Recession of Leadership
Welcome to our first installment of HMC Partners Blog. Our goal is to give you immediate access to our thoughts and give us a forum to express our views on all things financial. We will make weekly entries and even more as situations dictate. I have heard some favorite analysts we follow describe our current market woes to be a “Recession of Confidence,” meaning that many of the reasons we continue to have economic woes are due to the lack of confidence consumers worldwide have, and this lack of confidence keeps spending in check. And considering that over 70% of GDP growth comes from individual spending, rather than corporations, there doesn’t seem to be anything on the horizon to change our comfort.
While I agree that there is a wall of worry fed by the lack of confidence, I believe that this “Recession of Confidence” was fostered by a worldwide “Recession of Leadership.” Looking inward, we have no leadership at either the executive or legislative branch. At the height of the recession, President Obama felt that the major issue for our country to tackle was the need for Universal Healthcare, a.k.a ObamaCare. With unemployment at the time over 10% and with a nonexistent housing industry, he wasted precious time and political capital on something that would only hinder job growth which in turn continued to slow the housing recovery. Not until his approval numbers reached historically low numbers did he and his administration finally seek a plan that we breathlessly await after Labor Day.
Congress has continued their 20 year partisan war of political destruction. Neither side of the aisle is innocent and quite frankly, the candidates that continue to come forward lack business acumen and backgrounds of success needed to get done what is paramount to move this country forward, as exhibited by the “game of chicken” played during the debt ceiling debate. Winning for themselves and party far outweigh winning for our country. These petty arguments played out in the media only weaken our stature throughout the world.
Finally, the rest of the world doesn’t offer any greater examples of leadership. Certainly, Europe’s monetary tightening policy exercised last year was the absolute wrong move as it has stifled their growth and is now having an impact on the US and emerging markets alike. Their continued debt issues focuses worldwide attention on their leadership or lack thereof. Sarkozy, Cameron, Merkl and Obama are hardly Thatcher, Reagan or Blair.
So what does this all mean? It means it can no longer be business as usual in Washington. Earlier this month, Starbucks CEO Howard Schultz called on individuals and corporations to withhold campaign contributions until Congress and the President come up with a fiscally responsible plan for our country. Cutting off their lifeblood of campaign funding is a message they will hear loud and clear. Continuing to push for term limits and electing only candidates that run on this belief could have substantive change needed in this country for decades.
We continue to be the best country in the world but our hold on this title is weakening because of this “Recession of Leadership.” We can make a difference, but it starts by electing qualified people who place country first and are willing to go to Washington for the right reasons. Once we have the kind of leadership in the public sector that we have grown accustomed to in the private sector, we will then see a return of confidence and prosperity we have witnessed since the “Greatest Generation.”