“Let the Games Begin…” November 20, 2009

This week has raised a lot of eyebrows about whether the recovery is sustainable…or even real. Here’s what we learned this week:

· Excluding the jump in car sales, retail sales are modest.

· Core producer prices are in sharp decline.

· Outside of energy, inflation in consumer prices is not happening.

· Industrial production has slipped to a slower pace.

· And most disappointing, new housing starts were way off from what was expected.

Not the kind of week we wanted prior to Thanksgiving. And not the kind of news that will boost confidence.

But there was one very interesting and positive news item that has a lot of potential for helping economic growth: Warren Buffet and Goldman Sachs have teamed up to boost financing and lending programs for underserved small business owners.

This is significant – for two reasons:

(1) Small businesses have been most affected by the credit crunch, and still find it very difficult to get loans.

(2) Although it is only a $500 million initiative, it is a private sector initiative not a government one.

Capitalism is about private initiative and entrepreneurship, not about government run businesses. Also, large corporations do not create the jobs; job creation comes from new and small businesses.

One of the world’s wealthiest and most successful individuals has combined with one of world’s wealthiest and most successful businesses to cast a loud vote for capitalism. This Buffet-Goldman initiative is a real example of real stimulus that could provide real help.