This blog is written weekly by Dock David Treece, a registered investment advisor with Treece Investment Advisory Corp. It is meant to share insight of investment professionals, including Dock David and his father, Dock, and brother, Ben, with the public at large. The hope is that the knowledge shared will help individuals to better navigate the investment world.

Sunday, April 5, 2009

Glass half-full

It’s simply amazing how much is happening in the world today. How many mornings we’ve woken up, greeted by headlines we never thought we’d read. In such times, it’s important that we keep the global perspective developed in recent years. Doing so should make us realize very important notions:

1. The situation is much worse in other parts of the world.

2. Things will get better

In fact, numbers now being released suggest that this recession was no worse than the one that occurred in 1982. The reasons it were felt more deeply were the credit problems and the media. Not to blame the media, but unfortunately this recession, because of how many major corporations it dragged under, shook up the system more than many recent recessions. Because of its victims, this recession lent itself to taglines and appeared much worse than it actually was, but also represented a great opportunity for headlines.

Fortunately, now things seem to be getting better. The global economy, it appears, is improving selectively by country and industry. Recent numbers out of China indicate that the stimulus plan there seems to be working, and lately the U.S. housing industry has enjoyed some fantastic numbers related to new starts, sales, and prices.

Sadly, many of these numbers are coming as protesters have led demonstrations at the G20 conference in London. Realize that these protesters have other motives for their actions and anti-capitalist agenda. They are simply using the economy as an excuse to incite riots and spread fear across the globe through news coverage. We can only hope that the economy continues to improving and this causes the violence to dissipate. Luckily, governments have injected so much money into the system that it looks like they’re finally having an impact.

Throwing money at these problems does have consequences, which we are starting to see. Lately, both China and Russia have expressed a desire to move away from dollar in order to prevent their economies from being dragged down by ours should something like this happens again. In fact, Russia has even suggested the use of a gold standard. Of course, Russia has the capacity to mine significant amounts of gold to back their currency. Meanwhile, Venezuelan President Hugo Chavez has tried to rally support from Arab countries to create currency to be backed with oil.

In all that is happening, it is infinitely important that both we and policymakers realize that the game is changing, as are the rules and the teams. Many longstanding alliances are withering as new ones form. For years, the United States has enjoyed its role as the world’s foremost superpower economically and politically, made possible militarily. It’s quite possible that is now changing. And while the United States won’t become a third world country anytime soon, it’s time we realized that we aren’t the only big dog in the yard anymore.

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