How would we have reacted to a presidential candidate that made the following commitments last spring:
1. I will take steps to insure that oil prices are reduced by 56% from today’s high of $147 per barrel to $64 a barrel by November 1st.
2. I will take steps to insure that the value of the dollar begins to rise to appropriate levels and will achieve increases in our buying power in Europe by 25% by November 1st.
3. I will take steps to make housing more affordable. Prices on entry level housing will drop by as much as 50% and conforming thirty year mortgages will be available at 5.625% by November 1st. These mortgages will not have any adjustments to their interest rates during the thirty year mortgage.
4. I will add 20,000 troops to our existing forces in Iraq and position our troops for a successful exit from Iraq. I will assure you that in October of 2008, we will lose less than 15 troops and most of these unfortunate deaths will be by virtue of non-combat events.
5. I will assure you that the villains on Wall Street will finally have their comeuppance and by November 1st, we will send literally thousands of them home and in search of jobs which actually add to the economy.
After scoffing at anyone who would have made such ridiculous promises, virtually all of us would have virtually killed to achieve these results. Well, none of the candidates made such promises and all of the above promises were kept. Of course, the price was more than fairly expensive with our equity markets down 33%, foreclosures at record levels and unemployment up a couple of points.
The message is to be careful what you wish for in terms of political and economic change. The unintended consequences of tax increases for the rich, national health insurance for all, or tax refunds for people who pay no taxes may be the greatest thing since sliced bread …………… and maybe not.
I have always thought of our economy and our political condition as a single child’s toy. This is a toy where no matter where one presses, the air always goes into another part of the toy. There are always going to be successes, failures and a future very different than the current expectation.
The future may exquisitely bring exactly what we wish for, but it may also bring along a few demons that we never, ever wanted to see.