2011 Financial Optimism

Many Investors are optimistic about the stock market for 2011.  Many think the market will grow by 20% this year and very few believe the market will go sideways.  For whatever reason, all of the problems of 2009-2010 seem to no longer matter.  The states have a funding problem.  Housing prices are not expected to improve in the foreseeable future.  Quantitative easing which causes inflation seems to be acceptable now.  The government deficit and liabilities are astronomical and nobody has a solution to a resolution that will not decimate our children and grandchildren.  How quickly do we forget and deny these structural flaws in our system.

Denial and blindness are taking hold once again.  Logical conclusions do not apply when the masses are addicted to leverage and spending.  In the early ‘90’s I was working for a company where I earned a healthy salary.  I knew I would be leaving in early 1993 and start my own business again.  We had become accustomed to the standard of living supported by my salary.  It was extremely difficult to curb our spending prior to my departure.  There was such an emotional tie to spending money and there were many “corrective” discussions concerning our monthly spending habits.  Once I departed, we suffered an emotional “hit” adjusting to a new lower level of spending that comes with starting a new business venture.

Currently, the U.S. Dollar is the least ugly of the ugly sisters.  The Euro crisis caused the relative strength of the Dollar but the ultimate test was to compare the Dollar to hard assets.  Short term volatility masks the underlying problem of Dollar depreciation.  A sovereign debt crisis could move all currencies in a downward spiral.  The FDIC closed 157 banks last year and 2 were closed yesterday.  Most of these banks were smaller but since the Fed provided funding for the “too big to fail” group, the closures misrepresent the health of the financial system.  The amount of toxic debt on the banks’ balance sheets is still a mystery to most of us.

Oil prices are firming around the $90/bbl level.  Oil consumption is on the increase and will place upward pressure on the price.  $100 oil is an easy target.  If the price advances too quickly, the current economic recovery could quickly stall out.  China’s actions to slow their economy will impact the price of oil by restricting consumption.  The global connectivity of commodity prices make it impossible to project short term directions of prices.

The U.S. Dollar has achieved a purpose of extracting true wealth from around the globe.  By being the world’s reserve currency, it has been used to trade for the productive capacity of other countries and direct those resources to those who hold the Dollar.  For example, when I was in Romania in 1993, I could buy a 12 course meal for about $5.  An ice cream cone was five cents.  My Dollars were well received in that country.  With the consistent policy of inflation of Dollars, we buy goods and services then pay for them with a lower value.  The problem is that in Kingdom economics this is a sin of unequal weights and measures.  At some point the Dollar will be judged and found lacking.  The timing will be according to Our Heavenly Father’s perfect plan, will, and purpose.  I trust that HE will prepare HIS sons and daughters for this event.  As each of us dwells in HIS Word and Presence, we will be led to make preparations for such an event in whatever form it takes.

People are addicted to drugs, things, making money, achieving stardom, and any other thing that would strengthen and support pride, ego, and the flesh.  This causes them to be blinded from the truth, wisdom, and understanding.  What is so obvious to those who are not blind has been withheld from those who are.  Our prayers should be for Our Heavenly Father to lift the veil from those who are blind (including our own partial blindness).  We cannot know just how HE would do that but throughout history HE has removed any distractions such as their temporary wealth, houses, and other trappings.  It would not surprise me to see HIM perform another “cleansing” as HE has done so many times for the Kingdom economy will not be run in the same fashion as the current system.  As always, HE will raise up a people to lead others toward HIS Kingdom.  May the readers of this blog be in that company.

Comments are closed.