|S&P Low in 2009 of 666 x 2 = 1332 High in 2012|
The stock market has become a rigged game in the last few years. It is be propped up by the Federal Reserve and Ben Bernanke's team by printing unlimited dollars to buy futures and bonds in the open market. Bond prices are artificially low in order to encourage people spend and not save. However, the smart people running big corporations are sitting on hoards of cash earning 0%. Its because the market has been propped up in a phony way and there is no organic growth. Executives are expecting a stock market crash of grand proportion that will wipe out all of the Government businesses that have been propped up. Cash will be king in the future and there will be no safe havens. Its just a matter of time before the huge "House of Cards" bonds and stocks all fall at the same time wiping out the wealth that has been artificially created.
Yes, the United States can print endless amounts of money in order to create inflation and promote growth. The experts think we can grow our way out of the debt crisis and reduce the current 100% debt to GDP ratio that has doubled under the Obama administration. However, the austerity in Europe is nothing compared to what we might see in the U.S. if Mitt Romney gets elected and the Federal Reserve money printing press is halted. It will be painful in the short term but the long term gain for my kids and grandchildren will be tremendous. The U.S. Government must feel the pain of overspending and let the free markets take over their bloated and egregious spending habits. Don't forget Mitt Romney has been a private equity / restructuring guy in the private sector and will have the biggest turnaround project of all time on his hands once he pulls the Fed plug.
Mitt Romney knows that a healthy economy will grow through organic investment and capitalism at the local level. In healthily economies the Venture Capital & Private Equity industries thrive and so do quality IPO's that foster the cycle of wealth that has built the foundation of the United States. However, the recent financial crisis has led the Government to step in and act as the market "Big Brother" to prevent big investors from losing money. The VC industry and private equity industries are shrinking drastically because large LP's (limited partners) have no incentive to invest with below 0% annual returns due to overbearing Government regulations. We all know in healthy free markets there are winners and losers. However, now the losers are being prevented from losing and this is not capitalism. Bailouts have been preventing huge bankruptcies and progress towards creating new and more efficient businesses.
Thousands of banks should have gone out of business and so should have many of the auto companies like General Motors. Restructuring and bankruptcies are all part of the free market cycle and we have yet to go through it on a large scale downturn. The 2009 downturn was prevented by the Government by double its debt load in the trillions and now the next recession could be even worse and deeper.
In summary the only thing that is going to help the economy in the long run build a foundation of growth that is sustainable is if the Government simply gets out of the way. We investors are all "Big Boys" and taking loses is part of the game. Trying to impose regulations on the financial services industry to prevent loses only restricts the free market capital flows and prevents investors from doing anything. We need investors to be excited about investing and now restricted. These two bills / laws need to be repealed by the next President and then you will see healthy organic investment growth come back to the private sector.
1) Repeal Sarbanes Oxley
2) Repeal Dodd Frank Bill