Friday, September 19, 2008

The economy – where did it all go wrong

How can I put it? I’m no doctor, but it goes something like this…

The patient became infected by a credit-virus that spread through the system like a rampant cancer while the brain was disengaged.

Other than diagnosis, we know very little, but should have a clearer understanding of the internal damage within about 18 months.

Just to confirm. Some major organs – including Lehman Brothers, Meryl Lynch, American International Group, and HBOS – were either surgically removed or operated on over the last week to prevent the infection spreading.

Claims that the affected areas had become victim to ‘speculators’ betting on a possible collapse of the life support system have been much overstated. In March 2008, the UK’s Financial Services Authority (FSA) announced an investigation into the rumours, but subsequently confirmed it had not uncovered any evidence.

Due to overwhelming concern for the patient’s current condition, the FSA has halted all betting against recovery.

The ban on so called ‘short selling’ took effect at midnight on Thursday September 18, and will remain in force until January 16, 2009.

The UK Chancellor Alistair Darling passed on his best wishes to the patient – whose condition is of course entirely self inflicted due to lethargy and greed – and welcomed the FSA’s action.

A new system of robust health checks by Dr Regulator – who has spent some time away on leave – will offer a long term cure, just as it did during the last bout of sickness in America during the 1929 Wall Street crash. The patient did not recover to full health until 1954.

The current crisis is not considered as bad as that of 1929, nor is it likely to be. Instruments of recovery were put in place after the crash by subsequent governments.

If there is some optimism, remission remains a long way off. In the meantime the patient will appear deluded and feverish, and is likely to suffer from bouts of depression.

More tumours are expected in the immediate future, but they could occur in both the short and long term.

Uncertainty will agitate the patient’s mental health, causing anxiety, pain and panic. The need for more surgery is almost certain.

Until then – to restore a little normality to the madness – I suggest spending some time researching a more traditional diet. The patient will thrive on good, honest trading, based on sound business judgments, analysis and research.

Clean, fresh air would provide an excellent opportunity for recovery, as would an iron supplement. Consider investing in some exploration work if the patient’s health improves enough for a full return to work.

Commodities would be a good start, but avoid fast food and oil – at least as long as the nausea continues.

But be wary. This is no time for risk. Minimize danger by avoiding small-cap businesses that need access to cash to increase all exploration activities.

Target the producers who are already making money, while at the same time looking to buy into new, more profitable projects.

Good luck, and where’s the door? I’ll show myself out.