I recently received an e-mail from an advisor who took issue with part of my April column for Investment Advisor, “Timing Is Everything” (http://www.investmentadvisor.com/Issues/2009/April/Pages/Timing-Is-Everything.aspx). He wrote: “You stated that with ‘Pres. Obama, Pelosi, and Reid in charge, that we’re possibly headed for a Carter economic environment’… You appear to place the blame on the current officeholders which completely ignores what precipitated the current problems.”
This reader raises an interesting point that I believe has a message for all of us in our politically charged society. He’s right, of course: I did consciously avoid an analysis of the causes of the current crisis for two reasons.
First, the “causes” of major economic collapses like this one are complex, and analysis is often clouded by political beliefs—I’ve recently been reading two compelling and conflicting theories of what caused the Great Depression, and that was nearly 80 years ago. (With that said, I am deeply troubled by both Administrations’ rush to implement their own “solutions” without any public discussion or debate about how we got into this mess, so we could find a way to get out that has some chance of actually solving the problem. I still suspect that had the Bush team stepped in last summer to stabilize the mortgage market by buying up defaulting mortgages at a discount, the whole crisis could have been averted with little cost to the taxpayer.)
Second, and more important, regardless of the “cause,” it is the current Administration’s, and Congress’s, “solution” that financial advisors and the rest of us must deal with now. Unfortunately, the economic impact of skyrocketing Federal deficits, along with the inevitable higher taxes and higher interest rates, is far less debatable. Whether the blame for the current and coming crises rests with the Bush Boys or the Obama Gang will be a question for future historians.
Advisors, however, who today are projecting an economic turnaround in six to 12 months might want to rethink that turnaround timeframe.
Entries (RSS)
Bob,
Your answer is still a thinly veiled distaste for the current administration and does not offer readers an opportunity to learn – learn from the mistakes of the past (and those are primarily association with “cheap” money, deregulation, wealth concentration in the hands of the few and corporate malfeasance – all of which have been the “trademark” of one political party and administration of the last 8 years) – power brokers who left us left us all the mess in place. It is difficult to envision public discussion about collapsing banks, illiquid insurers, disappearing broker dealers, global capital markets collapse and a complete lack of leadership on all fronts. What would you have the average Joe debate? Forgive my cyncism but these are the facts.
I want to go on the record saying …that by year end we will have seen some light and definetely within 12 months the attitude of the Average American will be positive about the changes that President Obama and his appointees have instituted…..You see ….President Obama was elected by the majority …to bring about change …even the most resiliant Republicans will see the average American demand that they support the changes or…..you will see more of the old guard of Congress be replace once and for all….with men and women of integrity, respect and morals….let the clock begin!!!!!!!!!!!!!!!
What kind of answer is your answer no turn around in 6 to 12 months so does that mean a turn around in 12 months and 14 days or what. do we just leave a black cloud over everyone head leaving no hope for a recovery.
Any commentary on politics for the economic crisis wastes time for everyone. Point is—–for the last few years, Americans were stupid and Wall Street was both greedy and selfish and stupid in the sense that their selfishness and stupidity was not sustainable.
Obama is not good or bad compared to the last administration. However, I( did watch his speech against the credit card industry for their unethical and dispicable behavior toward the poor and at least felt like he was not being bought by that industry like what th;e previous administration had been by Wall Street.
The root cause of our problem is debt, and the father of our debt is our congress. The federal government is overextended. Bernanke, Greenspan and Paul Volker have all said it many times over the last 3 decades: a little inflation is an absolute necessity in order to whittle away at the national debt. They can’t afford to let the economy slip into deflation otherwise the national debt will destroy our currency and our government with it. On 9/11 the USA was overextended by $6 trillion on the books and another $15 trillion off the books. So Greenspan fearing a recession and deflation began lowering rates to 1%, where they stayed for far too long. Since money was practiacally free, every Joe and Jane took what they could get get and leveraged it with real estate. They figured they couldn’t lose by buying houses because the money was free, and “they aren’t make any more land” (remember that refrain?) From here on, Bob Clark’s analysis is just perfect.
Bush and Clinton did not cause the problem, but they didn’t help. Obama didn’t cause it either, but he now has staring at him a National Debt of $13 trillion on the books and another $40 trillion off the books. His economic policies stand a small chance to make things better, but an even larger chance to make things much worse. In the end, he too can walk off stage and say he didn’t cause the problem. As Alexis de Tocqueville said, “In a democracy, the people get the government they deserve.”
Every citizen in this country should be disgusted with all of our elected officials. The past several months have done nothing to eleviate the fears that we should all have about the furture of our economy.
Our Congress has shown time and again that they are probably the most incompetent branch of government that we have. I am not exonerating the Wall Street firms for their part in this mess either. I do feel that Congress is more to blame because their job is to protect the people of this country and look out for our best interests not theirs.
Let’s hope that the fundamentals of Capitalism can help offset the ineptness of our elected officials and get us out of this mess.