Capital Markets Update: March 2009

Last fall, we examined how the 2008 recession compared to the six recessions of the last 40 years. At that time we noted that today’s recession was the “least worst” of the seven episodes as of that time. Our updated analysis indicates that we are in the midst of the second-worst recessionary period of the last 40 years, and it is worsening quickly.

But do not bet against the U.S. economy. Entrepreneurs are still out there, and with a modicum of political leadership and stable economic policy we will get through this stronger than ever. However, it will take more time than we thought, due to the needless panic that was created by our political “leadership.”

The dotcom bubble gave rise to a belief that fabulous riches can be achieved by age 30 (35 if you are dumb) through financial models, flip books and PowerPoint presentations. “Only chumps work past 35” became a prevalent culture. But great business enterprises, and the jobs and fortunes they create, are the result of decades of hard work and execution, not nifty models. Getting rich slowly is the American way, and most overnight successes prove to be fool’s gold. There is no substitute for rolling up your sleeves every day and working hard on the details. This is true even if you are a genius. We have done capitalism a great disservice by not saying that the “get rich quick” emperor has no clothes.

Read the full Capital Markets Update in PDF format.

By Dr. Peter Linneman, PhD
Chief Economist, NAI Global
Principal, Linneman Associates