Did you know the only successful accomplishment of the Bryanite populist movement of the 1890s was to update the old phrase, “Behind every cloud there’s a gold lining?” Really. Debased the sentiment in the process, but what the hell.
In any case, Larry Kudlow always seems to find the silver lining in the dark clouds of the market, swirling as they do. And he provides campaign advice to John McCain, but that’s beyond our purview.
Another bad day for stocks, which seems to be a habit lately.
Fear is the big factor. Fear over the latest credit-crunch freeze-up in short-term lending markets. Fear over deepening recession. Fear over profits. Fear that Treasury-Fed bailouts — which grow larger by the minute — somehow won’t be enough. And fear that John McCain is going down in a three-house, Reid-Pelosi-Obama sweep that will raise taxes, embrace trade protectionism, end union secret ballots, and spend us into oblivion.
Amidst all this pessimism, permit me three silver linings: First, the strong dollar. Second, plunging energy prices that will generate an economy-wide tax-cut effect. And third, rapid money-supply growth after 18 months of flat money. In fact, on this last pint — which is so important — it looks like the Fed has un-pegged its fed funds target rate and is instead focused on pouring cash into the liquidity-starved global banking system. Meanwhile, the Treasury purchase plan for toxic assets will get off the ground sooner, not later. And the Fed is now backstopping the commercial paper market.
Against the rising tide of pessimism I would argue that these positives are planting the mustard seeds that will grow into the next bull-market prosperity. Believe it or not.
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