Marinette Economic Summit Speech

What follows is a speech from Bob Atwell, CEO of Nicolet Bank, at an economic summit in Marinette, WI.  This event was founded and hosted by Nicolet Bank.

I have been asked to make a few observations about the economic environment in our area.  I was also asked that I avoid any commentary that could be understood as political in nature.  Hi, I hope you are all doing well! Have a nice night. The bar is open.

Okay, I am going to propose or actually impose a deal on you since I have the microphone.  I get to say exactly what I want to and you get to disagree if you want to. You just have to do it after we are done.

I am very grateful for the government shutdown, because it has for the first time in 5 years made politicians more unpopular than bankers.

If I accomplish nothing else, I am going to explain to you why it has become impossible to say anything meaningful about economic matters without reference to politics.  I am also going to explain why politics has gotten so nasty.  Then I will return to my real area of expertise which is reflecting to you what I hear and see from you; the hundreds of businesses we deal with and the tens of thousands of retail customers who bank with us. 

The day after the shutdown matter was resolved, the President said,” Now that the government has reopened and this threat to our economy is removed, all of us need to.…focus on what the majority of American’s sent us here to do; that’s grow this economy, create good jobs, strengthen the middle class, educate our kids and lay the foundation of broad based-prosperity….That should be our focus.”

This is a stunning proclamation of the primacy of the Federal government’s role in our lives.  It bears no resemblance to what I learned in my 7th grade civics class.  In those distant days education was the responsibility of parents and local school boards.  Prosperity was the responsibility of the people who needed to do the work necessary to prosper.  More stunning than the scope of the President’s self-proclaimed paternity was the absolute silence that followed it.  You see, I think he is right.  He is right that the majority of Americans want the Federal government to do just that.  If I thought federal government could do that, I would want it too.  So the next time you get disgusted at the angry, heated political rhetoric that dominates our public life, I want you to remember this.  When the federal government believes it is the primary mover of economic life, politics becomes the means by which economic outcomes are determined. Politics is vicious because we have made it the principle theater of economic allocation.  Politicized finance is profitable for the politically powerful.  This is one of the main reasons why the richer are getting richer and the underclass seems to be growing in size and hopelessness.  There is frankly, a lot of money to be had in the fighting we profess to dislike.  The only way to return civility to public life is to make politics less economically relevant.  I don’t see us moving in that direction at all.  The problem is not that the President, the Tea Party, John Boehner or Ted Cruz don’t represent us.  The problem is that they DO represent us. Our system of representative government really works and will continue to do so until this consensus about federally created prosperity collapses of its own weight.  Just because a majority of people chooses to believe something, does not make it true.

So what do I see and hear from you.

1. A tentative sense of renewed prosperity after the very scary period of 2008 through 2010.  Unemployment is down, the vast majority of our commercial customers are really doing quite well and the equity markets are back in record territory.  At Nicolet we are growing and having a phenomenal year. Interest rates are at sustained record lows and banks are falling all over each other to lend. The night sweats of 2008 seem a distant memory.   

2. This sense of general economic wellbeing is in stark contrast to the fears that you regularly express to me privately.  You are worried about your investments, your retirement income and the fundamental health of your business.  You like low interest rates when you borrow, but you can’t figure how to get a safe return on your savings.  You can’t quite seem to get your heads around the notion that the federal government’s policy is to subsidize borrowers at the expense of savers.  This policy is designed to encourage leverage for borrowers and to crowd investors into riskier asset classes. This has a lot to do with equity markets being in record territory.  You are worried about debt, deficits and that creepy $85B of financial investments purchased by the Federal Reserve Bank each month.  Giving it the officious name of “quantitative easing” does not make it feel less icky.  You are very tentative about borrowing and investing.

3. You are alarmed about the social disintegration you see around you.  The younger generation seems dispirited and unmotivated.  There is a growing concentration of wealth among the mega rich, coupled with an increasingly entrenched underclass even in quant Midwestern cities.  The mega rich getting mega richer is at best an unintended consequence of the Federal Reserve Banks unprecedented footprint in global financial markets.  Crime, drug abuse and violence are rising concerns in cities and towns where we grew up with unlocked doors.  The appalling decline of marriage and healthy family life is all around us.  It is apparent to most of us that a social safety net cannot replace the affection and respect that fail to flow from our homes into our neighborhoods.

What does all this have to with an economic forum?  Well I urge you to accept that economics does not exist in isolation from politics nor from everyday social life.  Economics is both political and social.  So when you speak with me of your personal concerns and anxieties, here is what I would most like to feed back to you.

I don’t know what the future holds, but I know that the answers to your fears will not come in the mail from Washington, New York, Lansing or Madison.  I also know that a government which borrows 30% of what it spends cannot long meet the scope of its commitments.  I know that the Federal Reserve Bank using an illusory electronic entry to fund $85B per month of “quantitative easing” is unsustainable.  This unprecedented intervention is properly understood as borrowing against the fruits of our children’s future labor. If I catch my kids lifting money from my wallet, they are not going to get away with calling it “quantitative easing”.  Every time I come up here I am impressed with the interaction between you.  This is what is needed and this is why we do this.  We are a local intermediary; we take deposits and make loans.  We are owned here and live here.  We also intermediate the ideas we hear among you and that is what we are here to do tonight.  We are local people who deal in local solutions.  We want to encourage you to do the same.  If we can’t develop community based solutions, why would we expect people who don’t ever come here to figure things out for us?  Thanks for coming and thanks for your business.

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