Reviewing the Current, Not the Waves
Posted by Larry Doyle on June 29, 2009 8:33 AM |
Are we so focused on the beauty of the rolling surf that we have become blinded by the dangers of the shifting currents? No doubt!! Washington and Wall Street would have it no other way.
My wife and I attended a friend’s wedding on the outer part of Cape Cod this weekend. We had a few hours between the church service and reception. While enjoying a refreshment at a local waterside inn, we soaked in the beauty of the seaside setting. Little did I know, but along that very coastline the day before, two substantial homes had literally washed away as their foundations had been totally eroded by shifting tides.
In analogous fashion, haven’t Wall Street and Washington focused investors’ and taxpayers’ attention on short term goals and developments for their own profit while the public is stuck with an ever increasing bill? Sense on Cents strongly believes this to be true. The media is compliant in allowing the financial and political machines to define the ‘game’ and the ‘rules.’
The mission of Sense on Cents in navigating the economic landscape is to redefine the ‘game’ and the ‘rules’ so people can truly enjoy the beauty of the waves while fully appreciating the dangers of the shifting currents.
At this point, Wall Street is looking to return to ‘business as usual.’ Meanwhile, the programs and policies of the Obama administration are not only going with the ‘current’ that severely damaged our economic foundation, but are also strengthening that current. What do I mean?
Recall that after the market crash of 1929, the two driving forces that pushed our economy and country into The Great Depression were higher taxes and increased protectionism.
While Obama campaigned on targeted tax increases for the highest income earners, there is no doubt in my mind that our entire economy will be hit with higher taxes. These tax increases will come via formal tax legislation and also via increased costs passed along by industries impacted by new legislation.
The formal tax increases for every wage earner in our country paying taxes will result from anemic economic growth. Obama as much admitted last week in a Bloomberg interview that higher taxes across the board may be a necessity. I highlighted this prospect in writing, “The Taxman Cometh”.
Jack Welch stated the other day, “we’re going to have huge tax increases” given the enormous spending programs being launched by the Obama administration, in conjunction with little to no economic growth.
Over the weekend, I read 15 state insurance funds which pay unemployment benefits are now empty. How will these states address this issue? First stop, Washington. Second stop, higher taxes.
In regard to Obama’s major initiatives (health care, energy, education, financial reregulation), each and every one of them will employ formal tax increases or increased costs which will be passed along to the American public.
I am not stating that government can’t or shouldn’t ever look to employ new programs and policies. I am also not stating that government can’t or shouldn’t play a significant role in our country and economy. I am stating that our government is not now, nor has it ever been, an efficient provider of services or an efficient user of capital. Under Obama, I see these inefficiencies growing dramatically simply given the scope of his programs with no accompanying shifts to diminish wasteful government programs and spending.
Most recently, the narrow passage of the cap and trade legislation in the House will likely lead to increased protectionist measures and likely tariffs on foreign energy companies. Obama is aware of this ‘tidal shift’ and states he does not support formal measures in that direction but, in my opinion, the undercurrent pushing us in that direction is very strong.
With no meaningful opposition in Washington and no credible opposition in the media, Obama and Wall Street are playing the “business as usual” game. This “game” would have us focus on the daily rippling of the waves, while we truly need to focus on the extremely dangerous current that is leading us toward an ongoing lasting recession, if not much worse.