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Thursday, October 18, 2012

ROMNEY'S 100, part 2

"Oh dear" -Wiley Coyote sign held as he realizes he's standing on thin air

A few weeks back I posted what I think a President Romney should do if he wins the election in his first 100 days in office.  Mostly it is cleanup from previous administrations because as president his job is executive, not legislative, so he can't command congress to pass laws.
However, there's another side to the Romney presidency that I'd like to write about: the first 100 days after the election.  If Mitt Romney is elected president, I expect the economy to begin turning around. 
Right now, its basically in stasis, bouncing along a flat line with a few ups and downs, but overall not going anywhere beneficial. Growth for the quarter we are now in probably was negative, or less than 1%.  And there are good reasons for that.
Businesses are very uncomfortable with the situation in Washington DC right now.  They know that the Obama administration, despite being very friendly with mega corporations, is hostile to business and achievement.  They know that Obamacare will never, ever be vetoed or repealed while President Obama is still in office.  And they know that even if the GOP won a 2008-level majority in congress, President Obama would simply implement his policies through executive order and dare a spineless congress to stop him.
So business is at best hesitant to expand or take risks, and many are holding on waiting for things to get worse, building up resources for the increased cost when Obamacare takes full effect and more regulations come their way.  And some, perhaps many, are holding on by their fingernails like Gandalf at the bridge, and will fall if Obama is reelected.  Its not that they would just give up, its that they are just barely surviving on credit, loans, and help from friends who are running out of resources and that will be the final straw: no hope of getting out of the jam.
So if President Romney is elected, that immediately tells businesses three things.  First, there is a realistic chance that some of Obamacare will be repealed.  Second, it means that the new president not only understands and appreciates what it takes to run a business, but will not be hostile toward businesses.  And third, it means that at the very least, the ocean of new regulations, rules, and costly changes at the federal level will be reduced, if not reversed.
So while at present, running a business other than some multinational megacorporation is like jogging in a mine field, it will be more like jogging in a rainstorm, or better.  It will be significantly less dangerous and foolish, if not pleasant.
So I'd expect to see real signs of turn around by January.  Growth, hiring, business expansion and investment, and so on all should be showing signs of positive movement, if not explosion, by January 2013.  Not so much out of joyous celebration from having President Romney in office as a sigh of relief at having the boot of the Obama administration off their throats.
However.
We're still in seriously bad shape.  Not only were so many jobs lost that it will take years, if not more than a decade to get them all back, but there are severe problems out there which a new presidency will not solve.  A new man in the White House won't erase a debt growing at over a trillion dollars a year.  A new presidential election will not stabilize the banking industry which to a large part is still doing what got them in trouble to begin with.
Banks are still giving loans out to people who plainly cannot pay them back, out of pressure by the federal government and promises of bailouts.  The US auto industry is still struggling to survive, with GM looking closer to bankruptcy every quarter.  There are sectors of the economy only surviving by regular injections of federal funding, such as the aircraft industry.  Things are very, very bad out there.  And with a hostile press talking down the economy and boosting any bad news, things will be even harder for recovery.  While we'll see a short-term turn around in the economy, disaster still is looming over it.
The only way to turn that around is going to be painful, lasting, and seem worse than things are now.  Any boom in hiring in the private sector would be greatly diminished or even reversed by the needed firings in the federal government, which simply exploded in size under the Obama administration and was far too big under the Bush administration.
The problems we face right now, the dangers to the economy and the future are not caused by Obamacare and regulations.  Slow hiring and business caution are not the real threat, those can be reversed easily.  The real problems go much deeper and the only way out is going to hurt.
But the choice is between a crashing disaster that would make the 20th century's Great Depression look like boom times... or cutting back now, when we can, voluntarily, which might result in deeper recession for a few years.
And what president will take office and deliberately trigger unemployment and recession, just to fix things for a later administration?  Such a president would almost certainly never be reelected, and such a congress would likely be fired as well.  Why destroy your political career to help someone later?  Such men might have existed in the past, and may be out there today, but they aren't the kind of men who run for high office.
What makes matters worse is that the Obama administration is executing policy which is delaying disaster, not through any sort of effort to prevent it, but by tricks to push it off a few more months.  Policies like the federal reserve simply inventing money to give to the treasury to pay for its spending.  Policies like storing up more than a trillion dollars in banking reserve, to prevent the dollar from cratering with the bailouts and "stimulus" spending.  And what happens if those are ended?
I don't think the Obama team is evil, but I could see them decide that stopping those policies in December after losing to help people think Republicans are lousy with the economy might be a strategic advantage.
The only way through this I see is massive, horrific collapse and slow, painful rebuilding.  And it doesn't really matter who is elected president in that case, except perhaps a matter of how soon it takes place.

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