Can we stop panicking yet?

Hmm, maybe a little too soon. The hysterical cries of President Obama notwithstanding, absent the passage of a trillion dollar pork bill the United States will not sink into permanent recession. If the bloated spend-fest is passed in its current form, however, we can look forward to permanent indebtedness. So, we have that going for us.

We just need China and Japan to buy an additional one or two trillion dollars of Treasury bills over the next 18 months. Of course, Americans who have been encouraged to tighten their belts have seriously cut back on their purchases of Japanese and Chinese products (Note Panasonic's recent layoff of 15,000 employees.) Which means--still with me?--the Japanese and Chinese have less money to spend to buy our debt. Can this circle be squared? Or does it more and more begin to resemble perpetual-motion machines and cold fusion, the attempts at which run smack into immutable natural laws?

Gold is a bit pricey now, at well over $900 an ounce. So while I agree inflation is around the corner, a significant amount of inflation appears already priced into gold, considering that it's moved opposed to oil, the Euro, and the Pound in recent months, all of which have sunk against the Dollar. Money-making companies (There are still some around making profits) look good for equities, as long as they're cheap enough. Remember; you want to price them based on future earnings, which will almost certainly be lower for a year or two than the previous couple of years' earnings. Corporate debt is as cheap as it's been in a generation, making bonds look really appealing. But some junk is, well, junk. So buy carefully, and choose bond funds that are well diversified. Look at their track records in previous downturns and, if the fund hasn't been around a couple of decades to experience previous downturns, skip it.

Most financial equities are toxic, given Washington's desire to seize the industry in its large, crude fist for the forseeable future. You could look to industries that appear in favor with the Hope and Change administration, but if "green" industries and others don't have a real profit-making ability absent large subsidies, that's quite a gamble. Financing could dry up tomorrow, given the speed with which the current administration seems to be going off the rails.

More sensible is a look to quality sectors that don't rely on large subsidies or lend themselves to onerous regulation for political purposes. Consumer staples, retail at the top and bottom of the economic scale, utilities that don't have an outsize reliance on coal-generated power, and telecommunications firms with growing worldwide customer bases (African and Asian cell phone markets continue to expand) are possible bets. Any other ideas? Feel free to share.