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Capitalism is optimism monetized. New products and services and businesses—and new wealth—can’t be created without an abiding sense of hope, a basic belief that when you work hard and invest right, rich rewards are the likely result. That kind of confidence died around the world in 2008, thanks to morons on Wall Street, who gave us the ultimate in oxymorons: “risk management,” indeed.
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Brace for the glimmerings of a comeback in confidence in 2009, if only because it can’t get much worse than this. Most of these fearless forecasts are in the searching-for-hope category. Here’s hoping you might read ’em and reap.
1. A corporate smashup.
At least one giant, mishmash contraption, assembled by investment bankers over the past decade or more, will decide to split itself into sleeker, more distinct businesses to attract a better valuation. Favorite candidates: Citigroup [C
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], Sony [SNE
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], what's left of Time Warner [TWX
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] and CNBC's parent, General Electric [GE
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].
2. Goldman Sachs goes private.
A stock [GS
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] once at $240 now struggles at $80, so the smartest guys on the Street pull off a great arbitrage and put themselves out of reach of the hordes of hedgies and shorts that have destabilized once-solid firms. Caveat: I am making this up.
3. Banks reap billions on overdone writeoffs.
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By late next year some big banks will realize ample profits on the damaged assets they wrote down so severely—the mortgage-backed securities, collateralized debt obligations and other arcane weapons of their own destruction.
4. Ken Lewis takes a tumble.
American Banker's 2008 Banker of the Year, acclaimed now for his bold buy of ailing Countrywide and his rescue of Merrill Lynch [MER
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], could be the scapegoat when both deals blow up on him. Merrill's John Thain had almost a year to look at the books; Lewis had a matter of hours. Which one struck the smarter deal?
5. Recession chic: Bury the bling.
The coolest will brag about doing without next year; ostentatious consumption will make you a pariah. Advertisers will play up frugality and value over pleasure and status. And then, by late in the year and just as quickly, we will tire of this profitless piety and get back to trying to acquire happiness.
6. Shabby chic: Distressed assets are the new black.
Some Wall Street stars will reap new fortunes setting up funds to plow billions of dollars into the abused and abandoned stocks and properties left unloved in the meltdown. That would vanquish premature reports of Wall Street's demise.
7. Print media will survive.
In fact the Old Media may have a surprise resurgence of sorts, as advertising price cuts bring back sponsors and once-torrid online ad sales continue to slow down.
8. Big 3 Bailout: More, more, more.
With a rebel yell, Congress and the Obama-nation will hand $25 billion to Detroit (never mind that the credit crunch also hurts Toyota [TM
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], Nissan [NSANY
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] and other "transplants," which aren't pleading for a federal rescue). And then months later, GM [GM
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] -Ford [F
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] -Chrysler will be back, asking for $25 billion more.
9. The next bubble begins.
By late next year, some brilliant mind on Wall Street will devise the next great black box. One guess: insurance annuities. One banker noted the other day that they have an awful lot of unrealized equity value, juicy and ripe for securitization.
Data is a real-time snapshot *Data is delayed at least 15 minutes