There is only one thing that will save the economy: your job and your 401k in 2012.
We have to have confidence.
I know, I know. You think I'm as batty as Julie Andrews -- spinning up that dirt road to the von Trapp manor with guitar in hand, singing, "I have confidence in me!"
Maybe it is a little crazy. But it's true. Even the cold, hard facts of this complex global economy make this same emotional plea. Confidence -- or a lack there-of -- is paramount.
Fact: December will mark the eighth straight month of net withdrawals from U.S. mutual funds. Investors don't have confidence so they are taking their money and running.
Fact: The European Central Bank continues to set records as continental banks park their cash there. Why? Because euro zone banks don't have confidence they will get paid back if they loan to anyone but the massive central bank. Just as the phrase "crisis of confidence" characterized the U.S. credit freeze after Lehman Brothers went bankrupt in 2008, it has become shorthand for in the debt crisis of Europe, too.
Fact: For the third-quarter, The Conference Board's measure of chief executive confidence declined again to bottom out at a two-year low. That stat is about as quantifiable as uncertainty can get.
Heck, on the most basic level it is confidence that moves the market. Sears Holdings saw a 25 percent decline in the stock this week because news of store closings made people doubt the long-term hopes of the company. When stocks go up, it's when the reverse is true -- that investors are secure in the company's future.
In finance, confidence is key.
So what can we do in a world like this? After all, it's hard to see how one American can swim against the dark tide of uncertainty that seems to be sweeping in from all corners.
Simple: Don't let your fears and doubts cripple you in the year ahead. Have confidence in your own financial endeavors in 2012. Even if you're scared.
If you want to start a business, start a business. Who cares if people tell you "this isn't the environment for a start-up." Is it ever really a good time to take out a second mortgage, forgo corporate-sponsored health insurance and work 60-hour weeks because there's nobody else to help? True entrepreneurs are risk takers and optimists. They have to be.
If you want to spend money, spend money. I can't tell you how many people have told me that it was a "bad idea" to take a vacation even if they had the money and time this year. Seriously? Someone please shoot me if I ever decide it's a bad idea play on the beach with my daughters and a good idea to sit in a cubicle for eight hours, hoarding cash out of fear.
If you want to quit your job, quit your job. Numerous studies show that employee dissatisfaction is at an all time low -- largely because people think they don't have options. Everyone has their breaking point, so make sure you reach that breaking point with your employer before it starts affecting your personal relationships and overall happiness. There are always good opportunities for good employees.
All this is easier said than done, I know. But if you don't believe that ultimately things are going to be OK or that there are options... then frankly, what the hell is the point?
Sure, there is the possibility of chaos in Europe and a "hard landing" in China. There is political and economic bedlam at home and abroad. But if you want to live your life based on Doomsday scenarios, go build a bunker with canned goods and gold bullion instead of reading this blog post.
Yes, we have big problems -- both macro-economically and micro-economically in our personal household budgets. But unless we have the confidence and courage to face these issues and get on with our lives, we are doomed to the status quo.
So if you're looking for a New Year's Resolution, buck up and sing along with me and Julie:
...with each step I am more certain
Everything will turn out fine
I have confidence the world can all be mine
They'll have to agree I have confidence in me.
Here's to 2012.
Jeff Reeves is editor of InvestorPlace.com. Write him at jreeves@investorplace.com.
Follow Jeff Reeves on Twitter: www.twitter.com/JeffReevesIP
Business men including myself are greedy, but without these greedy individuals, businesses and corporations starting businesses and providing and/or risking their own wealth to create jobs for US citizens in order to (try to) create wealth for themselves, most US citizens would be unemployed and have to live off of the land or be beggars in the streets.
Who else other than greedy individuals, businesses and corporations HAVE EVER HIRED any US citizens, except for some tax supported government bureaucracy?
Confidence or the lack of it will precipitate market fluctuations up and down - that is a given. But we are undergoing a structural collapse that is being driven by a wholesale transfer of wealth upward on the one hand, and a transfer of wealth-creation (manufacturing jobs - not McDonald's burger flipping) out of the country.
If we don't address those two issues FIRST, then promoting confidence becomes tantamount to selling snake oil.
I was utterly astonished when I read this article.
Seems to me Jeff Reeves is just a tad out of touch with reality.
Much like most of those twads in congress and senate seats.
Confidence is just more "Psycho-Babble" and will not do anything to re-create jobs and/or economic activity in the US economy.
The US International Trade Deficit must be corrected by any means possible (Re-Industrialize) in order to generate more NATIONAL WEALTH and stop the flow of title to US located assets (privately owned businesses, factories, casinos, hotels, farms, land, ports, refineries, forests, ports, breweries, distilleries, and other NATIONAL WEALTH) that are leaving the USA to pay for the things that we import from foreign manufacturers, and also to pay for increasing government expenses, such as stimulus for infrastructure expenses.
The Trade Deficit is the basic structural economic foundation problem that will destroy the US economic miracle because title to US located assets are also leaving the USA to pay for the things that we import and consume in addition to paying for our increasing US government expenses.
Brazil, Russia, India, China, (BRIC) nations, plus Pakistan, South Korea, and the other industrialized countries of the world that have a positive net foreign trade balance are NET CREATORS of NATIONAL WEALTH (and the associated manufacturing jobs) for their nations.
The de-industrialized USA (and the European nations) with a negative net trade balance are NET CONSUMERS (DESTROYERS) of their own existing NATIONAL WEALTH (and the associated manufacturing jobs) in the USA, who live “high on the hog” by continuously borrowing wealth from the industrialized countries.
1. plant, grow and/or harvest something of commercial value from the earth;
2. extract something of commercial value from the earth;
3. manufacture something of commercial value that is consumable
4. construct a building that is permanently useful for rental income;
5. provide professional services (medical, legal, dental, engineering, architecture, land surveying, technology, accounting, etc.);
6. collect payment for patent and copyright uses;
and then trade, sell, lease or rent these items and/or services to parties outside of their family, in return for a net transfer of gold, currency or commodities from other parties outside of their family into their own family.
The members of that family (tribe, state, nation) can then reflect their real NATIONAL WEALTH and financial security with the net positive accumulation of privately owned grain, gold, cattle, jewels, land, buildings, hotels, casinos, factories, commodities and/or other marketable products that are then available to be used for economic security for reserve use in times of emergency, to raise the standard of living for the members of that family, and also accumulate redeemable products and/or commodities plus title to locally in-country located assets as redeemable value for any printed currency that they might care to issue.
It seems the task is to provide stable living conditions for EVERYBODY and to ensure that people still have an incentive to get things done... without the desperation and necessary poverty on the bottom rung of our economic ladder.. does freedom always imply winners and losers?
My vote fo the 2 things necessary to set the stage for this Country to start moving forward again.
How about THEY have confidence first, and let those bond prices drop to 2 or 3%, and see if Europe can pull out of this. But you don't ask that. They're the "market", and for some reason we think we need them. We don't. Not anymore. They are the collective "problem" and they have no desire to be part of the solution.
So I'll make you a deal. As soon as they start acting like adults and put their collective butts on the line like the rest of us have been forced to do, I'll reconsider this "confidence" thing you're talking about. Other than that, I don't think I'll buy into your "embrace lunacy" campaign. Sorry.
We need to face the facts both here in the U.S. & in Europeans that both BANKS TO BIG TO FAIL & Unrestricted Free Trade may have been a Dream for Wall Street Traders and other Traders across the planet but have been a disaster for National Treasuries and the 99%er's!
1st STEP! We in the U.S. need to reinstate the Glass-Steagall Act! http://www.ehow.com/about_5413083_history-bank-deregulation.html
2nd we need to create a new trading economy. I find it ridiculous the lip service European nations are paying to MAN-MADE-CLIMATE CHANGE.
Is it not obvious that the new engine driving MAN-MADE-CLIMATE CHANGE is unrestricted free trade?
The new economy would place an environmental tariff on imports and taxes on domestic manufactured products. This environmental tax would be based on manufacturing practices, transportation, sustainability, and proper disposal.
This would create the GREEN ECONOMY. It would give an advantage to local manufacturing.
This unrestricted free trade in both manufacturing and banking will destroy us all!
There will definitely be a severe crash this year or next and it will be a lot worse than 2008. The people who are saving are the wise ones who will be better prepared for the hard times to come.
Imagine a parent telling his kid "spend freely, have confidence and the economy will restore itself". Dream on.