Twenty Guests for Quail Dinner — Not at My House

I understand they were eating fruitwood-smoked quail and thyme- oasted rack of lamb for dinner Friday night at the White House, as 20 leaders from the G-20 countries were discussing what do to with the slowing world economy. I wonder what the poor fellow in Alabama who lost his job in the auto industry was eating that night.

 Canada’s Prime Minister Stephen Harper said the weekend was “without precedent.” French President Nicolas Sarkozy, who pushed for the G-20 meeting said, “I’m a friend of the U.S. but it wasn’t always easy…there were misunderstandings to overcome.” And President Bush said he couldn’t believe they’d accomplished so much.

 But in the end, it was just more of the same: reduced interest rates, more regulation for the financial institutions, raised capital standards for the banks, harmonized accounting standards, etc.

 Well, here is my response: You can bring down interest rates to zero, just like Japan did, and find out that consumers will not borrow when they are scared. Regulate the banks more and choke them. The only way to raise the capital of the banks is for the government to give them taxpayer money. Finally, as for accounting, and as if the onerous Sarbanes-Oxley Act wasn’t enough for large public corporations to deal with, now they need one standard accounting policy when they were originally told


each country had different rules. How much will that cost companies?

 Fifteen months after the credit crunch began…after $964 billion in write-downs by the banks…after almost $7.0 trillion in government bailouts, pledges, guarantees and handouts, these G-20 leaders want to save the stock market. Please, do me a favor and just let the Dow Jones Industrial Average fall peacefully to 5,000 so we can get this bear market out of the way. Don’t make the same mistake Greenspan did in 2004 by bringing interest rates so low he just made a bigger mess for our economy.

 Now comes the International Monetary Fund with a prediction that industrialized countries are on their way to their first simultaneous contraction since World War II. Well, here’s the reality: we are already there. It’s called boom and bust, it’s that simple. We just came off one of the biggest booms the world has ever seen; now we’re seeing the contraction, often referred to as the bust. It’s a natural as nature itself.

 Before I sign-off for today, one last thing: I read they were serving Cabernet 2003 Friday night at dinner for the G-20 leaders and their entourages. Hopefully, when they meet again in April (I hear London), they’ll have some good Brunellos or Barolos to serve. Those Cabs always give me a headache. Everyone knows you need a hearty Italian wine with rack of lamb. Or at least this Italian does.

 ** What He Said **

 “In 2008, I believe investors will fare better invested in T-Bills as opposed to the general stock market. I’m bearish on the general stock market for 2008 for three main reasons: borrowing money in 2008 will become more difficult for consumers. Consumer spending in the U.S. is drying up, which will push down corporate profits. Home-building in the U.S. will enter a quasi depression state in 2008 and the construction industry will make 2008 a record year for pink slips. I predict a major homebuilder will go bankrupt in 2008.” Michael Lombardi, January 10, 2008, issue of PROFIT CONFIDENTIAL. (WCI Communities, the largest builder of luxury homes in the U.S., filed for Chapter 11 on August 4, 2008.)