Wednesday, October 08, 2008
Perspectives on the Plan
|The famous words uttered by our fearless former General, George S. Patton, “A good plan today is better than a perfect plan tomorrow,” need to echo throughout the walls in Washington, D.C. Congress’ decision to support the government bailout (rescue) plan was probably a step in the right direction. The plan is not a silver bullet to remedy all the problems on Wall Street or Main Street, but it is a positive and necessary step to restore confidence in the economy. At some point, the government will need to quit intervening and get back to free market principles. Just like a parent who intervenes to assist a child in trouble but eventually lets go; the government must ease their assistance at some point to allow a free marketplace for Americans to thrive.
There is that ray of sunshine that pokes its head in the clouds through the storm. The FDIC is doing what it was designed to do – calm the markets and reduce the panic. This deposit protection system shows how well our banking system is designed and how resilient our country can be. I was not in favor of raising the FDIC insurance levels from 100,000 to 250,000 because it means the government is bowing to political pressure and, again, intervening in free market structures. At some point Americans will need to become responsible for their investments and not depend on the government (taxpayers) to bail them out
While the daily news fills our minds with gloomy headlines, there is opportunity for those who stay optimistic and alert. I believe the housing market will right itself in Southern California, as we see signs indicating we are nearing the bottom. Investors who have been waiting on the sidelines are beginning to jump into the market again. I am not trying to minimize the reality of the economic turbulence. However, I think it is necessary to realize the overall strength of the U.S. economy and the role we play as a country in the global marketplace.
While some analysts can see recovery on the horizon and expect to see life signs of a much stronger economy by the end of next year, I’m not sure we will feel the improvements for quite a few years. It is important to turn around the economic cycle we are in to take control of the cost of living to keep the dollar stable, and get our citizens back to work. Recessions can be positive because they shake out those who engaged in risky behavior. I am hopeful for the future and confident our economy will not only survive, but also begin to thrive.