With Governor Sanford in political Siberia and Governor Palin perhaps following him, Governor Mitt Romney should be smiling. Lots of things are going his way.
With the benefit of hindsight, had Candidate McCain chosen the Governor of Massachusetts and not the governor of Alaska as his running mate, the outcome of the election might have been different, but who knew in July of 2008 that in only three months, so much economic havoc would be wreaked.
With the Federal Government increasingly grabbing oversight of giant sectors of the economic pie—banking, insurance, automobiles, health care, and energy—it will only be a matter of time before it also starts to micromanage those sectors. The free spirit that has for the last few hundred years been the source of growth and prosperity that is the envy of the world, and has provided the incentive to millions around the world to come to our shores in an effort to better themselves and their descendants is being revamped in a way that has never before been seen.
The money being thrown at the economy is not the worst part of it—in fact, given the state of financial chaos last fall, there was indeed good reason for the Federal Government to act as lender of last resort. But it has gone farther than any crisis would have legitimized, by truly taking over the reins of corporate management. The problem is that Government is a not-for-profit organization, and an economy that is run on a not-for-profit basis will be a failure.
But in a Government managed economy, there are no profits to use for reinvestment. So the Government must resort to taxes as its resource. So, while on the one hand the Government today is pouring money into stimulating the economy with both needed and unneeded projects, it now must look to raise taxes for the new sectors of the economy (health care and energy) that it seeks to control.
Well, of one thing I am certain—fiscal drag will offset monetary stimulus, and the result will be a torpid economy—with high unemployment and anemic growth. Hopefully, the Senate will be able to muscle enough change in the pending legislation to marginalize the economic drain, but I am not optimistic about that.
By the spring of next year, the political focus will be on the House and Senate races that will say a lot about how people really feel about the economy. And following on the heels of the November outcomes will be the start of the 2012 Presidential race.
If the economy is still in limbo, Mitt Romney will have the opportunity of a lifetime. He understands economics; he knows how industry and business should work to thrive; he has had both private and public experience; he even studied and signed into law a health care system. For sure he will be able to talk to its strengths and weaknesses, what it can do and what it cannot do.
In all the political kerfuffle unfolding today, Mitt Romney has gravitas—no sexual scandals, a few grey hairs, a total lack of demagoguery, confidence but not arrogance, an ability to lead successfully and an understanding of the sanctity of the private sector in this country. Those attributes should stand him in good stead when the 2012 Presidential campaign starts to unfold in barely more than a year from now.
Patricia W. Chadwick has had more than 35 years of investment experience. She is the founder and president of Ravengate Partners LLC, a consulting firm that provides advice on financial markets and global economics.