Slogging Away in Kansas City

The economists, financial gurus and prognosticators have pretty much all made their predictions for the national and global economies in 2011. One that seems rather accurate to me is that we are in a long, hard slog and have been since 2000. William Greiner, CIO for Scout Investment Advisors, asserts that the USA has been in long-term bear stock market since the year 2000 – that’s eleven years running! Yes, we’ve had a nice market run-up since the declines of a couple years ago, but tell me, is your retirement account significantly higher than 2000? Most of us would say, “No.”

More importantly, what do they experts predict? When will a recovery really take hold? I cannot get too excited about reports that we’re not losing jobs at the same pace as in previous quarters. I’m looking for something a lot more positive. Like friends and neighbors getting jobs, raises and not feeling too scared to take a risk, on say, buying a new car or home. Greiner, Bill Gross of PIMCO and others seem to think eventually there will be capitulation. Capitulation is the act of surrendering or giving up, and people and organizations decide to tackle the real problem. The real problem is an unsustainable debt level in the US and several western countries.

While I’m rooting for our government to get us out of this mess, I don’t know that continued fiscal stimulus (i.e., spending money we don’t have) and keeping interest rates at extremely low levels is getting us anywhere, at least very fast. Of course, I would like to take advantage of those low rates and secure a mortgage – so don’t move too fast on that one Fed. My parents always taught me to be smart with my money, and I pretty much have taken that to heart. They, like our current government, didn’t do so well with spending just the money they earned, but it’s the thought that counts, right? Well, maybe with parents, but I do believe it’s time for our government to show some fiscal restraint perhaps event to the point of fiscal austerity. Otherwise, I’m afraid we’ll just keeping slogging away.

From a micro viewpoint, I do know of one person who landed a job, a good job mind you, in recent months. And I cannot think of anyone getting laid off in recent months. My clients, those still standing, seem to have settled down and are investing some money into their marketing communications efforts. The experts say these positive instances may be temporary until the capitulation. SO

Congress should raise the debt ceiling, or the legal limit on U.S. borrowing, before it reaches capacity in the next few months to avoid threatening the U.S. credit rating, Gross said in an interview today on CNBC. After candidates supported by anti-deficit Tea Party activists were elected on pledges to rein in spending, some lawmakers have said they would demand budget cuts in exchange for voting to raise the debt ceiling.

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