Friday, July 15, 2011

The world's financial markets are the ultimate boss, not the people


Todd Harrison wrote a very interesting article today that caught my attention.  Todd is a Wall Street trader,  and founder of that great website Minyanville.  Todd is wicked smart.  What I admire about him most however is his well balanced approach to living.  Family,  friends,  then the markets,  sums up his approach to life.  So,  when Todd talks,  I listen.  And today Todd is reminding us that the ultimate boss in our world is not sitting in our nation's capital.  The ultimate boss resides behind the computer screens across the world,  trading our nation's financial markets:

"If policymakers don’t make the right decision, the market will eventually make it for them."

How can that be the case?  Easy.  The American people can have entrenched opinions,  but those opinions flip on a dime when their financial future appears to be going down the drain.  My memory is flashing back to the fall of 2008.  Congress was voting on the massive $800 Billion stimulus package aimed at saving our nation's financial markets.  The American people were angry and didn't want that package to pass.  Congress snapped to attention and voted as the people desired,  against the package.  The markets rapidly sold off.  Within hours,  the people changed their minds and flooded Congressional offices with phone calls begging for that package to pass.   Have we already forgotten that lesson?

Today,  most of America wants the spending to stop.   Most of America wants the debt ceiling not to be raised.   But most of America are absolutely clueless just how damaging these actions will be to the American economy.   If we take the tact of drastic spending cuts,  or intentional defaults on our nation's debt,  we're going to see a massive plunge in the value of our investments.  401ks, pension plans, IRAs, 529s, Roths,  just plain savings ... down the drain.  Americans will once again flip their opinions in short order and demand a reversal. 

The job of our politicians is to be smart enough to see through to the end game.  The end game is to avoid the plunge.  Avoid the unnecessary damage to the pocketbooks of American families.  Resist listening to those who simply don't grasp the economic and financial aspects of this important budgetary debate.  Do what's right for our country,  before our ultimate boss,  the world's financial traders,  make that decision for us.

North Carolina deserves better than Republican Senator Richard Burr.

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