It is a well know fact that in times of economic uncertainty, people will flock to safer investments, but things may have changed forever.
It is now reported that 53% of all investors say that the risks of stocks are just too hot for their money, choosing instead to funnel their cash into long term bonds and other safer, though lower interest investing. This is common during bear markets, but for the first time, we are hearing from investors, that even when things improve, they might not shift.
The recent fall of the housing markets, and the resulting downfall of other industries, have shaken up investors to the point where there is an overall feeling that the risks of the stock market are just too much to see them as a solid investment choice, period.
The scariest thing about this is that it is a self fulfilling prophecy. Without investment, the economy will not grow, stocks will continue to plummet, and this will cause a snowball effect of investor fallout.Making matters worse, the common safety staples such as municipal bonds are also losing their value as the economies of locality are short falling in line with the overall economic picture.
Government officials talk everyday about bringing consumer confidence back, renewing economic growth, including jobs in every sector, and reviving innovation to tip the scales back to a future of possibilities, but where is this money to come from? Obama says that the solution is to “tax the rich”.
I hate to beg to differ, but who are the rich today, those who we invest in to create job growth, those we invest in to turn a profit, and those we invest in to for our financial futures, and the large investors who are starting to show by example that “save” is the current mantra.
Maybe if Obama would read the paper once in a while, instead of simply criticizing the press, he could see that the very people he needs on his side to turn the tables are the ones he is punishing, while he has been spending the past 3 years bailing out and supporting the ones that put us in this position to begin with. This is not a matter of politics per say, but common sense. If you pay the pyros to put out the fire while levying an extra burden on the emergency crews, you will get burned.
We have spent countless billions of dollars trying to spur an economy by throwing money at people who will simply be putting it in the bank, away from real investment and into the hands of a paranoid Scrooge of the current bankers who are more scared of investing than the next guy . When was the last time the banks were interested in infrastructure investments such as housing? Pre-collapse rules do not apply, but math still does. Until there are cuts to offset the mindless spending that have made all leery, we will never revive.