. He shunned earthly delights while embracing austerity. As a child he even defaced the currency which brought him much serious punishment. In addition to his famous showdown with Alexander the Great he is known for his stunts that included walking around in the daytime with a lamp while stating he was: "looking for an honest man."
Alexander was proclaimed king in 336 BC upon the assassination of his father, Philip, by the Captain of his bodyguards. We know the story of the conqueror of the world and understand his desire to live up to his name. Right now the people of Greece are only looking to further assassinate their legacy. Unlike Diogenes they are looking to have their earthly delights while shunning austerity. So, even as Angela Merkel asks what she can do within reason to help, Greece is asking her to move over a little—so they can keep catching those rays.
Diogenes lived in an uncovered tub for all to see. He once broke his only spoon upon seeing a young child bend over to drink water by cupping his hands. He was brash and became a legend. His country continues to be brash, but sadly it's becoming a travesty—the biggest ruin of them all.
One Honest Woman against an Army of Dishonest Men
I'm looking for an honest man in global politics. Right now Angela Merkel is the only honest person in the mix but can she withstand the barrage from those that hate austerity? Of course austerity as practiced in Europe is a joke and a sham. Higher taxes on the most productive members of society coupled with slim government spending cuts aren't austere. It's intellectually dishonest. So, too, are those pushing for more spending and borrowing as a solution.
These folks understand debt is slavery and the further the masses sink into this relationship the more they'll need it in the future. The problem is getting those so accustomed to freebies and easy living to wake up and smell the coffee.
Yesterday's Session
I liked the way the market closed. In fact, it was a characteristic of how the market acted for the first three and a half months. It showed a certain kind of resolve. Perhaps we have found the hot spot for would-be buyers. Considering the depths of the selloff and how little it had to do with fundamentals, I could see smart buyers nibbling here and there. Small caps led the way with the Russell 2000 the first of the major indices to move into positive territory. There still isn't enough volume to go around, so there is rotation focused on high Beta names that could pop instead of the comfort of Blue Chips.
Today's Session
I'm not sure how America will vote in November although my friend Monica Crowley says Romney will win (her new book "What the (Bleep) Just Happened? Is available now) but Wall Street and common sense are making a statement this morning. Hewlett Packard (HPQ) posted earnings that beat the street but the headline is 27,000 job layoffs- the stock is indicating much higher. It's never a happy thing that people lose jobs, but it is often necessary in order to save the entity. Beyond that news, the market is hinting at a higher open although economic data wasn't inspiring this morning (We'll have a detailed breakdown in the afternoon update).
Watch for the rumors out of Europe to nudge our market around.
| Comments |
I DO NOT THINK THE GREECE NIGHTMARE WILL EVER PLAYOUT, BUT LINGER FOR AN ETERNITY.
JIM ROY on 5/24/2012 10:20:41 AM |
It will take 2-3 years for the Greek mentality to shift and for the Greek people to accept that their life of social support is over. During that time, we'll see increasingly powerful protests against the necessary reforms. The rest of the EU will talk Greece into staying with the Euro, but there will be several times when it looks like they will go back to the Drachma. Their economy will be in shambles at least until 2015 and perhaps until 2020. Things could get much worse much faster, though, if other countries like Spain or Italy fall apart. None of the people in these countries want to give up their cushy entitlement programs. Think about how Russia fell apart when they were introduced to democracy - after generations of being told what to do, they had no idea how to manage themselves. Likewise, a society with generations of people used to generous social support will take years to adjust to a system in which they have to work much harder, and they will fight it with all their strength.
Art Fox on 5/24/2012 11:08:09 AM |
Sorry, I'm not prepared to comment on Greece (and i'm embarrassed to ask "is this a good time to visit Greece?"- I've always wanted to experience the area- the waters, the food...) Mostly i just want to thank you for your writing. You paint great pictures in your stories and make sound observations in your commentaries. Thank you so much.
Sandrina on 5/24/2012 11:39:45 AM |
Father Bruce was such a man who began Covenant House, a wonderful organization that helps homeless kids. He is gone but the organization he founded is going strong. They have a chapel at 41st and 10th and are worthy of wide range support
meyerhoff on 5/24/2012 11:41:01 AM |
I'm not sure but monarchies like big governments are expensive to maintain. To be brief, this country was crucial to the growth of a "middle class, a bourgeoisie" and "the struggle for human justice," and it would be sadly destructive to stifle the American spirit of economic growth and individual progress with big government.
However, there is a lot for this young nation to learn from Greece,the birth place of Democracy: The Greeks will have to revert to a pre-euro economy because it's unlikely that Germany can financially sustain a majority of the European countries without demoralizing its' own society. Apparently, the concept of the Euro was to strengthen the continent and to "fairly" equalize all the nations but, evidently, the imbalance of efforts and abilities makes it improbable, and unfair.
Grace on 5/24/2012 11:58:42 AM |
It's so hard to keep it straight. Are we talking a family, a problem employee, the USA, or Greece. They are so similar.
When a child has a problem and needs discipline, the parents must weight the pain versus the benefit. They know the wayward child must be kicked out of the house and suffer the pain of jail or poverty, but their hearts ache at seeing such pain in one they love. They have the deciding vote, but often lack the will to do what is right. If they don't hold the line and do right, the family is torn apart.
When I had a problem employee under my supervision, the decision to draw the line firmly with the result being either correction or dismissal was very painful for me. But when someone chose to force my hand rather than correct the performance, everyone benefitted. The other employees saw my integrity and knew the line was there. They also saw that the slacker was not getting off with pay while they did all the work, which improved their morale and motivation. I no longer ached every night the problem, and the fired employee virtually always ended up with a different job at higher pay and a good chance to turn their life around and become productive. The choice was mine whether I would face the pain and make the right choice. If I failed to make the hard choice, productivity dropped and the group was headed for failure and reorganization. If it were a company, that is called bankruptcy.
In the USA, we know what must be done to fix our problem. The working few cannot carry the nation, and the more they are asked to do so, the smaller their numbers become. If we try to carry the slackers without holding them accountable to produce, then the jobs will evaporate into the global competition (Asia) and we will bring on greater poverty. The decision belongs with our elected representatives. We know the current president does not have the will to make the right choice, and probably does not have the experience or wisdom to even see the answer. It is up to Congress to stand up and make the hard choice. They will eventually make the hard choice or the USA will fall. The longer they delay, the greater the pain.
So it is with Greece. Greece is the wayward child of the EU. Greece is the unproductive slacker of the EU corporation. As with a child or a wayward employee, they have been told what is needed to get back in line as part of the family [corporation]. But the Greek people hold the vote and clearly lack the collective will to correct the behavior. Meanwhile the other potentially wayward children [employees] of the EU family [corporation] are watching. Spain, Italy, Ireland, and Portugal are all waiting to see whether the EU will do what is required. If they do, the others will behave well, if not, then the others will become discouraged and also behave badly. The line has been drawn. Greece lacks the will to take any austerity measures, and therefore must eventually be expelled so the EU family can survive. Hopefully, their destitution will turn them into a prodigal son which can be brought home in 10-20 years. If not lovingly expelled from the family, both Greece and the EU will fall.
Prophesy indicates that the EU is around for the end times, so I must conclude the very high likelihood that the heads of the EU family will be good parents and let their bad child learn the hard way. Prophecy is not so gracious about the USA. We seem to be absent from the end times, so it appears the Pelosi crowd may succeed in making the wrong choices and destroying the USA family. I hope and pray I am wrong about the USA, for the sake of my children.
Bob G on 5/24/2012 2:13:53 PM |
Greek-owned ships, even though they often had "Monrovia" - indicating Liberian registry - on their sterns, at least would operate with Greek crews. Now, they are manned by non-Greeks. So much for Greek union benefits. You can't keep demanding a better vintage wine when there's not even any water available.
Patricia Flynn on 5/24/2012 2:40:03 PM |
Greece will collapse and complete chaos will ensure and a strong arm leader will rise to power promising law and order and rule as dictator for his lifetime.
Rich on 5/24/2012 4:50:38 PM |
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