Hi All, my name is Ed Leone. I have been a clinical practicing dentist for the past 38 years (need a dentist www.leonedmddentalcare.com) with a very high level of interest in financial matters over the years. In 2005 I gained a professional studies certificate in financial planning and in 2009 and MBA in financial planning. You will learn after reading this blog that I am an expert in only one thing-my opinion. The purpose of this blog is to share information and to get your feedback. If you would like to contact me over blog issues or financial planning issues leonee@vzw.blackberry.net.
Last month I talked about my short-term optimism over an economic recovery in our country. It is apparent to me that in spite of the continued road blocks which the US Congress has put in the way of business expansion, the business cycle is strong enough at this point in the acceleration phase to over come these head winds. The US Congress still needs to create an environment where business can be willing to take risk and be innovative. We need to see reductions in the tax structure, further committment to free trade internationally and reduced competition for available capital from government. If these steps are not taken, I fear that our economic grow will be severely slowed. So far, the Congress and the Executive have adopted fiscal policies which are Keynesian in nature only. We have not learned a thing from observing the past 20 years of economic strife suffered in Japan. Upon their banking collapse over real estate around 1990, the Japanese government chose to follow a path of continuing short-term stimulus make work projects and expanded government debt to the point that the government debt in Japan is at 120% of GDP. Not only is economic recovery still crawling along due to retention of toxic assets in bank portfolios (which are still slowly being reduced), but both federal and private pension funds are so poorly funded due to cost shifting to other areas of business expense and government services, that many Japanese citizens have had their retirement benefits severely reduced or taken from them. Government stimulus does not create long-term employment situations which will lead to increased consumption and the flow of currency through the economy. When the stimulus from government ends, so does the jobs available. We need to enhance business activity. The concept of expanding US Government debt by instituting new federal programs and then trying to pay off the debt with such mechanisms as a federal sales tax (Value Added Tax) and the inflation effect of monetizing the debt will put us in a very poor condition . According to Bloomberg Business Week, there is $3.2 trillion sitting in money market funds that could be redeployed with the proper monetary and fiscal incentives to grow this economy. Let’s just see where the future takes us.
For the record:
DJIA 11008.61
NASDAQ 2461.19
S&P 500 1186.68
Sugested Reading “Yes, You Can Still Retire Comfortably” by Ben Stein and Phil De Muth
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