“I hope,” I told Stuart Varney on his excellent Fox Business Network program yesterday, “that President Obama watches the preparations for Hurricane Irene closely.”
“People are battening down their hatches, boarding up their houses or simply fleeing and they are right to do so. The storm might not hit them but if it does, they will wish they had prepared for it.”
“President Obama’s economic policies are to the private sector as Irene is to the East Coast, a vast swirling destructive force,” I continued. “Small businesses are fleeing the path of Obamacare, Dodd-Frank, the NLRB, the EPA, the prospect of much higher taxes.”
“They are pulling in their hiring, and capital is hiding and some of it is fleeing off shore.”
I reused the analogy on my radio program an hour later and it worked again with the audience. It truly explains what has happened tour economy. It tells us who killed “the recovery?”
President Obama did, as surely as Casey Anthony killed her daughter and O.J. Simpson his wife and Ron Goldman. Sure, some stupid, willfully blind or self-interested people will deny these cause-and-effect connections, but denial by a few doesn’t change the facts, even if those few include the entire op-ed page of the New York Times.
Amity Shlaes called it in her amazing book The Forgotten Man: A New History of the Great Depression. Economic downturns worsen and go into prolonged mode when political leadership takes the business cycle and endlessly complicates it by changing rules and infusing uncertainty into every business decision.
Swirling sets of rules and new sheets of regulations are dizzying in their impact. "What does Obamacare require of me?" asks an employer. No one can really tell him, so he refuses to add to the workforce unable to calculate the costs involved.
A corporation wants to open a new manufacturing plant in a right-to-work state but sees Team Obama’s attack on Boeing's new plant in South Carolina and decides, at least for this year, to wait and see how the radicals at the NLRB punish the aircraft company before pressing on.
A hedge fund can invest in a start –up in booming though besieged Israel or in a new venture in flat and gloomy USA. It is a tough call. What piece of the pie will the federal government demand?
And should the young couple who can afford a house with the real cost calculated with the home mortgage interest deduction or should they look to the future and assume that the tax farmers are coming for that particular deduction with a fury?
“With Hurricane Irene threatening a full-force hit,” The New York Times reported today, “New York City on Thursday ordered the evacuation of nursing homes and senior centers in low-lying areas and made plans for the possible shutdown of the entire transit system.”
Prudent. Very prudent. Get the old and the infirm to high ground and limit the exposure that a flooded subway system could bring.
It is what markets and banks are doing vis-à-vis the national economy, scuttling to high ground, protecting what they have and watching for signs that the storm has passed or won’t hit them.
When markets conclude that either Mitt Romney or Rick Perry will bring the economic circus to an end and restore the private sector to the preferred position it has enjoyed since the founding of the Republic, then markets will begin to unlock and businesses to expand.
When the seemingly endless series of self-promoting and self-pitying (“a run of bad luck”) presidential speeches in fact comes to an end in January, 2013, then capital and capitalists will return in full force and employment will rise.
But until this storm of economic ignorance and Alinskyite fury passes, expect nothing because the smart money knows there’s still a big chance of a big blow again.