Wednesday, November 07, 2012

Four More Years and Financial Certainty

"Elections have consequences."  ~ President Obama to Rep. Eric Cantor (R) when explaining why the Republicans input was not included.

With the re-election of President Obama, there is now certainty about some elements that can affect the future of the economy and my personal finances.  To me, the President Obama's financial actions of the first term are the best predictor of how he will act in the second term.  Here is what I am certain will happen:

  1. Economy.  President Obama will once again err and assume that the economy will recover on its own, just as he did in his first term.  He will therefore put his energy and effort into social programs (e.g. Obamacare) or political pork ( e.g. $800 billion stimulus) instead of in concrete programs that will improve the economy.

    The economy will certainly continue to have a lack luster recovery.

  2. Bipartisanship.  President Obama will use the bully pulpit to drive his agenda.  We will not see President Obama "washing Boehner's car" or "walking McConnell's dog" to demonstrate his bipartisanship as he recently told a radio interviewer.  I expect much more vilifying, blaming, and lack of taking responsibility.

    President Obama will use brinksmanship to address the fiscal cliff, which will create certain turmoil in financial markets.

  3. Entitlement.   President Obama's policies will emphasize entitlement over opportunity. Being in the middle class is a right, not an achievement. He will continue to vilify the rich and successful as uncaring.  

    The deficit will certainly grow past $20 trillion by the end of his second term to support the growing entitlements.  This level of debt will be unsustainable when interest rates are at normal levels again.
A circulating joke on the CME trading floor is:

Q.  What's the difference between Greece and the United States?
A.   About six years.

With President Obama's re-election, I will prepare for that eventual outcome.  Unfortunately, it's probably now closer to four years :-(

For more on The Practice of Personal Finance, check back every Wednesday  for a new segment.

This is not financial advice. Please consult a professional advisor.

Copyright © 2012 Achievement Catalyst, LLC

No comments: