When companies get into financial trouble, they usually fire current management, analyze and streamline their operations, and restructure their debts.
America is currently in financial trouble, but the only step in the turnaround process that we seem to be capable of taking is firing current management (see the recent midterm elections). After that, it's just finger-pointing and bloviating and business as usual.
Howard Davidowitz, chairman of Davidowitz & Associates and a long-time critic of our government, is positively appalled by the turnaround approach taken by the current administration, which is to spend more money.
Davidowitz thinks President Obama is a "moron" and worries about a looming dollar crisis that will take the market down at least 6,000 points (50%).
I asked Davidowitz what he would do if he were president.
How would he fix our financial problems without crushing our economy? How would he create jobs? How would he avoid the current fate of the UK, which pursued an "austerity" plan only to see its economy plunge back into recession?
President Davidowitz says, he would immediately eliminate the Bush tax cuts. (He thinks Bush was an idiot, too, by the way). He would then address the real cause of our financial problems: Entitlement spending, specifically, Medicare and Medicaid. He would avert a dollar crisis. He would also cut military spending.
Would these moves hurt the economy? Yes, Davidowitz says, in the short-term, they might. But in the long-term, they'd be a huge step in the right direction. Our international trading partners and investors would see immediately that we had finally gotten serious about addressing our problems, and this would lead to a surge in the dollar and direct investment. And the investment, in turn, would produce the jobs that we so desperately need. And they would avert a dollar crisis that Davidowitz views as looming catastrophe.
- President Obama