Smart Money with Keith Springer Saturdays at 1PM and Sundays at 6AM on NewsRadio KFBK 93.1 FM and 1530 AM

Critical Economic and Market Commentary May 20, 2010

Posted At : June 28, 2010 11:51 AM

Economic Update

The World in a Nutshell

The debt crisis in Europe is scaring the bejesus out of the world markets. There is an underlying fear that the EU and euro will unravel if the crisis continues. Other EU nations – in particular the two largest, Germany and France – are being asked to bear the largest portion of the expense and risk associated with aid needed to “rescue” Greece and other nations.

At the same time, Germany and France are demanding that the nations at risk adopt austerity plans designed to reduce their sovereign debt through reduced government spending and higher taxes, which will crimp economic growth. All of this will have a negative effect on world growth as demand from these countries will be severely diminished.

Here at Home

There continue to be signs that the U.S. economy is expanding, albeit slowly. Manufacturing and production numbers keep chugging along and are gaining momentum.

Going forward, there are two conditions necessary for a sustainable recovery:
1.   Increased employment
2.   Increased consumer spending

Get them, and we’re on our way. Don’t and it’s Good Night Irene.

Either way, it’s time to play D. One important issue to keep in mind is that we are experiencing Deflation, NOT Inflation. You’d better have the right portfolio in a deflationary economy or you’re toast.

Regards – Keith Springer, President of Springer Financial Advisors

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