November 2008 - A Time of Transition

November was a time of transition for the U.S. economy.

Throughout the month the economy took a continuing downward trend into Recession and some proclaimed the worst trends since the Great Depression of the 1930s. The housing and automotive markets have continued to slide. The Treasury Department and Congress has said no for the time being to a bailout of the automotive industry. Detroit's big three wants an additional $25 billion to help with debtors. Congress has told Detroit, it will need a concrete plan on how monies will help to be presented in December.

The stock market continued to decine, half of what it was a year ago. Major banks such as Citigroup have had their stock values slide to all time lows, below $5 a share. Citigroup applied for $20 billion more and received it from the Treasury in return for preferred stock and promise of repayment. Still even with this infusion, Citigroup is only trading at$8.29 a share at the time of this writing. This does reflect doubling since the Monday announcement of the $20 billion.

While there is some optimism with respect to Citigroup, the housing loan credit default swaps that got it into trouble have not and will not go away. There is a very long way to go. But as with AIG, Freddie Mac, and Fannie Mae, Citigroup is "too big to let fail.

On other fronts the long political campaign saw the Democratic Party continue to reverse the Republican Party's hold majority representation. Barack Obama handily defeated John McCain as millions voted for a change in direction. President elect Obama has quickly moved to appoint a transitional team and cabinet that reflects recruitment from the last 3 adminstrations. Obama clearly sees economic recovery as central to his administration. Small and large businesses will be looking closely at the Obama appointments and programs as will labor and countless unrepresented populations, which will be vieing for attention.

That the economy has been turbulent and volatile is an understatement. All are looking for positive signs. The last week of November has seen some restoration in the market. But credit and loans is still a problem. There were bleak forecasts for retail but the post Thanksgiving retail market held steady over the weekend. Time will tell where it will go.

December will continue to represent this transitional phase. Which way for 2009 is the big question?