In this column we occasionally comment on politics, though we try not to get overly biased. For the most part people read our articles and listen to us on radio for our opinions on the economics and markets, not politics; so we try to keep our political quips limited to those that relate to these areas. Our audience certainly doesn’t hesitate to alert us when they thing we’ve strayed too far into the political realm, and we thank them for that.
This week, though, we’ll just get ready for a flood of hate mail. What’s going on right now is perhaps the biggest case of “we told you so” in the past half-decade, and it’s far too relevant to ignore.
Before Barack Obama was ever elected President we wrote that he was not equipped for the office. As a junior Senator and former Community Organizer, he simply didn’t have the working knowledge of an enterprising private sector that is required to make an economy work. The man had never run anything in his life.
So when Obama moved into the White House and Democrats gained control in both houses of Congress, we knew it was going to be a long four years. Here we had perhaps the most left-leaning administration ever, coupled with probably the most liberal Congress since the New Deal – not exactly a great mix when the economy was in the toilet and businesses were struggling to stay afloat.
But we gave them a chance. Week after week, month after month we watched things developed. We weighed in here and there on little tweaks that ought to have been made to keep the recovery going. After all we, like the rest of the global business community, were looking for sustainability.
Not surprisingly our warnings – like those of the entire private sector – went unheeded. While Obama and Pelosi campaigned for Obamacare and Cap & Trade, no changes were made in policy to allow the struggling economic recovery to maintain itself.
Now, as predicted, we’re starting to see things stall; and as with most major changes in economic circumstances – especially within an industrial economy, which the US is, like it or not – it all starts with steel. A recent article in the Wall Street Journal points out that steelmakers are now bracing for problems, and many are closing plants.
What’s really startling about this development is that just six months ago US automakers literally couldn’t get any more steel from their distributors, because the distributors couldn’t get any more from their mills. There was, it seemed, a real shortage in steel – which is a great sign in any industrial economy.
Now it’s clear that there has always been a shortage – of intelligence in Washington.
The last several years have made it abundantly clear that most of our so-called “leaders” in Washington are absolutely incompetent. Many literally don’t have a clue; they couldn’t run a dishwasher, let alone an economy.
All we can do at this point is pray that, come January, Romney can provide some real leadership. At this point we can safely guarantee that Obama won’t win reelection. He simply can’t get the economy moving quickly enough to lower unemployment and raise GDP growth before November. But until then, we’re stuck.
Thankfully, this is likely a short-term setback; the long-term, post-Obama prospects still remain very bright for the US economy. Another Journal article recently showcased a surging number of companies lining up to issue bonds so they can lock in interest rates as low as they’ve been in a half-century or more.
With the money they accumulate from issuing bonds, many of those companies will [hopefully] finance expansion projects, just as we’ve predicted. Their rush has been to lock in low rates before they begin creeping back up and borrowing becomes more expensive.
What businesses have been waiting for – and they are now finding – has been some kind of certainty. Right now they’re becoming increasingly certain that Obama won’t win a second term, and that the outlook for business in this country will improve. As more businesses and investors become certain of that the market – and the economy – will begin to move in the right direction.