Complete Disarray – Well Almost Complete…

At the end of the Bush administration the country was ready for a change. “Change We Can Believe In” is what we wanted. And a very hopeful country along with a very charismatic personality that spoke to the issues we wanted to address stepped up to the podium.

The American people were so upset with the last administration that they cleaned out the Republican leadership across the board giving the Democrats full majorities in both houses. History has shown that when one party has the overwhelming majority in our government it usually turns out to be a bad thing. So what is the answer? Put balance back into the House and Senate?

Obviously there is a disconnect between our leadership and the middle of the road conservative / liberal. Both sides have their fringe from Tea Party to Blue Dogs. These groups simply make static and provide Glen Beck and Keith Olbermann with daily material.

In the first year our President seemed to have a single agenda, Healthcare. Even with the overwhelming majorities this one item could not gain enough traction to pass congress. Our President who gives the appearance that he promotes and strives to achieve bipartisanship seemingly had issues with controlling his how party members. During this entire process the economy was in the fast lane heading directly into the tank.

 

The bubble and economic roadmap…

I do agree that the issues with the economy were caused by the previous administration and the policies typically associated with the Republican economic road map. The major problem that I saw with the drastic change in our government’s leadership is that the Democratic approach to the business world and the economic agenda is so drastically different that it caused the creation of what could almost be termed a singular singularity in the US economy. While attempting to stop a financial meltdown that was caused by the unbridled activity of the financial world the solution to “save” some of the very institutions that caused the problem was in direct conflict with the natural order of a free market.

We were in the middle of an over inflated market that finally ran its course. We had a bubble in our housing market created by the fast paces economy and the, what I would term outrageous practices of the lending institutions and the insurance companies who were underwriting the risks. I believe any economist would have seen this coming. So the logical course correction would be that the bubble would burst and the markets would fall flat and the organizations responsible would have failed or been penalized to a degree that would have caused them serious pain.

That should have been the natural progression, but we had a change in leadership.

 

Save the world…

While a rescue plan was in the works prior to the current administrations takeover, the massive recovery plan that was finally delivered was more in line with the Democratic approach to controlling the markets. There were obviously some companies that were allowed to fail while others were provided with the government’s financial support. Thus the bubble did not burst but was severely deflated. And with the wisdom of the Democratic leadership they have continued to pump resources into the market, print money, take interest rates to an all time low and even go so far as to force the restructure of some of the manufacturing sectors former giants.

Now we find ourselves with an economy that still resembles a “half bubble” but now has so many holes in it that even with all the stimulus packages and bailouts they do not stop the downward trends. The bad news there is that we will not be able to readjust the market until it reaches a flat plain and has the opportunity to reset “normal” rates, operating practices and trustworthy risks engagements. The government is simply postponing the inevitable.

 

No, look over here…

With the almost certain failure of the healthcare reform and the economy still deflating the leadership in Washington seems to want to resurrect some of the old campaign promises along with a lot of activity to show the American people that they are focusing their attention on the unemployment rate and job creation.

While I do believe they should be putting energy into proposed unemployment strategies and job creations there are a couple of critical points that should be observed.

1. The government cannot create jobs outside of government controlled jobs. (Police, Firemen, Military…) There are programs that have in the past created mass public works projects but these are providing jobs through private industry. Thus showcasing the only real job creation is in the private sector and can only be controlled by the private sector. Primarily the small business.

2. With the implosion of the markets and the economy it leaves us with a surplus of manufactured goods and a services industry failing because the customer base no longer has expendable income. Regardless of how much money the government prints or stimulus packages they offer, the fact of the matter is this overwhelming surplus of goods has to be adjusted before any real progress can take place.

What this translates into is that the unemployment will not see any relief until the surpluses are adjusted. (Sold off, sold out, discarded…) And the markets cannot adjust until the manufacturing sector has recovered to a sufficient position that Wall Street has confidence that a real adjustment has been made to a “new normal” and a base for rebuilding is realized.

The administration has also resurrected the Don’t Ask Don’t Tell (DADT) issues with the military. While I fully support this activity it comes at a very suspicious time. I believe the President has lost some of his base with the GLBT community and now simply wishes to garner support with some of the smaller individual groups who supported him in his campaign. I am not saying the administration does not find this issue important only that the timing makes me suspect their motive.

 

Next steps…

I am predicting another change coming. With the upcoming elections I believe the balance of power will once again shift. I personally believe this is a good thing. In the current structure the Republican representation is so off balance that they have little say in anything that happens and when you have no say you have no responsibility or “skin” in the game. This is not only bad for having a balanced team, it reflects bad on the Republican minority when all they can do is oppose any solutions offered by their liberal counterparts.

Some of the most productive periods in our government’s history have been when the balance of power was close to neutral. One of the biggest handicaps this President has had to endure is the overwhelming takeover of the government by the Democrats due to the complete disarray the previous administration let the American people with. If my expectations and predictions are correct, the next two years of this Presidents time in office will be much more productive than his first.