Franklin D. Roosevelt spoke these words in his inaugural address to the US on the 4th of March 1933 as his nation and the global community faced a bleak immediate future that included the Great Depression, World War II and the Cold War. During the Great Depression, unemployment levels in the US were around 35% of the working population and, if you count underemployment, probably a lot higher.
In today’s ‘crisis’, unemployment rates in the US and Canada are around 6% and 5%, respectively. If you listen to 24/7 media coverage of the market meltdown of the last two months, we are headed for disaster, may already be there and there is little that can be done about it except try to find the culprits of the mortgage mess so we can blame someone, prosecute them and put them in jail.
You see the US does not have enough people in jail already—they have only incarcerated around 3 million people including dangerous public enemies like Martha Stewart. That is far more than any other nation on earth and that includes Iran, North Korea, Russia, China and Cuba, all nations whose governance the current US administration would not consider admirable.
Frankly, it does not matter at all who is responsible for the subprime mortgage mess; any entrepreneur could tell you that it does not matter how you got there, it only matters how you find a solution to the problem. The US has a terrible tendency to want to punish first and fix later. If you must punish, punish later, fix first.
I have no doubt that comes from the idea that a good cop is like a Marshall of the old Wild West: Bang, Bang, Bang, “Stop”. Or possibly it comes from the puritan ethic of the founders of the 13 Original Colonies who, despite having many admirable qualities were, by natural temperament, highly judgmental. Anyone who was ‘different’ could be labeled a witch and burned at the stake.
Well burning people at the stake is not going to solve current financial issues. Leadership is going to do that.
FDR also said in that speech:
“This great Nation will endure as it has endured, will revive and will prosper. So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself—nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance. In every dark hour of our national life a leadership of frankness and vigor has met with that understanding and support of the people themselves which is essential to victory. I am convinced that you will again give that support to leadership in these critical days.”
Where is the leader today who can speak these words or words that have the same force, clarity and effect? (You can read FDR’s speech and listen to an excerpt of it at: http://historymatters.gmu.edu/d/5057/. It is wonderful to listen to his words and, if you are troubled by what is happening around you, it will lift your spirits.) Do you think it is George W. Bush who could say words like these and inspire people to the same type of effort that got his nation through the three great challenges of FDR’s time and the time of Ronal Reagan?
I am neither a Republican or a Democrat, nor a Liberal or Conservative. I tend to agree with comedian, Chris Rock, no one party can claim to have all the right answers and, anyone who believes that, is a fool or a leader of fools. (Mr. Rock says it better: “On Crime, I’m a Republican. On Prostitution, I’m a Democrat.”)
In Canada, we faced (in my opinion) a more serious situation in the early 1990s. Canada’s national deficit was then $42 billion per annum and the national debt was climbing to an all time high—approaching a one to one ratio of debt to GDP and the country was perhaps 18 months away from defacto bankruptcy and an IMF mandate that would have been brutal. Jean Chretien was elected Prime Minister and Mr. Chretien with his long serving Finance Minister, Paul Martin, fixed the problem in less than seven years.
One of the things that Mr. Chretien did was not run around the country screaming: “We are all going to die!” which is what I see many of today’s ‘leaders’ doing.
Instead, Mr. Chretien travelled from coast to coast to coast giving his ‘Uncle Jean loves Canada, Canada is the No. 1 place in the World to live, so saieth the United Nations’ speech.
Now I am not really sure if Canada is the best place on earth to live but it doesn’t matter. As long as the avuncular Mr. Chretien could convince most Canadians that they do in fact live in a nice place and that the world was not ending, that was enough to get Canadians going again. It may not have been as well delivered or as well put as FDR’s idea that Americans should put forth the effort “to convert retreat into advance” but it worked.
Mr. Chretien backed up his words with action. He announced a $2 billion national infrastructure program after he was elected PM. Remember, this was when the country had an unprecedented deficit. The financial pundits of the day told him that it was foolish to spend more money at a time of national financial crisis but he did it anyway. Sure, Mr. Chretien and Mr. Martin were reining in spending, reducing employment in the civil service, getting rid of unproductive programs and not approving new programs or spending unless absolutely necessary. But the fact that Mr. Chretien was prepared to invest in our country and he was giving his ‘Canada is da Best’ speech everywhere, was enough to get folks here to say to themselves: “Gee, things aren’t really so bad. If Uncle Jean thinks it is an OK time to invest, gosh, maybe it is. Maybe I will invest in that new CC machine tool or expand my plant or replace the windows in my home where the seals have failed after all.”
($5 million of the $2 billion infrastructure program funds ended up in Scotiabank Place, home of the Ottawa Senators. While $5 million is a lot of money, it wasn’t a big part of the overall budget for the new arena which cost about $240 million. But it was an important psychological boost to all those involved. That was exactly the purpose of the fund. It almost didn’t matter what it went into. Spread the funds around and get people moving again. Get them out from under their beds and out there doing stuff. $2 billion is a lot of money but again, when you put in into perspective, it is a drop in the bucket in a more than one trillion dollar economy.)
It sure worked. Canada has run a surplus every year since Mr. Chretien turned the country’s fortunes around and the nation’s Banks are rated amongst the most secure on the planet. The country also runs a trade surplus as a major exporter of energy, resources, technology and services.
The current US President inherited a large national surplus from the former administration and the US is now suffering from unbelievable national deficits and trade deficits that between them amount to more than $800 billion per year. Oil prices went from below $40 per bbl to more than $140 per bbl. It should not come as a surprise to anyone that there would be real world affects on the US when the most important commodity on earth triples in price in a short time and the twin deficits rise to unprecedented levels.
Again, it doesn’t matter how you got here, it only matters what you do about it. It doesn’t help that George W. Bush has been urging ‘ordinary’ Americans to fight the ‘War on Terror’ on the home front and internationally at every one of his speeches practically to the exclusion of all other national priorities. ‘Look under your bed every night or in the closet before you go to sleep, Osama Bin Laden might be there.’ I personally think Mr. Bush’s search for Bin Laden has been about as effective as O. J. Simpson’s search for the ‘real killers’ of his former wife and her friend.
Now I find it surprising that some people, maybe most people, think their leaders should be ordinary folks just like them. Well, the US has had eight years of a man of ordinary talents and average achievements and it is likely that Mr. Bush was the worst prepared person to ever become President of the US, with the thinnest personal résumé and he is likely to go down as the: ‘Worst. President. Ever.’ Perhaps John McCain would make a good US President, you can never be sure about these things. But Mr. McCain is proud of the fact that he graduated 5th from the bottom of his graduating class.
He sang: ‘Bomb, Bomb, Bomb Iran’ to the tune of a Beach Boys song to a friend of his. It was a joke and, frankly, if you were sitting around a pub with an old army pal and you were an ordinary guy and not a candidate for the defacto leader of the world, it would be pretty funny. But for a potential US President, you have to set a higher standard for yourself. It shows, in my view, poor judgment and we have had enough of that in the White House over the last eight years.
Mr. McCain’s choice for VP, Sarah Palin also prides herself on being an ordinary person. Enough with the ordinary already—we need extra-ordinary leadership in extra-ordinary times. Perhaps Mr. Obama can provide that. He can not possibly be worse than the current occupant of the White House.
The US (and the World) needs a change in priorities. From a focus in the White House over the last eight years on ‘what can I do today to help the oil industry and large corporate interests’ or ‘what new international adventure can I get into this year’, the new President in January ’09 might consider some other things like:
1. health care for all US citizens;
2. education reform and investment;
3. energy production and conservation;
4. green energy and green technology;
5. infrastructure investment;
6. pushing the boundaries of science;
7. exploring space;
8. preserving the environment and reducing population growth;
9. peace on earth and tolerance.
People need to be inspired. They want to be inspired.
Now back to the current financial crisis. People in North America need to ask themselves four questions:
a. Did you eat three meals yesterday?
b. Did you fill up your car this week?
c. Did you get your pay cheque on payday OK?
d. Did you sell any of your stocks or mutual funds in the last two months?
If you answered ‘yes’ to the first three and ‘no’ to the last question, then what the heck are you worried about? Do you think that Warren Buffett is not sleeping well in Omaha? Sure he is. He learned to: ‘Buy Low and Sell High.’ If you sell when everyone else is selling and buy when everyone else is buying, then you are the bigger fool.
Canadian Prime Minister Stephen Harper was right when he said the current market meltdown provides buying opportunities. Clever people like Mr. Buffett know this. The Canadian media did not react well to Mr. Harper’s comment because, people like Mr. Buffett are incredibly rich, and ‘ordinary Canadians’ are left out. This is, of course, hogwash.
What the media forget is that Mr. Buffett was and still is an ‘ordinary guy’. He is incredibly modest, still lives in a small home in Omaha he bought when he wasn’t rich many decades ago, drives a modest car, has given huge amounts of money to charities (especially, the Bill and Belinda Gates Foundation) and is, from all that I can tell, a nice person. Mr. Buffett earned his wealth.
In the last 100 centuries of recorded history, very few economies have ever performed as well as North America’s with employment rates of 94 to 95% over extended periods of time. This enviable tack record is at risk more from the psychological effects of poor leadership and a leadership vacuum than anything else.
The US and Canada have together, with help from their traditional allies, faced down the existential threat of a world dominated by Nazi Germany or a Communist Soviet empire. You think high oil prices, a sub prime mortgage mess, a stock market decimated by greed and panic or 30,000 Al Qaeda terrorists are going to end these two great nations? I think not.
Dr. Bruce
October 11, 2008