Joining the Chorus–Sequestration: Any Fiscal Austerity Now is a Mistake

Everyone with a brain has commented on Sequestration and what should be done instead–some with sound logic and facts and data to support their view. The most recent brought to my attention in a comment by Tom Gallagher, via RenMac, is an analysis of the impact of austerity in Euroland, “Panic-Driven Austerity in the Eurozone and its Implications“.

The best complete article on this topic and what else needs to be fixed in America–actually in Washington–was Fareed Zakaria’s in a recent issue of World Affairs, “Can America Be Fixed–The New Crisis of Democracy.”  It details the ills of the US and spells out some solutions. The solutions were summed up in a sentence in his second paragraph of the 10-page article: “The focus in Washington is on taxing and cutting. It should be on reforming and investing.”  In the same issue, Roger Altman, who would have been my candidate for Treasury Secretary,  wrote a rather optimistic article, “The Fall and Rise of the West.” asserting his view that the West would emerge stronger from this financial crisis. I think Altman is right if Zakaria’s prescriptions are followed. I would highly recommend both of these articles as well as the fall, 2012, issue of the World Policy Journal, which devoted the whole journal to the subject of Democracy. If you only have time for one article it should be Zakaria’s–an elegant and fairly complete synopsis of how we got to this point and what should happen to get us past it. Zakaria provides some very appropriate solutions, which unfortunately require our politicians, and to some extent, we, the people, to act responsibly. Unfortunately, there is no evidence of this happening either from the Administration or Congress or us. And, now that it looks like it will happen, Sequestration is getting a “…it’s not so bad…” rationalization from some who should know better.

I am hoping for a miracle, I guess–just a simple agreement to postpone this nonsense and any short-term series of compromises and truly to focus on a long-term well-vetted plan,with a clear understanding of timing and consequences, that results in “…reforming and investing.” I think the markets, companies and individuals would react well to this. There isn’t much substantive to add to what others have said. I simply urge you to click on the links above to understand a bit more of the madness that is rampant in Washington and its implications.

This entry was posted in 2013 Outlook, General Interest, Sequestration, United States and tagged , , , , , , , , , , by Jack Rivkin. Bookmark the permalink.

About Jack Rivkin

Jack Rivkin retired in 2008 as EVP, CIO, Head of Private Asset Management of Neuberger Berman(NB) and from NB's Executive Management Committee. He was also on the Lehman(LB) Council on Climate Change(CC) and the NB CC Fund Advisory Board. He has been engaged with the United Nations and other entities on policy issues related to Private Capital and CC. He is an Associate Fellow of the Asia Society. He has continued on the NB Mutual Fund Board and with his CC responsibilities. He began his investment career in 68 as an analyst at Mitchell Hutchins(MH), and became Director of Research(DOR) there. After Paine Webber(PW) acquired MH, he served as DOR; CFO of PW; CEO of PWMH-the equity trading and investment arm of PW; Chmn of MH Asset Management and President of PW Capital. 87-92 he was DOR and, subsequently, Head of the Worldwide Equities Division of LB. 93-95, he served as a Vice Chairman and DOR at Smith Barney (now Citigroup). He was an EVP with Citigroup Investments 94-01, responsible for private equity investments. He was also an adjunct professor at Columbia University teaching a course in Security Analysis. He joined NB in 2002. He is the co-author of “Risk & Reward—Venture Capital and the Making of America’s Great Industries,” Random House, 1987. He is a regular guest on various media. He is the principal subject in a series of Harvard Business School cases describing his experience as DOR and Equity Head at LB. He has served as a director of a number of private companies and the NYSSA. He is currently a director of Idealab, Dale Carnegie, Operative, World Policy Institute and other private companies. He is a member of the Economic Club of NY, the Anglers Club, Theodore Gordon Fly Fishers, and a lifetime member of Trout Unlimited. He continues to be an active private equity investor when he isn’t fly fishing. Mr. Rivkin earned his Professional Engineering degree from the Colorado School of Mines and his MBA from the Harvard Business School

3 thoughts on “Joining the Chorus–Sequestration: Any Fiscal Austerity Now is a Mistake

    • Brendan, Of course it can be fixed. Fareed Zakaria’s article spells out some of what needs to be done, but he also points out that there is no apparent willingness or capability on the part of many of the players to develop some long term solutions. Both parties seem intent on destroying the other party. I must say the Republicans appear to be losing the battle but are inclined to take the country down with them. It may take another round of elections and, unfortunately, some bad results economically before steps are actually taken to develop a long term plan.

  1. I agree, politics will get in the way of an efficient government. However, I believe that it is not only the Republicans that are losing. The entire country is losing to party wars. It is my opinion that we need an overhaul on the political / election process.

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