Market Musings: The Buzzword is Austerity
A quick look at the headlines over the past weekend shows that this country's fiscal crisis is being brought into greater focus. States are proposing cutbacks, and governors are telling constituents that we cannot kick the can down the road any longer. It all makes sense, and it is rhetoric that we have all heard before, and in politics, words speak louder than actions.
Two years ago at the depth of financial despair, Americans were willing to listen and were willing to follow the new President and his administration. Enacting austerity programs or budget cuts would have been no problem back then. Americans recognized that they had lived too well for too long on easy credit. It was time to tighten our belts. It was time for change.
But nothing changed. Those who were most connected (the bankers) received subsidies (i.e., bailouts) all in the name of the "greater good". But it wasn't for the "greater good". After trillions of dollars being thrown at the problem, it appears that the only people who have benefited were the bankers -- with record profits and record bonuses. "Joe Sixpack" is in either in the unemployment line or knows someone who is. The economy isn't on any sounder footing, and some would argue that it is more of a house of cards than ever. Food, energy, education and health care costs are rising, and these are the expenses that get noticed everyday especially when your income hasn't kept up.
So after racking up trillions of dollars in debt and having little to show for it, our political leaders next solution is to invoke austerity and shared sacrifice. Yet the people are not biting. I do not believe that the general sentiment is what is in it for me. People are more like we have given you a chance and you have squandered that opportunity and we don't trust you. In essence, the opportunity to enact austerity and fiscal restraint passed a long time ago.
In the end, fiscal restraint is upon us, but so is the anger of a non-compliant populace. It is likely that budgetary cuts won't be deep enough or significant enough as politicians cave to their constituents kicking the can further down the road.
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