***Editor’s Note: Scott Wizeman is a Guest Columnist for “The Thirsty Quill.” Having been a loyal reader of ‘The Quill’ since our launch in November, Scott has graciously agreed to offer some valuable insight and perspective into the current economic situation that is plaguing our nation. Mr. Wizeman’s opinions are appreciated and respected, as he is one of many guests at ‘The Quill’ who currently work within the financial sector. A conservative Libertarian, Scott is a devoted husband and father, and enjoys bird hunting and spending time with his family when away from work. Scott graduated from The Citadel in 1998 with a degree in Business, and later earned a Master’s Degree from Southern Methodist University. ‘The Quill’ appreciates Mr. Wizeman’s contribution, and looks forward to publishing more of his editorials in the future.***

“Gloom, Yes. Doom, No.” (A Response To Open Court Topic #4)

By: Scott Wizeman, Guest Columnist

(The following piece originally appeared as a “Comment” response to “Open Court Topic #4.” Mr. Wizeman graciously agreed to allow his comments to be used as a Feature Article at the request of “The Thirsty Quill.” We have included a copy of the Open Court Topic/Question with the response for obvious reasons.)

“Open Court” Question of the Week:

Given last week’s modest turnaround on Wall Street, accompanied by President Obama’s optimism regarding the state of our economy in a recent speech, do you believe that we have seen “the bottom” of the current economic recession? Why or why not? Will things slowly begin to get better, or, are we still in store for another dip in our financial markets?

Corey,

I think you have asked a series of questions, not just one about the recession. 1. Has the recession bottomed? 2. When will we see things get better? and 3. What is going on in Financial Markets?

1. Here’s what’s happened thus far: CDO’s got messy. Banks starting taking it on the chin. Then “financial” companies started to hurt. Then, as Warren Buffet said, “the market fell off a cliff.” Here’s where we are now: commercial credit is still scarce, consumers continue to open credit card statements to see rate increases and available lines reduced. The next 2 quarters are really going to prove a lot. Are there enough companies that can meet monthly expenses with no new credit available. I hope there are. If businesses continue to tighten their belts, and is seems they are, then the question is how high can unemployment in the market place get before more comsumer debt goes bad. More bad mortgages? more credit card defaults? Then, how does that relate back to the Banks who made those loans, who will continue to write down what was thought to be good debt? Should banks have to contract to the point of not knowing who will and who won’t pay, then the commercial credit market seziure of August 2007 won’t be our biggest problem. Have we bottomed? Nope.

2. Good news. Depending on where you look, there are bright spots. To those with good credit, fixed rate mortgages are crazy good. Money isn’t easy to borrow, but it is cheap. The thing we all welcome is a decrease in prices. We’re all looking for good deals these days. The problem is that falling prices leads to an awful sprial of deflation that has a whole set of other issues. So, when will we see things get better, they are. Free markets are self correcting. The concern now, is if intervention (that was needed to speed correction) went too far already. Has it? Probably. (Case in point, the Federal Government basically fired the CEO of GM over the weekend. That’s some serious meddling.)

3. Fear is still driving the markets. Fear is an unstable driver and intoxicated on emotional response. Until the fear driven by uncertainty can leave main street and wall street, we’re in for more bad accidents.

Gloom, yes. Doom, no. The fact is, we’re not done yet.