Forget the President-Elect, who is running the Treasury?

Since this blog is not about politics I will not pontificate or discuss the recently ended presidential campaign. Regardless of your political orientation this has been a historic election on many levels and we should be proud of our democracy.

Back to my usual topic, the economy! Things seem to be stabilizing a bit, most likely due to the sheer amount of government money that is now flowing throughout the world. While the personal lending markets are still very tight and there is virtually no residential lending occurring, bank-to-bank lending is improving, which should stabilize the banking sector for now. The 3rd quarter earnings reports have been released for most banks and it was a bloodbath, as expected. The continued collapse of the housing markets, combined with the mark-to-market requirements, caused banks (including Wachovia) to write down record amounts. While the optimists hope that this quarter was the worst, I suspect we have at least 1-2 quarters of continued bad news. The fundamental issue is the housing market and until there is a price floor things will not rebound. The frightening thought is that some analysts peg the potential bank losses at over $1.3 trillion, which means we aren't even half-way through the cycle.

As a result, I am following with keen interest who our next Treasury Secretary will be - make no mistake, this will be the most important decision Obama will make for at least the next year. The short list includes Larry Summers, Paul Volker and Jamie Dimon - of the three my preference is Jamie Dimon, only because he is living in the existing market and would be straightforward around the pain that has to occur in order to fix the market (i.e. increased foreclosures, tightened lending standards, changes to our tax policy to encourage saving instead of spending). We'll see soon enough.

Finally, there was an interesting article about our area in the Charlotte Business Journal - the area just south of us is unicorporated but booming. As a result, four developers are partnering to literally build a town center with private funds. God bless capitalism!