Economists and Federal Reserve officials are puzzling over the question of why, with our tightened labor force, are people not seeing wage increases? Additionally, there is a huge debate raging over the question of why, with oceans of free money everywhere, are companies not investing more and putting capital to work? Why are wages still stagnating and why doesn’t the corporate treasure trove of cash and capital availability lead to higher investment?
Some say it’s the downward force on prices driven by the efficiencies of the internet and technology. Some say it’s secular and possibly driven by the aging population or the effects of globalization. Watching the White House Correspondents Dinner last night, I couldn’t help but wonder if there wasn’t a large force at work…
President Obama was sublime at the WHCD last night. Self-deprecating, humorous, articulate – everything you’d want to see from him at an event that’s essentially a comedic roast of Washington and the people who cover it. I’ve been watching his performance at this event every year and have always noticed the same thing – no matter how funny the line he delivered, and no matter what the subject matter, there are always large pockets of attendees who simply refuse to laugh. Or even smile. They sit there in the audience with a look of utter disgust or hatred on their faces, an implacable disdain regardless of the mirth unfolding throughout the ballroom. The determination to hate this man and his ideals is stronger than ever – even now, in what Obama himself describes as “the fourth quarter” of his presidency.
Which got me thinking about the questions above – why aren’t businesses, with a few exceptions, investing more for the future? Is it possible that the overarching reason is a lack of belief that there will be any kind of future at all? How many people in America believe that Barack Obama has ruined the country and destroyed the future? How many nights a week does Fox News dedicate toward reinforcing this view? After six years of having this message drummed into their heads day after day, should we be surprised at all that so many people can’t shake it – and conduct their business accordingly?
In general, when you think the future looks worse than the past, you tend not to want to make big investments or put money at risk on new projects. They call this uncertainty. That’s how bond market curves are formed. It’s how multiples on the stock market expand or contract.
What if the White House itself – and its current resident – is the primary source of this uncertainty? What if this “Kenyan, marxist, gay-loving, gun-hating, Arab middle name-having, Harvard educated, big city-raised, tax-happy, community organizing black socialist” is the reason why so many people refuse to accept that things are getting better, not worse?
Could it be that the Barack Obama presidency is the most deflationary force in America right now?
Just a thought. Would the nation’s attitude toward investing in the future be different if the guy who ran the country looked more like the presidents of olden times?