I've spent the last two years listening to experts and watching the trends, and I'm now convinced that people just get stuck in a talk track.  Whether it's the political statements like "small business won't add jobs until they know where their tax rates are headed", or "this economy isn't going to turn around until jobs come back and the consumer starts spending again".  Talking down just about everything is just too easy right now.

But consider the contrarian view and I think we might just start looking at things with a little more balance.  We are now in a phase when a sustained period of low growth is likely.  Slow consistent growth is good and will likely lower the risk of inflation.  The move to more conservative and pro-business governments is good and will likely drive the restructuring of entitlements and lower the risk of significantly higher taxes.  Once again, good news.  The reversal of the fall of real estate and the rise in unemployment has begun. Once again good news.

In addition to the positive aspects of slow and steady, the emerging markets will continue to grow at above average rates for many years.  This is good news for global companies and counterbalances the gloom and doom in the US and Europe.  Capital is poised to invest as private equity investors have $1 trillion to invest over the next couple of years, and profitable corporations engage in strategic M&A.  This flow of capital will drive value creation and the exodus from bond funds will find it's way to the equity markets.  You can see it in the eyes of the private equity guys; they are talking down valuations while also racing to put their money to work.  Once again...all of this is good news.

Finally, we are just at the beginning of the next wave of technology enabled innovation.  With the emphasis on mobility and the shift to cloud computing, technology is once again going to change everything.  Today, the gadgets are seen as toys and not productivity levers, and the global computing environment is still built around the old model.  As technology tools and applications are delivered like electricity from a utility, productivity will once again go through the roof.  As I said eighteen months ago, technology will lead us out.  The upside is impossible to measure and the rate of change and investment will accelerate quickly. 

While most people today seem to enjoy talking things down, others are charging ahead with confidence.  Solid growth based on fundamentals, global markets and innovation is right around the corner.  The smart money knows it, and they will benefit the most while the vast majority keep whining about the past.

9/20/2010. 

With all of the doom and gloom the past couple of years, the pessimists prevail these days and everyone is complaining about something.  It's hard to believe that Obama came into office just over a year ago with a clear mandate, and today he's viewed by most as a one-term President.  Having said this, it's also helpful to look on the bright side.

Just over a year ago, we all had serious doubts about the strength of our financial system.  Today, the financial services industry is bracing for further regulation and government intervention, but the financial system has been saved.  Just over a year ago, the country was also in a condundrum about Iraq and Afghanistan.  Today, we still have significant challenges in the region, but it's clear we have an exit strategy.  Just over a year ago, we were in the midst of the Great Recession with little hope of turning the economy around.  Today, we have officially exited the recession and signs of hope continue to present themselves.

So, why all of the doom and gloom?  Well, people are still unemployed and worried about the future.  Their homes are worth far less than they once were and nearly everyone's net worth has been slashed.  As business owners, we have limited access to capital, no clear path for growth and an expectation of increased taxes in the future.  We also see the ridiculous spectacle that our federal government has become and we're weary of the partisan battling in Congress.  And on top of it all, we have a President who seems oblivious to these concerns by pushing a health care plan that would only increase the size of the government we have little confidence in.

But, look on the bright side.  The stimulus from the Fed combined with the financial strength of America's companies and financial institutions will allow us to grow.  The housing market is in the bottom and now beginning to show some signs of life in many markets around the country.  Americans are also fed up with the actions of our government in Washington, and it is highly likely that the forces supporting a constrained federal government will result in throwing out the incumbents.  And finally, regardless of the health care bill's outcome, much of it will never become a reality because entitlement reform simply cannot be postponed any further.

Things have been bad and much of the discussion is negative these days, but look on the bright side...the worst is over and good news is coming.     

3/9/10 

Just one week ago, I asked the question, "Will the Recovery Have Legs?"  What I absolutely did not expect was the very real possibility that our "recovery" may be so short-lived in 2010 that we don't even notice it.  This past week was more than a little scary, and I believe we are entering an important moment.

Who would have seriously predicted just two weeks ago that the Democrats would lose their super majority with a Republican winning Ted Kennedy's Senate seat in Massachusetts?  Ironically, along with the surprise, the Democrats can no longer jam through the health care bill which was so emotionally tied to Kennedy's very own crusade.  And now, a young and inexperienced President can celebrate his first year in office with the fact he needs to change direction before he's really even begun. Clearly, this is a major challenge for an inexperienced President, but I wonder if he understands this is a tipping point on so many levels.

Not only was his push on health care and alignment with the Democrats in Congress a huge mistake, it was also a major drain of political capital.  While he has already softened his position, he has not demonstrated the awareness of how he needs to pivot to avoid rattling the markets.  In fact, he seems to believe that changing his focus from health care to punishing the banks is the answer.  Perhaps the timing was just coincidence, but can you believe he would sermonize on "never again will the American taxpayer be held hostage by a bank that is too big to fail".  Are you kidding me? We're trying to build confidence in the recovery not threaten it with saber-rattling.

In the very same week, Warren Buffet comes out and says "the tax on banks just doesn't make sense", and two additional Democrats on the Senate Banking Committee announce they plan to vote no on Bernanke's confirmation.  Really?  Is Congress so oblivious to the fact that a "no confidence vote" on Bernanke is completely irresponsible right now?  So, in spite of very solid earnings announcements from a host of companies, the equity markets sell off and will probably end the week with the Dow off by nearly 5%.  Sure the markets have gotten out ahead of themselves and were bound to experience some correction, but you'd at least expect that to happen based on some economic news.  The data looks good, but our leaders look terrible and that's the problem.

Obama had best figure out that punishing the banks and tongue lashing them in public is even more stupid than trying to push through a massive health care plan when we just went through the Great Recession.  Forget the political consequences for Obama and the Democrats, we can't afford more destabilization.  Somebody in Obama's camp better help him pivot and change direction or we're not going to like what's on the other side of this tipping point.

Let me know what you think.    

We're entering some very strange territory in this country as it becomes more apparent every day that the extremists on the right and on the left are gearing up for a major fight.  While Obama won by running to the middle, the debate over the last few weeks on healthcare is fanning the fires on both ends of the extremes.

As a fiscal conservative, I, like many in this country, have difficulty relating to the extremists on the right and the left.  I'm not as socially liberal as the base of the Democratic Party and I'm not as radically "conservative" as the base in the Republican Party.  Importantly, I'm not alone as the vast middle in our country share these same views.  Having said this, the views expressed in the media, and increasingly the banter amongst my friends and colleagues, reflect the extreme view of the moment.  Just as the Democrats believed they could do no wrong after the election, the Republicans are now "doing the happy dance" as healthcare reform looks like it could in fact be Obama's Waterloo.  While disappointed in the current situation, far too many people are almost gleeful to see Barack fall in the polls.

Clearly people are angry that they've lost money in the market and their homes are not worth nearly as much.  The middle class in the country see nothing but rising costs and reduced benefits in the future and they blame the financial irresponsibility of our government.  These concerns are most clearly seen in the light of healthcare reform.  Nevermind the countless elements of any healthcare package that will have positive effects, it is clear to most people in this country that we'll get less, it'll cost us more, and the government will have a bigger say in our lives.  That means healthcare reform is a big loser for the Democrats and a big winner for the Republicans.

At the end of the day, the debate over healthcare will prove to be cathartic.  We'll move past the debate and the economy will eventually improve.  We'll likely swing back to the right and eventually find the middle again, and the big issues won't change.  Namely, that America isn't the center of the universe anymore.  This is the "Asian Century" and we'll look more like Europe as the century progresses.  The day or century of reckoning is here, and the sooner we face it the better off we'll be. 

Instead of engaging in the daily "one upsmanship" that fuels our debates these days, I hope we'll find a more moderate middle ground.  If the politicians in Washington would be a little more humble in victory and gracious in defeat, perhaps the vast middle in our country could find a voice.

When will Americans take back this country from the politicians and the media?  Let me know your thoughts.