The Political/Economic Blame Game

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.