James Carville, the fiery policy wonk behind Clinton's successful 1992 Presidential Campaign, is said to have coined the phrase and posted the quote prominently in the Clinton campaign headquarters as a means to focus everyone's attention on what was important at the time.
Some 19 years later, it is still relevant, although a more effective means to focus our government efforts (Federal. state, and local) might be to have everyone in office watch the animation The Geography of a Recession (http://www.latoyaegwuekwe.com/geographyofarecession.html) at the start of each working day.
When I look at the current "focus" of our politicians, it all seems to be predominantly aimed at slashing costs, even though, for the most part their attention seems to be on delivering the impression of doing so (e.g. attacking earmarks), as opposed to some meaningful efforts to address some of the underlying root causes of the deficit.
It reminds me somewhat of the myopic focus of companies trying to address significant changes in the business climate in which they operate through keeping the same business strategy, but reducing their work force (in effect slashing costs) by 10% every six months or so in an effort to get back to profitability. In effect, in my opinion, this is what the Fed tired to do to stave off the effect of the housing bubble bursting through reducing interest rates by 0.25% to 0.5% every six months - eventually you run out of cards in the deck, and by that time you have missed opportunities to get ahead of the curve.
What I expect of our politicians and business community is to craft and implement policies and strategies which create sustainable opportunities for wealth creation across all segments of society. I do not believe that we as a country can survive in a global economy if our sole or predominant focus is on the services sector - eventually we must start building stuff again.
Arguably, our economic "success" of the late '90s and the entire '00s, was fueled by easier access to credit and debt, clearly a non-sustainable path as we have seen in the past 3 years.
The Student Loan Mess...
A strong education policy is great and required, but if it means that people graduate from college bearing Student Loans that, in effect, force then into indentured servitude of the banks, we are in effect kicking the can down the road for someone else to clean up.
In my opinion, our college loan situation is another looming financial crisis/bubble (http://www.finaid.org/loans/studentloandebtclock.phtml). Banks, under the protection of regulation enacted by the federal government, are extending credit and making loans to students which make no economic sense. What good is it for either you personally, or the country and economy as a whole, if you graduate with a college degree that does not result in personal wealth creation, and in effect all the "added earning value" of said college degree is consumed by paying off a mountain of debt associated with student loans? Great is you are a bank who loaned the money, with the default risk being absorbed by the government, but not if you are that recent graduate who cannot create personal wealth from your education.
If banks were forced to bear the entire risk of the loans that they issue to students, it would force them to be more accountable to ensuring that the loans make sense. While the near term effect might be to reduce the number of "eligible" college students, possible beneficial side effects might be to force the "institutes of higher learning" to better control costs and efficiencies, rather than raising tuition rates every year. They do this, in part "because they can" and because the current structure and availability of student loans enables them.
I am sure that many of you have experienced the frustration of going through the FAFSA (http://www.fafsa.ed.gov/#) application process in an effort to reduce the price of a college degree, only to find that your eligibility had been denied because you have implemented sound financial management policies at home (keeping a rainy day fund, avoiding taking in unwise debt, etc.) What message does this send to our young adults as they enter into the business world?
Hopefully in a month's time, by my next posting on the economy, I will be able to talk about the great legislation being pursued or better yet enacted by our governments which stimulate sustainable economic growth and wealth creation.
In closing - "It's the economy stupid!!!"
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