Is the new President doomed?

Posted by Tom Nowakowski on November 25th, 2008

financial, news

I am not going to start this into a political discussion but merely an observation. With the roller coaster of a ride that we call the economy, you have to wonder if one man (along with an army of helpers) will actually be able to do anything. The economy as a whole is a living beast that can be summed up as a living game of domino’s. Once the first domino starts to fall, the rest follow and will either stop on it’s own or by an obstacle.

With that being said, It will take a few years for us to get out of any recession and into a steady upward climb. 4 years just isn’t enough time to get programs into place and see long term solutions. In fact, what we see now is a lot of short-term band-aid’s trying to slow down the domino race as much as possible. I’m sure we have all read about the tumble of the economy in 3rd quarter 2008. We see our disposable income lowering, we’re holding onto any kind of money we have, and banks are too scared to lend to us in fear that we won’t pay them back.

Now, I know as an economist that in order to stimulate an economy every player needs to keep making transactions and spending money, it’s what keeps the crazy model actually working. But, can you really blame anyone out there for holding on to what they have? These past few months we have seen 401k’s drop in value by half and if you only have 5 to 10 years till retirement, that’s going to make you take a step back… in fact, it probably made them all sprint backwards. It’s a very scary position to be in.

So in all this shakeup, and all these short-term slow downs, does Obama actually have a chance to get this economy back into shape? Well, the enthusiasm is there, that’s for sure. But we all know that with an economy all we can do is set the right groundwork and let it grow on its own. Too much and too little regulation is bad and it’s up to the lawmakers to find an equilibrium on what will work now. We are witnessing history on many angles and the next couple years will we a very exciting time for finance people.