I’ve been thinking about turnarounds. Actually I’ve been thinking about Election 2008, public opinion polling, “the numbers,” and leadership. Thus far in the race for the White House, the two presumptive major party candidates have focused their messages on “Straight Talk” and “Change.” These foci, messages, and mantras may have secured each their respective party’s nominations, but neither is truly on point to get either elected to the Oval Office, or to fix anything.
You see, public opinion polling is clear on the fact that the public is unhappy with our current situation(s). Depending on the poll (and the questions asked) the results consistently show between 75% and 81% believe this nation is headed in the WRONG direction. 14% to 17% say that US/us are on the RIGHT track. 6% to 8% are undecided, or have no opinion. For a year now the numbers have been heading south, and the negative trends have accelerated since the first of the year. A right turn, a left turn, or a U-turn is needed. If you don’t believe me, please read on.
Stock prices and the equity market averages reflect the realities of where we are, and the perception of where we are headed. In the second quarter of 2008, the DOW is down 7.4%, the S&P 500 is down 3.2%, domestic stock mutual funds are down 9.7%, and foreign stock mutual funds are down 11.9%. Since the first of this calendar year, the declining percentages are almost double that. This is a worldwide phenomenon, with comparable downturns being reflected in market exchange indexes around the globe. Stock prices are now hovering at or around their twelve-month lows. The forthcoming valuation statements from the broker-dealers to the investing public will reflect that TRILLIONS in “paper wealth” have literally evaporated since the last reporting. This was the worst across-the-board June for the world’s equity markets since the Great Depression!
America is not working, because Americans are not working. The Bureau of Labor Statistics (BLS) just reported that (at least) another 62,000 jobs were lost in June. This mirrored 62,000 jobs also lost in May. 5.5% of eligible Americans are now un-employed. If you add to that those whose unemployment benefits have expired, or those who are under-employed—putting in their time in positions well below their qualifications, experience, and training—does that percentage double, or triple? The BLS reported a cumulative job loss of 438,000 since the first of this year. Excluding government jobs “created,” 564,000 private sector employed positions have been lost so far in 2008. Does this mean that Uncle $ugar has “employed” an ADDITIONAL 126,000 since January 1st? Never in our history have we had such a large governmental work force, and the number keeps growing. Is the exponential expansion of government payrolls the solution, or our problem?
We continue to buy more of what we “consume” from abroad—most with borrowed money. Dependence on foreign-made items is reflected in current/trade deficits and National Debt. Layoffs, downsizing, and terminations here mean more goods and services will come from outside our borders. Our trade deficit in January was $57.856 BILLION, in February was $60.573 BILLION, in March was $56.591 BILLION, and for April was $60.901 BILLION. May and June amounts should be similar. Jan 1st our National Debt was $9.211 TRILLION. June 30th it was $9.492 TRILLION!
In 1992, a focused campaign message—It’s the ECONOMY stupid!—got Bill Clinton into 1600 Pennsylvania Avenue, allowing him to unseat incumbent George H.W. Bush. Administration follow-up policies resulted in a turnaround that brought US/us to almost a balanced budget and an economic/ financial uptick. What worked in the subsequent downturn... won’t cut it now, as the recent fixes effectively supplanted one bubble (the dot-com boom) for a bigger balloon (the subprime housing mess).
Which candidate in 2008 has the “Leadership for a Turnaround”—McCain? Or, Obama?
I’m Fred Cederholm and I’ve been thinking. You should be thinking, too.
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This story was published on JuLY 7, 2008.