Reflecting on my first book signing event in Connecticut I was amazed at the thirst many Americans have for leadership. That was one of the reasons I wrote my book, but its nice to know I’m not alone. The concern over the well being of the American economy hung in the air with each question that was asked during the hour and a half Q&A session.
As the populist drum pounds loudly in Washington I was fielding questions ranging from jobs, flat tax vs. consumption tax to should the United States have a banking system like Canada? It reminded me of a conversation I had with Wilbur Ross, one of my contacts highlighted in “Thriving in the New Economy”. Ross was comparing the U.S. banking system to the Canadian banking system. He said all five Canadian banks are considered too big to fail. But their system did not falter the way the U.S’ did during the financial crisis. Ross explained that size has nothing to do with it. It has to deal with *what* the banks are doing. The Canadian Banks did not use subprime mortgages to lube their revenue engine.
Ross says populism is creating a crossing of the wires if you will on the regulation that is being tossed around on Capitol Hill. We are hearing a lot on the Consumer Protection Agency and the ‘Volcker Rule’. Ross says the Consumer Protection Agency as well as the Volcker Rule would have not prevented the financial crisis if they were enacted before this mess happened. They are using the financial crisis as an excuse to grow government. Credit cards had nothing to do with the financial crisis added Ross.
The uncertainty of these policies as well as others being brewed up in Washington have the markets on a wait and see approach to investing. Paul McCulley of PIMCO has so eloquently put this scenario in one simple phrase. “The economy is weighing the invisible fist of the markets and the visible fist of government.”
With the all important jobs number coming out on Friday, many in my audience were questioning if the focus on Capitol Hill should be more on jobs than health care. Counting the many people working two part-time jobs to get by or the ones that have stopped looking altogether, many economists say we are looking at an unemployment number between 15-17%.
Larry Lindsey says in my book, the “…new economy will be one where new economic leadership will emerge.”
From what I gathered at my event in Connecticut, I think Americans are still looking for that leader.