Direction of a Train

Ooops, I forgot to include the train metaphor in the last post on economic movement.

The direction a train is facing often tells you more about where its going than the schedule of past stops.

Imagine for a moment that you came across a train in Reno that is facing East. The people getting off the train are all talking about their California vacation and one of them even shows you a ticket that says San Francisco.

Now, you might be wanting to go to the Golden State, and the information that the train was recently in California is compelling; However, jumping on the train is likely to be a big mistake. The train is pointing East!

It ain't going to Frisco. It's headed toward Chicago.

Obama continues to pound the drum that the economy collapsed in 2008 because of George Bush and the right.

The engine of our government was headed to the left at the time. Democrats captured both the House and Senate in 2006, and leftist regimes captured countries around the world.

Businesses invest forward, they don't invest back. Businesses hire people for the work that they will do, not for work they did in the past.

If we want to blame the recession on either the right or the left, we should look at the direction the country was headed at the time of the collapse and not where it had been.

At the beginning of the economic crash, investors realized that Bush had done little for the free market (beyond giving a tax cut without corresponding spending cuts). The collapse happened when people realized that we were heading in the direction of a bigger government.

I was upset to see Democratic candidates campaigning against George W. Bush in this current election cycle. It shows that our leaders are not looking for answers ... just partisan excuses.

The idea that Bush caused the recession is partisan talking point. To counter the talking point, I wrote the post: Who caused the recession?

As businesses face forward, the direction our economic engine is facing has a bigger impact on investment decisions than where it has been.