And even though the stimulus plan is not yet in effect – and we’re sure it will be soon, with or without Republican support - there are bright spots in this economy nevertheless. Auto dealers, of all people, have reported seeing improvement as of late. We’ve heard that this past January, usually a slow month in cars, was a good month over all and the best January in a long time, especially for used cars, both imported and domestic. In addition, the market for corporate debt appears to be loosening. In the past week Cisco issued $4 billion to use for buying out its competitors and Intel announced a $7 billion expansion in plants here in the US.
With these new developments in the credit markets, it is quite possible that what we are witnessing, in response to tight bank credit recently, is a return to 1980s-style alternative financing. In the ‘80s it became extremely popular for companies to issue bonds rather than using bank financing. It worked wonders for the spree of leveraged buyouts then, and it is providing a great option of financing today. And the stock market seems to be recognizing these developments, as it has stayed relatively stable since bottoming in November. However, precious metals have been shining especially bright as investors flock to gold and silver for safe-haven investments as well as hedges against the inflation this stimulus plan is likely to cause.