I'm afraid i've had Blogger Block this week. However, a conversation with a friend yesterday gave me something to share with the peeps. My former Reiki teacher surprised me with her theory that Republicans are usually good for the U.S. economy and that all things being equal, she's planning to vote for Bush in Nov. She also mentioned that she didn't think Kerry was stable or solid.
I have my own mixed feelings about Kerry, primarily centered on his original vote in support of launching the War in Iraq and his current mealy-mouthed excuses in the face of what was ultimately a politically craven decision. And I won't argue with her theory on Republicans' correlation with a positive economy. I think that Bush I put the country's economy on a solid track after Reagan's "voodoo economics" and Clinton was able to propel the nation's economy forward with that initial positive momentum. Does anyone remember the brief period from 1998-2001 of a balanced budget with surpluses projected for 10 years or more? Bush changed all that within the first 2 years of his adminstration through what observers might call out-of-control spending and mismanagement of the nation's resources.
Indeed, I must take issue with the wrong-headed and dangerous concept that the current Republican (whose traditional conservative values might be argued) in office is making wise decisions about our economy. One by one, over the past 2 years, many of my MBA professors at Georgetown warned us that the Bush administration's rate of deficit spending is not sustainable even in the short term. Our economics professor explained it best: the ratio of any nation's deficit as relates to its Gross National Product (GNP) must remain within a certain range. Otherwise, 2 things happen. As other nations buy our debt, we may lose our strength and independence as the world's largest economy and experience a weakened ability to negotiate with nations that hold our debt (and our future) in their hands.
Second, we are running an increasing risk of a Mexico-style devaluation of the dollar. Mexico has largely recovered from this economic disaster in the mid 90s, but in the short term, the average Mexican experienced tough times as the price of consumer goods escalated far faster than salaries almost overnight as the peso collapsed. Isn't the current weakening dollar a good thing for the U.S. given that it makes U.S. exports more affordable and attractive to other countries and spurs trade? Sure, that's true to a limited extent. But a weaker dollar also lowers our purchasing power of imports and a dollar collapse would mean new financial hardship to millions of Americans already stretching their dollars to the max.
One might argue that other nations would bail out the U.S. in order to prevent a crash of the dollar, which would have serious, deleterious impacts to the global economy.
Yet, the Bush administration is openly resented, distrusted, mocked and feared around the world by peer governments, particularly by our likeliest saviors, the European Union. Bush has burned diplomatic bridges in the global community to the extent that the State Department has agreed to the humiliation of international observers of the November U.S. election: an historic first. Would G-7 nations come to our aid in the event of a U.S. debt crisis? Or would they take a hands-off approach as they have with the post-war Iraq debacle to humble what is widely perceived as an arrogant rogue nation with a corrupt, ignorant and bullying leader who should be forced to clean up his own messes?
The main takeaway point is that several of my professors recommended watching the deficit rise carefully. To stay relatively liquid, spend conservatively (especially in equities markets) and prepare for the inevitable economic crisis -- whose full shape and character we know not yet. There may be rocky times ahead. Either your vote goes to the man who has put us in such danger or an untested one who may be able to soften the approaching blow...vote not with your heart, with pure emotion, but with the facts. And the cold, hard, economic facts are not in a certain candidate's favor. And whether you vote with Bush, Kerry or another candidate, hold tight to your wallet -- a change in our circumstances as a nation may be on the way...
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Posted by: Kobe Shoes | May 11, 2011 at 04:48 AM