Voldemort's alive?

Eevn in spite of the recent rally, there is still this underlying, pervasive and inherent fear and doomsday feel in the market that is reminscient of those types of evils that its bad luck to even name them or speak their name. However, this fear has a handful of references: (i) double-dip; (ii) recession; (iii) deflationary threat; (iv) post-stimulus contraction; and (v) correction just to name a handful.

But the idea, or fear, is generally this: that the market is sputtering along at a slightly positive rate, albeit one that still feels recessionary to the average Joe who doesn't measure his life in terms of corporate profitability. But if the market were to slow much at all, this would mean that credit availability would contract, the stock market would likely suffer a noticable decline and the employment picture would become even more gloomy in addition to individual wealth and home values coming under further downward pressure. It would be a cycle that would take us back to the chaos and economic peril of 2008 when the economic system simply wasn't working. It was jammed in multiple spots.

Keeping the current trod going is harder than one might think. It's a balance of maintaining confidence in the promise of tomorrow or next year while buying time for the economy to deleverage and not slip into the aforementioned declining cycle. It simply wont work to try and accelerate this economy to its potential of 3% GDP growth. So the primary plan moving foward should be one that provides targeted economic incentives (ah, nice new word for that now worn out term 'stimulus') to keep growth afloat. These efforts need to be consistent and periodic, on a scale appropriate to encourage but not so burdensome as to meaningfully increase debt concerns.

Examples = extending the Bush tax cuts for couples earning under $250,000 only; removing the payroll tax for a short period of time to encourage investment in labor and job creation; and restructing of medicare, medicaid and social security.

Other options not as appealling = infrastructure stimulus (this would provide artificial jobs and paychecks but, as seen with rebate tax checks, is not the most efficient response esp. in light of budget concerns); allowing corporations to write off equipment/asset purchases instead of depreciating them over a period of years (it helps but is less effective than you'd think -- with interest rates at 0%, corporations are already able to secure 0% loans on such investments in a sense so the savings of immediate depreciation of assets is much less impactful than expected); a national infrastructure bank (sounds eerily similar to a Fannie Mae or Freddie Mac).

The bottom line is that the current Administration and future Congress must become magicians who can entertain the American public while this process unfolds (slowly). The ability to encourage and act without threatening the ability of the country to pay its debt obligations will require charisma and nimble manuevering. Let's hope they can keep all our eyes looking for the rabbit to come out of the hat and our minds off the threat of what-cha-ma-call-it.