Market gurus and economists will tell you, “We need to fix the banking system before the economy and the markets will improve.”    Makes sense….right?   It must be so.   After all, politicians like President Obama keep repeating the same message and just to prove the point, he and Secretary Geithner say they have “big and bold” plans to fix the system (maybe they’ll actually tell the rest of us someday.)  Who dares to doubt them about something that seems so evident?  Over and over, the message is being sent via every media outlet that doesn’t mind blindly repeating something so it can become indisputable truth that leads you to a conclusion that if we fix a particular problem, then the economy will be healed.

Actually, we have two such “facts” that have become part of the recovery plan.   The first is that “We need to fix the housing crisis before the economy and markets will improve.”   Makes sense….right?  It must be so.  Market gurus, economists, and politicians (the people with all the answers), they have said all that for the past two years.  Program after program from MLEC to HOPE NOW to mitigating/halting foreclosures to TARP to Good Bank / Bad Bank to bankruptcy judges writing down principal to whatever Geithner has announced he will announce at some future announcement has been aimed at fixing the banking mess and the housing/mortgage crisis.   Never mind how those programs have failed to work.   Apparently, the only thing that matters is that we keep trying.   Because Because Because????  Because why?   Well, it’s obvious right?   Until the housing / mortgage crisis and the banking system are fixed, we will suffer.

I agree that the economy and markets will struggle for at least as long as the credit and housing markets are impaired.  However, I just get the sense that the “Fix Fixation” is setting us up to believe that fixing those problems will fix the economy and market.   There is no guarantee that if the banks are healed, that the economy will rebound.  We have had numerous periods in our history were the banking system was not dysfunctional and we still had a bad economy.   Since the Great Depression until the past two years, we didn’t have a national housing crisis like we have now and yet we had several periods where the economy struggled.

Our problems are much deeper and wider than many people want to acknowledge.   If you believe government programs can fix everything or that they are the only ones that can fix our current problems, where will you turn when the economy still sucks after credit markets are not so terrible and/or when housing levels off?