As investors focused on Washington theatrics last week, economic crises in Europe escalated, U.S. job growth decelerated and our gross domestic product was downgraded. By the time investors got past the Drummond logosigning of the bill nobody liked, a real crisis of confidence was in full bloom.

We take the market sell-off of Thursday, Aug. 4, 2011, seriously. But note: We see this crisis in confidence, and not a repeat of the 2008 crisis on Wall Street. Back then, we saw a highly leveraged consumer and a corporate America with a weak balance sheet. Today, consumers maintain much less debt and corporate America just provided a strong earnings season, supported by solid balance sheets. These are good things, even on the cloudiest of market days.

So … where do we go from here? In addition to the modest improvements we expect through year’s end, there are several factors that could ignite a market rebound, which are likely to be hot topics of conversation in the coming weeks. They include:

– A Tax Holiday: U.S. companies have billions of dollars parked in other countries because of their favorable tax rates. A tax holiday would allow these companies to repatriate these dollars back to the U.S. at a cheaper rate, which could then be used to build new facilities, improve manufacturing, and hire more workers. Many people consider the 2004 tax holiday a bust, but for the wrong reasons. Pundits look only at the impact it had on specific companies, instead of the broader market and the economy as a whole. The reality is the S&P 500 rallied 6.5% once the measure was passed in 2004, and gained 15% by the end of the following year, while GDP growth in 2005 clocked in at a solid 4.3%.

– Quantitative Easing Round 3: Over the last couple of years, the government has injected billions of dollars into the economy in the form of buying its own bonds. With the recent market pullback and a threat of a credit downgrade, in addition to it being a pre-election year (politicians need to do whatever it takes to get re-elected), expect a business-friendly environment and a continued-easy Fed offering some version of a QE 3. Rates aren’t going anywhere, and now that Washington basically has permission to print more money, expect it.

– Major Jobs Initiatives: No president has ever been re-elected when the unemployment rate was above 7.2%. Last week we saw our first step toward progress. Initial claims were below 400,000, but we have a long way to go. Corporations might be claiming the debt compromise is causing uncertainty, but a tax holiday and fed injection of money could add clarity to politicians who help secure it.

– Finally, corporate profits and new mergers and acquisitions are likely catalysts that will help lift us out of the summer doldrums. Together with one or more of the initiatives mentioned above, I expect both consumer spending and investor confidence to improve in the months ahead. Don’t get us wrong — we may be quietly confident, but we continue to keep a careful eye on client assets as we move through these dog days of summer.

D. DRUMMOND OSBORN, CFP, CTFA, is president and senior advisor of Osborn Wealth Management, 800 Lincolnway, Suite 409, LaPorte. Call (219) 716-0013 or (800) 889-7401, or visit www.osbornwealthmanagement.com.