Posted on May 3, 2012
My Uncle Bob calls it the dreaded perpendicular shot.
In golf, when you mishit a golf ball so badly that almost kills the person standing next to you, you have hit a shank.
A shank can happen to anybody. And it is very, very scary when it does happen.
The golfer has no idea how it happened or why. One minute you are hitting ball straight as an arrow. Then next minute, your ball is whizzing around the head of your playing partner.
There was a great scene in the movie “Tin Cup”, when Kevin Costner, the washed-up player who attempts a dramatic come-back after winning a qualifier to play in the U.S. Open, gets a bad case of the shanks on the practice tee before he starts his round.
His caddie, played by Cheech Marin, goes through a crazy routine that seems completely non-sensical, all to achieve one goal: To get Costner’s character to forget about his shank and to start hitting the ball again.
I was thinking about that scene and about shanks in general when thinking about what happened to our financial markets in four years ago.
When you start shanking the ball, you lose confidence in your swing. You end up over-correcting so that won’t hurt anybody, and you end up duck-hooking the ball in the woods. And the pattern continues until eventually, you either give the game or you work through your problem.
What happened with the financial crash was similar. We lost confidence in the free market system. We lost confidence in the financial system.
This happens periodically. During the Great Depression, it happened for a decade. Franklin Roosevelt took on the role of Cheech Marin. He tried a bunch of different things that may or may have worked, but eventually, confidence in the market system returned.
President Obama has taken a different route. Instead of finding ways to restore confidence, the President has been like a caddy whom continually talks in our economy’s backswing.
Sure, he continued the Bush bailout of the automakers, and I have said in the past that the Bush bailout of the automakers was the right thing to do.
But beyond that, Obama has done little to restore confidence in the marketplace.
He has continued to play the class warfare card, beating up the rich for not paying pay more than 75% of the tax burden that they currently shoulder.
He has pushed regulations that undermine investment and increase compliance costs. He signed Obamacare, a law designed to kill jobs.
Thankfully, the American marketplace is resilient and America’s entrepreneurs are continuing to innovate. But it isn’t easy to hit a good shot when the President keeps talking in your back swing.