The Current Economic Environment: US Consumers Are Still Reeling

Currently, the United States is trying to recover from the worst financial crisis since the 1930's; though, at this time, I believe we will avoid the doom and gloom experienced by the Great Depression. But, we have a much bigger problem potentially looming in the shadows of economic despair.

Here are the major economic risks facing the United States:

1. According to the CBO, the US government's deficits will exceed 1 trillion dollars annually over the next 10 years.

2. 40% of the US annual spending deficits, are being financed by the sale of Treasuries to the Chinese.

3. The US government and the Federal Reserve are artificially stimulating the economy with a zero interest rate policy, government stimulus, and the printing billions of US dollars. All of which has the potential of creating massive inflation starting in 2011.

4. Unemployment continues to increase at nearly 10%. US corporations continue to cut jobs to increase profits, because top line revenue continues to be flat or down year over year.

5. US Consumer Confidence continues to slid at a reading of 47.5 (100 signals growth and expansion).

6. The Federal Reserve continues to buy massive amounts of Treasuries, which has kept government bonds prices at multi-year highs in order to artificially keep mortgages interest rates lower.

I can go on and on. I am not sounding the all panic alarm, BUT, IF WE DO NOT GET OUR FISCAL HOUSE IN ORDER IMMEDIATELY, THE UNITED STATES OF AMERICA COULD be setting itself up for the WORST FINANCIAL CALAMITY OF THIS CENTURY.

Our investment strategy will continue to be cautious, with derivatives strategy protection and cash hedging.

by David A. Mascio