Global stock market will be jittery for at least the next 18 months. Using borrowed funds, individuals. and governments overextended themselves for years before the recession. During the recession, governments stimulated —a euphemism for waste, and pork— their economies, using debt. Meanwhile, consumers borrowed to spend, and governments bragged about economic growth. Sadly, governments measure their performance by spending–the more they spend the more success they attribute to their programs.
Global Stock Market Requires Detour in Behaviour
Now, we must account for our irresponsible behaviour, which caused individuals and governments to carry excessive debt. Particularly Greece, Portugal, Ireland, and England, to name a few countries, are awash in debt, and their governments need to start reducing programs and policies that drive spending. Unions, particularly government unions, will balk at cuts, which will disrupt economies, and ironically government debt will increase. Do these Governments have the confidence to transcend politics and start pruning programs?
UK’s Conservative Prime Minister, David Cameron, in a recent speech preparing the public for his first budget, said, “The overall scale of the problem [state of the country’s finances] is even worse than we thought … decisions we make will affect every single person in our country. And the effects of those decisions will stay with us for years, perhaps decades to come.” How true!
Global stock market gyrations results from many factors including greed, fear, panic. People need to take control of their finances. Governments need to become better stewards of taxpayers funds. A day of reckoning is coming for many countries, USA and Canada, included. We must start to tell people as Cameron did that government must lower spending, which will affect people for decades. We must stop looking to government for all solutions. With less government, Canadians and Americans will be much better off.
Therefore, since I don’t think existing governments in North America and Europe will shrink, and cut unneeded programs significantly, global debt will linger, and stock markets will oscillate regularly. Be careful as you ride the cycles.
© 2010 Michel A. Bell
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