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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (71563)	11/22/2007 11:12:21 PM
From: RealMuLan	Read Replies (1) \| Respond to of 116555

Wall Street's Grateful Table As They Lick Their Wounds, What Can Financial Folks Still Be Thankful For? By EDWARD HADAS November 21, 2007; Page C16 online.wsj.com Some in finance face a worried Thanksgiving this year. Losses at big banks have spawned rumors of massive headcount reductions. There is the mortgage mess, which just seems to get bigger. And the weak dollar means that anyone planning a foreign vacation is looking at a much bigger bill. Still -- in the spirit of the occasion -- here is a list of 10 things to be thankful for, something Wall Streeters can chew over with their turkey and pumpkin pie. [Dow Jones Industrial Average] 1. The prosperous past. The current problems come after decades of profitable expansion. The share of U.S. gross domestic product, or the value of all goods and services produced in the country, dedicated to financial activity has increased to 8% from 5% since 1990. Economists and politicians aren't happy about the increased ratio of debt to GDP, but the trend works well for financiers. 2. The still-prosperous present. By almost any standards, if not those of pampered bankers, times remain good. Large swaths of the world economy are booming. Bonuses accrued in the first nine months of the year for the top seven investment banks in the U.S. were up 10% from a year earlier, to $95 billion. Even after big write-downs from Citigroup and others, recent estimates suggest Wall Street bonuses won't fall much more than 10% below the record of 2006. 3. A market-friendly government. The U.S. isn't run by an anticapitalist like Venezuela's Hugo Chávez. Better still for Wall Street, the Federal Reserve seems set on keeping interest rates as low as possible -- and fighting asset-price bubbles only after they have popped. By then, many bankers and traders have raked in their fortunes. 4. The politics of the next U.S. president. No one who has much of a chance has a populist, antifinance agenda. That could help Wall Street avoid too much blame for the current housing problems. A return to rigorous, profit-crimping regulation is improbable. 5. The judicial system. There may be enough of a populist backlash, and enough law-breaking, for a few folks in finance to worry about legal problems. Still, in a country that offers defendants the best justice money can buy, few miscreants will actually end up behind bars. In China, you can be executed for financial misdeeds. 6. The state of corporate governance. The rewards for success are huge and, at the top, there can be big rewards for failure. When the Pilgrims celebrated their first Thanksgiving in 1621, they were glad to have enough food to last the winter. Stan O'Neal's $160 million retirement package from Merrill Lynch will buy him enough simple fare for about 30,000 years. 7. The power of the dollar. Sure, the greenback is losing value and prestige. But, thanks to more than a half-century of global pre-eminence, the U.S. denominates all its $8 trillion of net foreign debt in dollars. If those were in euros or yuan, the talk now would be of default rather than more expensive European holidays. 8. Chinese economic policy. No one knows exactly why the People's Republic has been willing to trade cheap consumer goods for vast quantities of dollar-denominated debt. But without that willingness, U.S. consumers would be less affluent. 9. Past mistakes. Bad loans may bring shareholders to their knees and give bondholders buzz cuts, but the American way is to look ahead. In the coming rainy days, there is going to be plenty of lucrative business for restructuring experts. 10. The experience. Gratitude for adversity is certainly in the Pilgrim spirit. As Robert Cushman put it in a 1621 sermon, delivered in the new settlement of Plymouth, the Pilgrims were to be people "quietly contenting themselves with such hardship and difficulties, as by God's providence shall fall upon them." That might be a tough sell on Wall Street, even at Thanksgiving. Still, perhaps it offers greater comfort amid the turbulence of 2007 than in some more-buoyant years.