Truth or Consequences
By Richard L. Kesner, President
The CommonWealth Group
May 2009
Truth or Consequences, the game show, first aired in the early 1950s and continued through the late 1980s. Contestants were asked to answer questions truthfully within a specified time period. If they failed – they had to face the consequences.
Looking back, the consequences of the game show may be considered more severe than the consequences we have witnessed doled out to CEOs, politicians, Ponzi scheme operators, etc. Unfortunately, society has deemed “truth” to be flexible. The University of Miami had a football coach, Butch Davis, who always started his comments with, “To be truthful…” Whenever I heard him say that, I suspected either a lie or fabrication to follow. He either didn’t understand what he was commenting on or believed his own bull. Similarly, Nick Saban stated that he would never be the coach of the University of Alabama’s football team. Where is he now? President George H.W. Bush (Bush 41) publicly announced during his campaign, “Read my lips, no new taxes.” All of these represent non-truths that seem to be saturating our media and everyday lives. The problem is that there are no consequences for their actions.
NON-TRUTHS IN POLITICS
In a world of promised transparency, we have anything but. It seems that the “elite politicians” believe very
similarly to Jack Nicholson’s character in A Few Good Men. “You want the truth? You can’t handle the truth!” Earlier, President Obama warned that we “faced a catastrophe of immense proportions” if his stimulus package was not passed quickly. The package passed easily and was voted on before most of the members of Congress had time to read what they were voting on. Shortly afterwards, President Obama assured this country that “the economy is sound.” All of the sudden, he was echoing the same comment he criticized John McCain for making. The stimulus packages sound like short-term solutions being applied to long-term problems.
The stimulus packages may have a short-term positive impact on our economy but could hamper long-term growth by greatly expanding our national debt. Short-term solutions are programs for immediate results to either get re-elected or receive gratification. To the short-sighted and newly elected or those facing re-election, that is all that matters. Unfortunately, short-term results usually only benefit the few and are offered merely as “smoke and mirrors solutions” invoked to protect jobs. Politicians, CEOs and world leaders seldom think beyond the short-term.
SHORT TERM FIXES FOR THE ECONOMY
Currently, Congress and the Obama Administration are pursuing short-term fixes. These solutions were previously enacted in the 1930s with poor results. Hopefully, this time the outcome will be different. In the 1930s, the unemployment rate increased each year through 1933 with a high of 24.75%. Double-digit unemployment continued through the decade, dropping to 14.18% in 1937 before increasing to 17.05% as the government stimulus programs expired.
After WWII the unemployment rate varied with the lowest unemployment rate occurring in 1953 at 2.9% and the highest unemployment rate at 9.7% in 1982. According to the Bureau of Labor Statistics, we are currently at an estimated 8.5% unemployment rate.
IS GOVERNMENT INTERFERENCE THE RIGHT SOLUTION?
The government is now interfering in our lives more every day. Robert Wagoner, CEO of General Motors, was asked to resign by the White House. Where in the Constitution does it give the Executive Branch the power to fire a CEO of a private company?
Today’s headline stated that President Obama feels that bankruptcy may be the right solution to save GM. After giving them how many billions of dollars, now bankruptcy is the solution. And if they go bankrupt, are the loans from the government (a creditor) wiped out?
The private sector has the ability to police itself by allowing bad companies to fail and good companies to succeed. There are times when this can be painful, but long term the strong will survive and the economy will be better because of it. It is survival of the fittest, just like in nature. If weaker companies are supported and allowed to survive, it weakens the entire economy.
THE GOVERNMENT AND TAXES
Taxes are another tool used by politicians to manipulate votes. When George Bush (Bush 41) pledged that he would not raise taxes and reneged on that pledge, it probably cost him re-election. “Taxing the rich” is always popular. So is the new phrase, “redistribution of wealth,” which, in essence, is “spreading the wealth around.” Isn’t the opportunity to achieve and get ahead what makes the United States better than any country in the world, along with our freedom to do what we want in life? The United States guarantees opportunity, though not always equal, but does not guarantee results. I seem to remember the Declaration of Independence reads as follows:
“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty, and the pursuit of Happiness.”
There is nothing wrong with wanting to be rich or aspiring to obtain your goals, whatever they may be. Almost every person in America has an individual goal that he wants to attain. Not everyone can be Warren Buffett or Bill Gates, but in America you can live well even if you don’t achieve mega wealth. Having the freedom to pursue individual goals is an unalienable right. Attacking people because they have achieved success and punishing them for their success goes against the founding principals of the United States.
Because of the global economic crisis, we have a government that is taking power away from the people and taking away our liberties. I hope this is a temporary power grab to stabilize and strengthen the world’s economic situation, but deep in my heart I feel that we will never see government release the new powers they have taken.
What are we doing to help with your investments? In every crisis there is opportunity. We are looking to take advantage of these opportunities through rebalancing of assets and hiring of new managers. With Congress and the Federal Reserve printing and distributing trillions of dollars in stimulus money, we are concerned with hyper inflation. Protecting your asset base and your purchasing power is our primary concern in this environment. In addition, we are looking at investments that do not correlate with the equity markets, which should reduce the volatility of the overall portfolio. We continue to investigate new managers and new asset allocation opportunities.
BACK TO TOP
HOME l CONTACT US
|
