Did you happen to see the segment on CNBC Friday morning (about 8:45 am ET) that featured an out-and-out rant by Rick Santelli?
The rather heated "debate" among the panel CNBC had compiled highlights a basic issue that is, in my opinion, affecting the economy.
That segment highlighted the differences between the two basic sides of the current political/economic debate.
On one side are those that believe government can and should help the economy and that problems only arise regarding a government program, such as the "Stimulus Program", when it is implemented poorly.
The other side tends to believe that government is the problem and basically needs to get out of the way of the private sector and let the entrepreneur spirit of business take hold.
I will not venture an opinion on the merits of either side.
I will point out however that, due to technological advances and other societal changes, communication of information is more rapid, more diverse and more widespread than at any previous time in history.
That means, I believe, that the general public has "suddenly" become more aware of the existence of the two sides and of the process that is (and always has been) part of Washington DC.
And they don't like it. They just want things fixed.
As the saying goes: "If you ever saw how they make sausage, you would never eat it again!"
We have all seen the "man/woman in the street" interviews on television. I recently saw a segment in which several different people all made similar comments regarding the Debt Ceiling Debate. They said things about congress such as:
- I wish they would quit acting like children and get it done.
- They need to start acting like adults and do what's needed.
- This is a serious issue that needs to be resolved now.
- Those guys (and gals) need to get their act together and finish this.
You see, they all wanted the politicians to "get it done". The problem, which I believe none of the people interviewed even recognize, is that they all have in mind their own version of what "should get done" and no two of their opinions are the same.
Thus we come to the realization that this discrepancy of opinion regarding what action the government should take can only be resolved through debate.
And in our system, with the two parties on basically even footing, no one side has a position which is one-sidedly dominant and which would allow for smooth sailing of that side's ideas.
Thus the debate is contentious, sometimes rancorous, and often filled with hyperbole.
And the public, the consumer, isn't used to seeing this in all its ugly detail. But it does see it now.
I repeat: "If you ever saw how they make sausage, you would never eat it again!"
I believe that this new awareness has a detrimental effect upon consumer sentiment and thus upon consumer spending. It is also quite possible that seeing what truly goes on in government and how it works is affecting small business attitudes and confidence. I believe it does and that this is shown in surveys such as the N.F.I.B. business survey. Small business sees an uncertain future with unknown and currently unknowable future impacts of taxation and regulation. It is generally reacting by holding back on spending and hiring.
My conclusion: A consumer that is in a funk combined with a small business community that is sharply pulling in the reins is going to have a significant negative effect upon the U.S. economy. And when the U.S. gets a cold, the world gets pneumonia.
The market, in my opinion, will at some point soon likely rebound from its current pullback and resume its intermediate-term advance. But I also find it difficult to come up with a way to justify a move all the way back up to the April highs, and certainly not well beyond them. The market can and will do whatever it wants and we must stay flexible. For now though, my basic template is an intermediate-term rally that resumes after the current pullback runs its course, but which does not reach the old highs before a new intermediate-term decline commences.
Now, my thumbs are sore from all this typing, so I will end this "soapbox vent" here and go get a cup-o-joe.
Editor’s Note: Okay, we’ve heard from Curt, now it’s your turn to give us your thoughts in the comments section below.
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Comments
We are so screwed!
It is sad but I believe you are right. its all out there for Public consumption like never before. Thus Washington needs to change! A business person in the White House would certainly help!
Vote out all the incumbents because of their inability to govern in the interests of Main Street. Remember who caused the financial crisis. WALL STREET's insane mortagage derivatives instruments that led to the "house of cards" collapse once real estate values began declining,
I don't believe my reduced consumer spending habits are as much a result of my sudden "insight" into Washington politics as they are due to the fact that I simply do not have a job.
God Save us from the Politicians!!! These bozos got us into this mess directing the banks to make these stupid loans to people who could not afford them. Then the loans go bad (what a shock) and they throw 3 trillion dollars at the banks to save them. Now that the banks have mostly paid back the money (thanks to our uncle Ben's clever interest ray play) the government turns around and sues them over the very loans they were directed to make. Does this seem insane to anyone else but me??? What in the world are these people thinking.....
Although I'm in the camp of less government, less spending and lower taxes, I certainly don't know what is the right answer but I know the status quo isn't working. I know before Obama I was able to trade to a 15%-20% gain and now I barely break even. So what we've been doing the last couple years doesn't work....lets move in a new direction
One side wants more spending and debt. The other side wants to cut spending. S & P said if you cut 4T from spending we will not downgrade your debt. Real simple.