The R Word, The C Word

With the outgoing administration finally able to utter the phrase "recession", we have another crucial element in the sort of capitulation that we'll need before we see a rebound in mood.  As in all recoveries, the first step of the process lies in admitting there is a problem.  Thus, in this week's admission that the U.S. economy is in fact in recession, there is as much reason for optimism as they has been in many weeks, if not month.

Of course it's a silly game whereby incumbent politicians, especially presidents, try to refrain from utter the "R" word for as long as possible.  In this Bush is no different from any of his predecessors.  What is important is what this "give in" says about the likelihood of things getting worse in the immediate term.  And like the Mumbai terrorist attacks, this is the kind of bad news that often accompanies occasions when the world has gotten as ugly as it is going to get - at least for now.

I've said that I thought a rally into the first quarter of 2009 made a lot of sense - the inauguration of a "change agent" in the form of a new president, the likelihood of a great deal of public spending, and the massively oversold condition of stocks on a longer-term basis are all among the factors pointing to a short term bounce.  For now - and with a growing sense that punitive attitude taken toward U.S. automakers by Congress in last week's special hearings will abate and a deal struck after all - I'm sticking with that observation.