A Turning Point Week

This week may be a turning point in a couple of major political and economic fronts. Depending on whether the economic stimulus package passes in its current form will set the tone for the rest of 2009 and perhaps, the remaining 3 years 11-1/2 months of President Obama's term. Here are the turning points I see happening:

Change or no change. Obama campaigned with the promise of bringing change to Washington politics, creating a new era of bipartisanship and smarter government. While I was skeptical of this promise prior to his election, I had been reasonably impressed with his actions leading up to the Inauguration. It seemed he was making good on his promise... at least initially.

Then came the unpaid tax problems of Geitner, Daschle, Holis and Killefer followed by the lack of bipartisanship and the abundance of pork for the economic stimulus package. It's starting to look more like politics as usual.

Economic recovery or further decline. I applaud the efforts of Congress to work quickly to deliver an economic stimulus package. However, the package appears to mostly social policy with very little economic policy. In addition, the package seems to have a much higher proportion of pork than usual.

I believe the current package will have little impact on the economic situation. other than to create higher inflation a few years from now. If the bill passes the Senate, I will revise our investing strategy to take advantage of a higher inflation scenario.

Hope or fear. Obama ran on a platform of hope, but has been appealing to fear to pass the economic stimulus package. It will be interesting to watch which emotion President Obama invokes when he addresses the public on Monday night.

The economic turning point is the most important one to me. I hope that President Obama can influence Congress to develop an economic stimulus package that really helps the economy, instead of one that mainly offers pork to the states.

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

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