2010 - A Year of Reckoning

2010 figures to be a year of reckoning.

It was the best of times and the worst of times in 2009, but 2010 will be a time of transition, a time of honesty, a reality check. A time where the rubber meets the road. Gains will not be so easy. Cracks in the system are likely to be tested. Risk increases as expectations increase.

Govt's will try and pass the economy back to the private sector, while central banks will try and extract themselves from the market, all the while hoping they don't upset the applecart, or have their bluff called.

Fear and trembling dominated 1Q09, while hope and relief characterized the last half of 2009. Unmitigated reality awaits the market in 2010.

Chanos is onto something

Just saw some notes on a presentation Jim Chanos gave at an investment conference.

They reflect a thought I have had for sometime, but of course he puts it much more eloquently and identifies the underlying impetus for change.

I am referring to the idea that when an industry derives excess profits, this attracts the govt to increase its share of the take. Chanos puts his finger on the impetus for change coming from the cultural and political acceptance that health and education are rights and not privileges (and this changes how they should be viewed and treated by govt).

Chanos talks about a 30 year deregulatory boom in education, healthcare, defense, govt services, and finance. The govt has a stake in these sectors either directly or indirectly, whether because they are deriving outsized margins (against the public good) or the govt subsidizes them. Bottom-line: there is payback to be had. He is particularly focused on the potential for change in healthcare and education.