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’tis the Season for Hope? Why We May be Headed for a Holiday From Stock Market Strife
By Addison Wiggin
We all know that President-elect Barack Obama ran on a campaign centered on the theme of hope. And now, so far at least, that nebulous promise seems to be manifesting in hard numbers on Wall Street. As he selects his cabinet and begins laying out his plans for the nation’s future, Obama seems to be sparking some much needed economic hope as the stock market reacts, mostly positively, to his decisions. These Obama market rallies are an indication of some short-term (gasp!) good news for the nation’s economy.
(Hey, it may be temporary…but we’ll take it!)
Recently we’ve seen the market rally on the heels of Obama’s announcements regarding job creation, the nation’s infrastructure, and economic stimulus. In fact, the DOW is up 20 percent from its mid-November lows. But while these rallies will provide a reprieve from the relentless selling that has been going on in the stock market, they probably won’t last through the first quarter of 2009. When the retail numbers come out in January, I suspect we’re in for another round of pessimism.
The real problem is that America’s problems are much, much bigger than the current recession. They’ve been building for decades. We keep hearing a lot of talk about getting our economy “back on track.” In truth we don’t want our economy to be on the same track it was on before it fell apart. If we don’t address the real issue facing the economy—spending beyond our means—these short-term market rallies will be the only ones we see for a very long time.
And there is still a huge elephant in the room in the form of unfunded entitlement programs. Unfortunately, President-elect Obama has said he is not going to focus on these challenges or address the national debt, but rather follow the conventional wisdom and spend, spend, spend to stabilize the economy. That’s worrisome because irresponsible spending is what created this mess to begin with.
Rather than trying to spend our way out of this mess, I would ask the president-elect to pressure Congress to renew tough budget controls like the PAYGO rules that expired in 2002 as soon as possible. And I’d ask him to take additional steps to cut spending, finance the entitlement programs, balance the budget, and start paying down debt as soon as possible.
My new book I.O.U.S.A. illuminates today’s financial crisis in a unique and easy-to-grasp way by examining four serious “deficits” the nation faces: the budget deficit, the personal savings deficit, the trade deficit, and most importantly, the leadership deficit.
The book serves as a companion to the critically acclaimed documentary of the same name—a national debt documentary that was nominated for the Grand Jury Prize at the 2008 Sundance Film Festival, was recently named as a nominee for the Critics Choice Award for Best Documentary, and is on the short list of Academy Award nominees in the Documentary Feature category.
In I.O.U.S.A., I consult “The Mount Rushmore Crowd” of the American economic scene to shed light on the economic challenges facing the nation. These luminaries include several experts who have been tapped by President-elect Obama for financial advice, such as Warren Buffett, Robert Rubin, and Paul Volcker, who was recently appointed chairman of Obama’s Economic Recovery Advisory Board. Others include Alan Greenspan, Paul O’Neill, Ron Paul, Arthur Laffer, Steve Forbes, William Bonner, and more.
Americans should enjoy the stability resulting from these short-term gains, but should understand that we are headed for more economic hard times and that now is not the time to slink back into our irresponsible habits.
Americans need to pay close attention to the decisions that are being made by our government officials, and we need to hold them accountable at every end. But we also need to use this break from a volatile market to continue to get our own financial house in order. Individuals need to save more, invest wisely, expect less from the government, and be willing to pay for the services they do expect. Doing so is the only way we can hope to come out of the recession into a brighter economic future.
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About the Authors:
Addison Wiggin is the editorial director and publisher of The Daily Reckoning and executive publisher of Agora Financial, a multi-million-dollar financial research firm and publishing group based in Baltimore, Maryland.
The Daily Reckoning has attracted more than 500,000 readers in the United States and Great Britain, has been translated into French, German and Spanish, and has been popularized by such mainstream publications as Money and Marketwatch.com. Wiggin has been featured as an expert in such publications as The New York Times Magazine, Worth, The Washington Times, The Washington Post, Time, The Pittsburgh Post Gazette, The Baltimore Sun, The MotleyFool.com, The Street.com and CNN/Money.
He is also coauthor along with William Bonner of Empire of Debt: The Rise of an Epic Financial Crisis (Wiley, 2006). He is the author of newly revised and updated Demise of the Dollar and Why It’s Even Better for Your Investments.
Mr. Wiggin has been a student, writer, and commentator of financial markets and governments for more than a decade. With a master’s degree in philosophy from St. John’s College and experience working with the Cato Institute in Washington, D.C., Mr. Wiggin has acquired both a macroeconomic and contrarian’s outlook on domestic and international markets.
Kate Incontrera is the managing editor of The Daily Reckoning. Ms. Incontrera was also an associate producer and writer on the critically acclaimed documentary film I.O.U.S.A. Before joining Agora Financial in 2004, Ms. Incontrera studied writing at The University of Cambridge and at Towson University in Baltimore, Maryland.
About the Book:
I.O.U.S.A.: One Nation. Under Stress. In Debt. (Wiley, September 2008, ISBN: 978-0-470-22277-5, $19.95) is available at bookstores nationwide, major online booksellers, or direct from the publisher by calling 800-225-5945. In Canada, call 800-567-4797.
About the Author
Addison Wiggin is the editorial director and publisher of The Daily Reckoning and executive publisher of Agora Financial, a multi-million-dollar financial research firm and publishing group based in Baltimore, Maryland.
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