It may not be as bad as four years ago when the newly minted President Obama faced a massive subprime financial crisis, government bailouts of the big banks and auto sector, and a great recession.
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New York, NY (PRWEB) November 09, 2012
In a recent Investment Contrarians article, editor and financial expert George Leong reports that over $752.0 billion is spent annually on Medicare/Medicaid, which is the second-biggest area of spending for the government, following Social Security. (Source: U.S. Debt Clock, last accessed November 2, 2012.) As Leong notes, failure to rein in costs could create a financial crisis. But, according to Leong, with this week’s re-election of Barack Obama, the President will have to deal with many factors that threaten a financial crisis in 2013.
“It may not be as bad as four years ago when the newly minted President Obama faced a massive subprime financial crisis, government bailouts of the big banks and auto sector, and a great recession, but there are still major obstacles to deal with,” says Leong.
The Investment Contrarians expert reports that the $16.0-trillion national debt could grow to a whopping $22.7 trillion by the end of Obama’s second term in 2016, if nothing is done, based on the current pace. He adds that if costs continue to rise, annual spending on Medicare/Medicaid is expected to reach over $940.0 billion, and Social Security will surpass $1.1 trillion annually, which would lead to a financial crisis. (Source: U.S. Debt Clock, last accessed November 2, 2012.)
“The big variable in all of this will be the ability for job creation,” Leong points out. “… The reality is that unless Americans are put back to work, the economy will continue to stall, and add to a possible financial crisis.”
Leong reports that Obama plans to extend the Bush-era tax cuts to those making under $250,000 a year, which represents the majority of working Americans, to encourage this key consumer group to spend.
“Yet, the most important item on the President’s agenda will be what to do about the pending fiscal cliff on January 1, which calls for automatic budget cuts meant to avert a financial crisis,” states Leong. “The problem is that a significant cut in fiscal spending due to the automatic budget cuts could make the economy worse.”
Leong reports that the Congressional Budget Office (CBO) predicts the U.S. economy could contract by 0.5% in 2013 if the spending is curtailed, and this could lead to another financial crisis.
To see the full article, and to get a real contrarian perspective on investing and the economy, visit Investment Contrarians at http://www.investmentcontrarians.com.
Investment Contrarians is a daily financial e-letter dedicated to helping investors make money by going against the “herd mentality.”
The editors of Investment Contrarians believe the stock market and the economy have been propped up since 2009 by artificially low interest rates, never-ending government borrowing, and an unprecedented expansion of our money supply. The “official” unemployment numbers do not reflect people who have given up looking for work, and are thus skewed. They believe the “official” inflation numbers are also not reflective of today’s reality of rising prices.
After a 25- to 30-year down cycle in interest rates, the Investment Contrarians editors expect rapid inflation caused by huge government debt and money printing will eventually start us on a new cycle of rising interest rates.
Investment Contrarians provides unbiased research. They are independent analysts who love to research and comment on the economy and investing. The e-newsletter’s parent company, Lombardi Publishing Corporation, has been in business since 1986. Combined, their economists and analysts have over 100 years of investment experience.
Find out where Investment Contrarians editors see the risks and opportunities for investors in 2012 at http://www.investmentcontrarians.com.
George Leong, B. Comm., one of the lead editorial contributors at Investment Contrarians, has just released, “A Problem 23 Times Bigger Than Greece,” a breakthrough video where George details the risk of an economy set to implode that is 23 times bigger than Greece’s economy! To see the video, visit http://www.investmentcontrarians.com/press.