Tuesday, November 24, 2009
Economics Is Easy: Politics Is Hard
Economics is easy. You know what's hard? Politics is hard. Without politics an economic system of regulations, transparency and enforcement would be no problem. But just as designing something on paper with a pencil is simpler to do than actually fabricating the object, so too is getting the Congress and the Administration to understand the importance of firm regulations a major problem to our economic recovery.
While I was not around in the early 1930s when the Great Depression hit this country, I believe that many feared that the future of this nation may very well have been at stake. The economic situation was very bad and politicians, I think, realized that serious regulation was in order. The Acts that came out of the Great Depression kept this nation moving forward for several decades, in my opinion. The train got off the track when a level playing field took a back seat to greed. The laws that came about, or the lack of laws that did not come about to deal with the new financial instruments like credit default swaps, lead to the financial crisis and the bond market meltdown of 2007-08.
Whether Congress or the Administration realizes that the level playing field needs to be restored in order for the movement of credit to once again pull our economy out of this recession is the question. We can not look to the banks and their leaders to ask the Federal Government to do the right thing. Their greed knows no bounds as is evident by the stupid remarks these leaders make about their role in the financial problems that have engulfed this country, and in some cases the world over the last several years. There were crisis all along the way until the water broke in 2007, but the politicians, perhaps due to their lack of knowledge, did not realize that the problem was just getting patched and getting bigger.
Perhaps, it will take a period of ugliness to fall across the face of this nation before the right things are done and the level playing field is restored. I hope I am not around if that is what it will take because it ain't going to be pretty.