This weekend, Hurricane Irene made its way up the East Coast hammering certain cities and towns (Wall Street was spared) with winds, rain, power outages and floods.
As the rain has moved past New York City and Long Island and wind gusts have subsided, it seems to me that we can learn some things from the experience that relate to the government's current handling of the economy.
Here are the 5 lessons learned from Hurricane Irene.
#1 - Prepare For The Worst, Hope For The Best. The government reviewed the weather forecast and decided to order mandatory evacuations and advise the public to stay indoors. While certain areas survived unscathed, the advice was necessary and probably saved lives. Our upcoming economic forecast includes a potential double dip recession, an unsustainable entitlement system, a European banking crisis, a persistent housing depression and a highly volatile stock market. Will these economic forecasts turn out to be accurate leading to the perfect storm or inaccurate leading to sustained economic growth? We should learn from Hurricane Irene and prepare for the perfect storm.
#2 - We Need Political Leadership. In preparing for the worst, we need political leadership. Ben Bernanke, in his speech on Friday from Jackson Hole, acknowledged this. The Fed basically is out of bullets. We need our political leaders to step up with strong fiscal policy. They should take the lead of Mayor Michael Bloomberg and Governor Christie. They demonstrated leadership and, as a result, kept people out of harm's way.
#3 - You Can't Stop a Hurricane. If an economic hurricane is coming, we can't stop it. We can only get out of the way, hunker down and wait for it to blow by.
Increased borrowing or stimulus gimmicks will not stop it. They will only make it worse, exacerbating the damage.
#4 - Don't Mistake the Eye of a Hurricane for a Sunny Day. Our economic hurricane started in 2008. In 2010, we thought we started to see sun and blue skies. We thought the hurricane blew by like other recessions, but this one was worse. We may only have been in the eye of the storm. The back end of the hurricane may be coming our way. We need to make sure that we are prepared for it.
#5 - After the Hurricane, Rebuild. We to need to start preparing to rebuild our economic foundation. This fall and winter will be the test. Will the super committee come up with the super plan? Will Congress pass real economic reform?
We can learn a lot from Hurricane Irene. It's time to hunker down, be realistic and rebuild our economic foundation.
Jon Henes is a partner in the restructuring group at Kirkland & Ellis LLP where he has led some of the most complex restructurings in the United States and abroad across a variety of industries, including media, chemicals, energy, manufacturing, real estate, retail and telecommunications. Jon has also frequently appeared on CNBC's "Worldwide Exchange" as a guest expert on various financial and economic topics, federal, state and local fiscal issues.