Tuesday, January 5, 2010

Thought of the Day

Thought of the Day

January 5, 2010

A consideration, as we enter 2010, is that the Administration is likely to alter the way it views and comments on the economy.

While economies march to their own drummer, perception and the spin put on commentary play a role. Last year it was in the interest of the Administration, as the in-coming Party, to paint the economy in as dark tones as possible. The blame would be laid, as indeed it was (justifiably, if one also includes the Democrats who run Congress), on the former Bush administration. This year the Obama administration will have full authorship of the economy and one can bet that the rhetoric, in the months ahead, will assume a much more positive bias. The trillions of our dollars that have been spent or committed will be credited for the recovery, as it takes shape.

It is not that the “blame game” will end, but that the emphasis will be on the improving outlook – an outcome I expect. But an improving economy brings its own set of risks. In the early months, employment will lag; so that positive words may well fall on despondent, out-of-work ears. Secondly, and of longer lasting consequence, interest rates will rise, hampering housing as it struggles to improve. As we head toward the mid-term elections and the crowing, as an improving economy intensifies, it will be difficult for a theoretically independent Federal Reserve to remain mired in providing money at zero interest rates.

One can expect mainstream media to echo the raising of hockey sticks by the Obama White House.

While the tone of both the rhetoric and the real economy should improve as the year progresses, the real choice for voters as November approaches will be the in the expectations for government and the role that it plays. Is government the solution to our problems, as President Obama and the far left would have us believe, or is it the problem, as President Reagan so famously stated? Keep in mind that it was government which brought us “affordable housing” and which now wants to bring us “affordable healthcare.”

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