IIp7-8_0609.qxd 23/6/09 15:15 Page 3
Letter from America | 7
Mid-Year Report
Card for the U.S.
Economy
by Charles Lewis Sizemore, CFA
Chief Investment Officer,
Sizemore Capital Management LLC
www.sizemorecapital.com
L
ast month, we issued a “report anti-freedom legislation in U.S. history— With this as the political backdrop, we would
card” of sorts on the state of namely the Patriot Act and the Heroes Act. now like to give the U.S. economy a mid-
economic freedom in America. So, on balance, we would have to give the year report card as well. We are in the most
Unfortunately, with the recent former U.S. president rather low marks as a severe economic contraction in decades, and
developments in the defender of economic freedom. overall sentiment remains bleak. That said,
government “bailouts” of The current U.S. president, like his we do believe that the worst may be behind
private industry and the all-out assault on predecessor, is also getting off to an us. The stock market’s 50% rally from the
free trade and on offshore finance underway, unequivocally poor start. The Obama March lows notwithstanding, we do not
the United States scored quite poorly. Only Administration’s handling of the Chrysler and believe that a “V-shaped” economic recovery
time will tell how these developments will General Motors bankruptcies, as we discussed is likely. If we had to assign the shape of a
play out. last month, has set a horrible precedent and Latin letter to our forecast, it would have to
Mr. Bush started his presidency with a rash has done significant damage to the country’s be “L,” but perhaps we would tilt the L
of protectionist and anti-trade measures reputation as a defender of property rights slightly counter-clockwise so as to give it a
(such as his much-criticised steel tariffs and and the priority of creditor claims. Mr. mild upward slope. Things are getting better,
agricultural subsidies), but over the course of Obama, like Mr. Bush before him, may yet but they are doing so slowly and
his eight years in office he moved decidedly in become more supportive of free trade, and he incrementally.
the direction of open markets. Mr. Bush may yet tone down his attack on the offshore This month, we will focus our report
eventually became one of the staunchest financial industry. He could also send a card firstly on the housing market—since
defenders of the Doha Round and also led powerful message to Americans and global it is in the housing market were this crisis
(with mixed success) numerous other free- investors alike by repealing the more offensive originated—and secondly on the state
trade initiatives such as Cafta, the FTAA, and parts of the Patriot and Heroes Acts. But at of retail sales. It is the consumer sector,
bilateral trade deals with Colombia, Peru, and this stage in his presidency we have our at 70% of GDP, that ultimately drives
South Korea, among others. Of course, giving doubts, and we would have to give Mr. the U.S. economy, so any durable recovery
with one hand and taking away with the Obama marks almost as low as those of Mr. will have to include an improvement in
other, Mr. Bush also signed some of the most Bush. retail sales.
www.investmentinternational.com June 2009 Investment International
Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36