Fiscal Cliff Solution Doesn’t Solve America’s Problems, Warns Wealth Preservation Strategies of NJ, which Points to More Conservative Solutions for Concerned Investors

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Weeks ago, just in the nick of time, the U.S. “fiscal cliff” problem was resolved by Congress, and everyone breathed a sigh of relief. The stock market responded favorably, and this month reached levels last seen in 2007, but this “solution” in no way solves the United States’ fiscal problems, according to the financial firm Wealth Preservation Strategies of NJ.

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Does the solving of the fiscal cliff really solve any of America’s huge economic problems?

Take your pick of the country’s problems: unemployment, housing, a sluggish economy, printing money, the national debt, Obamacare, Medicare, Social Security, pension funds, and a divided Congress. Each one is significant, and without any easy solution, according to the financial firm Wealth Preservation Strategies of NJ. For example, Time Magazine ran an article in August, 2012 entitled The Six Daunting Financial Problems Facing America. "Most of these problems are included in the list above, and none of them even began to be solved by the temporary “fiscal cliff” resolution weeks ago" comments Brian Solik, president of the firm.

The article states that the cost of Medicare and Medicaid, for example, is projected to rise from 5.4% of GDP (Gross Domestic Product) to 7.2% in a decade and to at least 9.6% of GDP in 25 years. Federal government debt now stands at 73% of annual GDP, not counting money the government owes to itself, such as the Social Security Trust Fund. If current spending and tax rates (including the Bush tax cuts) are extended, debt will reach 93% within a decade, and will go into the danger zone in 15 years, according to the Congressional Budget Office.

U.S. fiscal issues are so great that The United States looks increasingly likely to lose its gold-plated AAA credit rating in the next few months amid warnings by Wall Street rating agencies, reported the Washington times recently. “The next step is a very serious cliff that involves the credit rating of the U.S. It doesn’t get more serious than that, and one hopes that will cause some to be more responsible than they might otherwise be,” said David Kelleher, president of Better Markets Inc. and a former Senate Democratic aide.

So why is the stock market doing so well lately, in light of all of these problems? Much of it depends on the potential for short-term gains and the hype that accompanies it. “Every economist knows that a government that prints money to buy its own bonds is digging itself into a deeper long-term problem,” comments Solik. “However,” he adds, “in the short-term, this has a positive effect on the economy, and the stock market often responds well.”

The stock market can often have very positive years in the midst of a weak economy, according to Solik. “This happened during the Great Depression, during which the market experienced tremendous upswings on various occasions.”

This month the stock market finally came back to its previous highs in 2007. There’s a generally bullish sentiment amongst many analysts and investors. However, does the solving of the fiscal cliff really solve any of America’s huge economic problems?

Harry Dent, author of the New York Times bestseller The Great Depression Ahead, doesn’t think so. He said recently: “ Investors must realize that there is a new normal. The new normal is not even the expectation of 4% on stocks and 2% on bonds…. The new normal is a roller coaster of one bubble bursting after another.

Those concerned about potential stock market losses and wondering what other more conservative strategies are available are invited to read previous articles from Wealth Preservation Strategies of NJ.

Brian Solik, CRPC is President and Founder of Wealth Preservations Strategies of NJ. He is a former Wall Street broker who now focuses on educating investors on how to maximize their financial security and minimize taxes. If you would like to read other related articles contact Brian at 732-415-7717, bsolik(at), or visit his website

Securities and investment advisory services offered through Brokers International Financial Services, LLC, Panora, Iowa. Member FINRA/SIPC. Brokers International Financial Services, LLC and Wealth Preservation Strategies of NJ are not affiliated companies. The opinions expressed are those of Brian Solik and not necessarily those of Brokers International Financial Services, LLC.

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