Chapter 11

The End or the Beginning?

Source: © FactSet Research Systems.


The 2008 annual report was published in February 2009, less than a month before the S&P hit a closing low of 677 on March 9. The United States was in the midst of a migrating global financial maelstrom and enveloping Great Recession. As noted in the Preface, when disasters hit, natural or man-made, individuals and institutions instinctively turn to the paternal arms of Uncle Sam. Those in power tend to reflexively reciprocate in kind. However ill-conceived the governmental actions, however ineffective the experimentations, however costly the ultimate consequences, the political and social imperative is to intervene. Centralization of control has enfeebled the once free(r) markets. The Great Recession began in December 2007 and, apart from an easy-money-induced huge rally in risk assets, the economy remains largely unresponsive. Some observers in the months and years ahead will argue, understandably, that letting markets clear unimpeded—however terrifying in the short run—would have resulted in a deeper but far shorter V. Interfering with the Darwinian process of natural selection, where the strong survive at the expense of the weak, invariably creates a host of unwanted consequences. Japan is a prime example. The point, however, is moot. To quote the current chairman of the Federal Reserve Board, “There ...

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