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Whether you’re a Republican or Democrat, or whether you like it or not, what’s going on in the financial markets affects us all.
On Aug. 4, we saw the Dow Jones Industrial average drop more than 500 points, the worst one- day drop since December 2008.
Not even a better-than-anticipated jobs report released the next day allayed fears — the market at one point dropping by as much as 200 points and ending in positive territory only when good news about the Italian economy was announced.
But last week’s overall market loss has the unwanted distinction of being one of only three weeks since World War II that has had a weekly decline of this magnitude.
The markets and the economy are inseparable. And for the retired teacher, civil servant, or blue collar worker who has never owned a share of stock in their lives, they’re in the markets whether they know if or not.
Everyone’s retirement plans, both public and individual, involves participation in the markets, as do university endowments, charitable foundations and a myriad of other entities that seek investments necessary to preserve and grow their funds.
Add to that, governments at all levels sell their bonds in the financial markets and pay interest to the investors who buy them. And whether or not they buy them, or how much interest will be paid, is subject to the risk and reliability of a government to pay the debt it’s incurred.
So when government fiscal policies begin to strangle and penalize business and create excessive debt as a result of irresponsible spending, it ultimately impacts our markets.
We are all aware of our massive federal debt that’s handicapped our economic recovery, but added to this is the precarious fiscal health of many of our states and municipalities, which includes significant unfunded obligations to their pension programs which, by the way, invest in our markets. And when those investments go down, their unfunded liability only increases.
We have a financial crisis in this country exacerbated by a loss of confidence and fear — the latter made worse by the politically motivated scare tactics of Mr. Obama in the past few weeks when he said the government wouldn’t be able to pay social security checks if he didn’t get a debt ceiling increase acceptable to him.
We need calm, knowledgeable leadership, and we need common sense economic policies that grow our nation’s economy. We need a Balanced Budget Amendment to the Constitution.
The future of your nest egg, public or private, will be far better off with it.
Allen Weh is a former president of the state Republican Party and former gubernatorial candidate.