An Economic Thaw?
We have heard it thousands of times — a cry for help, a desperate situation. “I’ve fallen, and I can’t get up!” It’s a picture of the US economy; an anxious plea for help.
The “fiscal cliff” has become that overused phrase — a term that is losing its punch; a label brought on by a self-imposed deadline by leaders who could not lead, lacking reason and wisdom.
In the summer of 2011 and the debt ceiling debate that turned to crisis, Congress and the White House agreed to automatic triggers — spending cuts and tax increases — if they failed to reach a deficit reduction plan. The story has been a tragedy, reminiscent of a movie with intrigue and deceit. But, it’s not Hollywood, it’s real life, with our lives hanging in the balance.
If you listen very carefully you can hear the cry of a slowly growing economy saying, “help, I’ve fallen, and I can’t get up.”
That is the story we all know about — the story of dysfunction in Washington, dire economic predictions, and the epicenter of massive distortion. But, there is another back story that gets little coverage. It is a story begging to be told, and is more hopeful.
In the midst of a bitter political negotiation, there are signs of hope and recovery. America has not lost its instinct for freedom and prosperity. In the fog of political combat we can lose our way, but ultimately we find our bearings. I see no reason why this time is different.
With the Federal Reserve playing the role of the umpire and backstop, there are trillions of dollars on the sidelines and alas, the housing market is showing signs of healing. The US economy is building strength and with predictable, rational public policies, our economy should climb out of this malaise as early as next year.
Investors seem discouraged by the perception of incompetence. Democracy can look like that. It’s been a terrible upheaval for most of us, but at some point investors will play the cards they are dealt and realize they must put money to work — to plan for retirement, to plan for college educations or plan for that rainy day. When that happens, the markets have been oiled with plentiful money from the Federal Reserve and the economy could continue to show signs of recovery.
During this holiday season, let’s choose to focus on the next great peace dividend for the nation — a bipartisan agreement that will solve the fiscal crisis before us. We all want an end to the political cold war in Washington, and I feel a thaw coming.
- How to Govern America in 2013 II: Mortgages, Housing, and the Recovery (delong.typepad.com)
- Fiscal cliff threatens economic recovery (bigpondnews.com)
- Fiscal Madness (economistsview.typepad.com)
- Bernanke Says Solving Fiscal Cliff May Lead to ‘Very Good’ Year – Bloomberg (bloomberg.com)
- Bernanke to Congress: Don’t flub the austerity crisis (washingtonpost.com)