3 years on, the global financial crisis or “tsunami” has not only subsided but completely overturned. Today, markets around the world are breaking new highs, except for a few in Europe. Asia is a hot spot now, with tons of panic money pumping in. As the fear factor begins to lose its weight, speculation slowly shifts in the balance. Risk taking could be more visible, particularly in Asia.
Looking back, we may ponder about the big bets taken by the U.S. government (and at one time, leading all other governments). Optimism was scarce and is still in U.S. As it all seems now that the true beneficiaries of all the stimulus are the so-called “too big to fail (TBTF)” companies. Not long from now, we will see the fairy tale of General Motors: from the verge of diminishing to dawn of a re-birth. It would only take a fool to realize the simplicity of a deal. Buying stocks of a TBTF is not only the safest “insurance” (which you know nowadays is becoming less credible) , but also the best bargain in town on returns. If the government can bring a dead company back to life, you must believe in the great potential in it. Fret not if you don’t have enough cash on hand, there are other available options such as Citigroup and AIG (or not…).
In a sense, it demonstrates the highest level of protectionism a country may enforce in subtlety. When a government became the greatest investor in a gloomy market, even the worst company in the industry can instantly become one of the greatest in the world. All others (productivity, product quality, brand etc) matter less. This should be the trump card on the table. All companies should strive to grow and extend beyond its physical limits. In this way, they can secure a ticket to the government’s deep pockets (this is why I don’t see a slowdown in any leveraged buyouts or acquisition through borrowing) . Those who are sad over missing the opportunity should not despair. If the economy is going for a double dip recession, they would still stand a chance. Now that employment is a big political issue, the number of employees you have will determine how big your chip is. A word of advice: don’t take your corporate jets (or your private ones as well) to meet the officials when you are asking them for money.
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