Can Obama Save the Economy?
As the stock markets have made a big rebound, some people think that we are out of the woods. Has Obama’s massive plan averted financial disaster?
I think that it is way too early to tell. The fact that the markets have come back to nearly previous high levels is a great sign. The problem is that nothing has changed fundamentally in the economy. Unemployment is still high, and there is no reason that it will come down in the near future. Domestic automakers are finished, but the American people are left holding the bag. Demand for goods and services is not rising, and businesses have little ability to grow in the near future. Housing prices are falling, and I don’t think Obama’s plan will be enough to keep them from continuing to fall.
The government has made it’s play, and it is a powerful one. Interest rates are near zero. But what happens if the markets start to fall again? Will the government be able to intervene?
I think the answer is no. The government will not be able to reduce interest rates. And, they will not be able to do massive interventions because the tide of public opinion has turned against the government. Besides that, there is a limit to the amount of money that they can borrow. What if we reach that limit and can no longer borrow more money? How will we make payments on the national debt, let alone all the other expenses that the government has?
These are a recipe for a perfect storm in economics, in my opinion. If the markets fall past the 6-month lows, the governement may be powerless to do anything. In that case, people will start to sell like crazy, and we would see massive losses. Housing prices would fall further. And with countries around the world in financial trouble, the result could be depressions in countries around the world.
Does that mean that we should be scared and hopeless? Absoluetly not. As comitted optimitsts, we believe that if that the economic situation gets worse, it will be a great opportunity for anyone who is interested in making money. Our personal finances are not the same as the government finances. Just because the markets go down does not mean that individuals need to lose money.
We choose our own actions. We are the creators of our own destiny. I think that it is important to be aware of the possiblity of future financial chaos, and prepare to handle it.
Related posts:
- The Opportunity of the Economy
- Is the Economy in Trouble? Or just the Sheep?
- Automated Trading and the Economy
- 8 Reasons why a Down Economy can be Good for your Finances
- What Are the Hidden Opportunities of a Down Economy?
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is one of my favorite financial books of all time. It's an allegory about a guy who has a terrible job, and how he overcomes challenges to achieve his dreams.
