Grand Rapids, MI (PRWEB) August 6, 2009
In a recent article published on Bloomberg, two well known professors proposed another stimulus package, an idea that's also been supported by an Obama advisor.
Dennis Tubbergen, in his financial services blog http://www.dennistubbergen.com, weighed in on what another stimulus package and more debt might mean for the economy.
The Bloomberg article mentioned that the economy shrank 5.5 percent in the first quarter and 6.3 percent in the fourth quarter, which is the worst 6 month performance since 1958. Adding to the economic concern is the consumer savings rate which shot up to 6.9 percent in May.
And here is why this is bad news for the U.S. economy.
This economy is very dependent on consumer spending. According to a 2003 article published on CNN, consumer spending makes up about 70 percent of the US gross domestic product.
Professors Nouriel Roubini of New York University and Robert Shiller of Yale University are calling for a stimulus plan, which they believe will encourage more spending.
Tubbergen, in his blog post, says he doubts this will happen and, even if it does, it may only delay the economy's inevitable hard landing.
This recession is a credit driven recession, Tubbergen explains, and was created in large part by the Federal Reserve and the government. The crisis will likely not end by creating more debt; it will end when the huge debt burden on the government and on U.S. citizens has been dealt with.
For those who have accumulated wealth, Tubbergen believes they may need to look at dollar alternative investments and absolute returns* investment strategies.
For more information on Tubbergen's views and wealth management philosophy, visit http://www.dennistubbergen.com.
*Absolute return investment strategies aim to produce positive returns regardless of the directions of financial markets. Investing in market related securities involves a risk of principal loss. Having a particular investment strategy does not guarantee a profit and/or guarantee against loss. Prior to making any investment decision, the services of an appropriate professional should be sought as investment related recommendations are dependent upon the personal financial situation of each individual investor.
Advisory services offered through USA Wealth Management, LLC, a federally registered investment advisor. The opinions expressed herein are those of the writer and not necessarily that of the above noted company. This update may contain forward-looking statements, including, but not limited to, statements as to future events that involve various risks and uncertainties. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual events or results to differ materially from those that were forecasted.