Saturday, November 16, 2013

No Bubble Obama

Although unintentional, President Obama's greatest achievement will be the absence of bubbles during the economic recovery of 2009 - 2013.

This economic recovery has been the slowest post WWII recovery.  It was no surprise since President Obama "invested" government spending in paying back the political supporters of his campaign, instead of  putting money towards programs that would grow the economy.   Recall the shovel ready projects, start up funding like Solyndra, and alternative energy programs?

So businesses hunkered down, consumers deleveraged debt, and banks slowed lending, despite record low interest rates.  The result was that businesses, consumers and banks got stronger, the economy slowly healed, and investors bid up the stock market.  However, there was none of the irrational exuberance that happened in previous recoveries has been exhibited yet.

My guess is that the Obama administration will continue it's policy of allocating funds toward political supporters which will continue to keep businesses from hiring, keep consumers cautious, maintain a slow healing economy and, best of all, avoid any bubbles.

For more on Reflections and Musings, check back every Saturday for a new segment.

This is not financial  or policy advice. Please consult a professional advisor.

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