Uncertainty, the "Great Value Killer" 3 / 3 / 2009

Look into the markets and what to you see? Hesitation. Why? The G7, while taking certain actions that may be value building, has primarily looked to the creators of our economic problems for answers and solutions. They are in no particular order, the regulatory agencies, the self regulated industries, and the corporations that gamed our economies to transfer value from shareholders to themselves. They built no value, in fact they knowingly drained value and transferred their risk to shareholders and the G7 economies as a whole.

So what is the result? Each of these enterprises, and make no mistake the regulatory agencies are enterprises too, is doing what it has done best, perpetuating the mirage of its overall value to the world economy even in current state in order justifying the need to feed them even more of our funds.

The result, beyond the general anger of the populace, is simple..the friends of these enterprises are supporting their requests, and the foes of these enterprises are calling for their downfall. No one knows which way to go here, the Fed and the Presidents of the G7 included. That creates uncertainty and uncertainty prevents investors and lenders from entering the markets.

Until these economic engines come off the sidelines, the values of all companies must continue to decline because a lack of investment and funding sources adds risk to the future of these enterprises. And since the only sources of capital seem to be the G7 governments, and their investment choices are the illiquid, no value companies, Citigroup, AIG, Car Companies, Foreign Banks, which in turn are not able to provide the capital to fuel the real businesses of the G7 nations, the overall value of the businesses and the G7 economies have no choice but to decline.

Building value in this environment is not possible. Maintaining value is difficult. The most troubling issue is the clear lack of understanding of how to build and maintain an economy by the G7 governments. How hard is this? AIG, Citi, GM, Chrysler, HSBC. If anyone of these companies goes away will we suffer more than we already have? No, in fact our economies will most certainly improve because the uncertainty surrounding their bail outs will be pulled from the funding markets.

Build value everyday.

Brad van Siclen