Who is currently investing in America?
Every day it seems like another country is either going broke, engaging in a civil war or being destroyed by a natural disaster. Is the world falling apart or is it going through a cleansing process? America is the wealthiest and most secure country in the world, yet a mere three years ago we were on the brink of financial destruction.
In 2007 it appeared as if there was not much wrong with America. Yet by 2009 the entire financial system had collapsed. Fast forward two years. Although the government printed trillions of dollars to support the economy and the banking system, interest rates are still very low. We are "relatively" back to normal. So who is currently investing in the United States? Everyone! I believe America is the best bet in the world. Let's review some of the issues affecting America.
Europeho thought of this Euro idea? How many wars have been fought in Europe? Why would the Greeks or the Germans bond together? I certainly don't blame the Greeks for being Greek or the Germans for being German. Get over it, cancel the Euro. I liked the funny money they used to print, the upside for those of us who love to travel will be much cheaper visits to Greece, Spain and Italy. Do I worry about this? Not at all. The european banks will survive. I believe America will always be a better place to invest than Europe. The truth is that we work harder - ask the Europeans. This is August - we aren't shut down for the summer, not a bad idea though.
The Middle East
If I hear another person talk about "democracy" in the Middle Eastâ€¦ History is a great guide. Democracy as we know it, is a long way off. The Middle East works on brute force and that is what we are witnessing. Before Facebook and twitter and CNN we were not exposed as graphically to the brutality of the dictatorships and regimes in that region of the world. The strong will survive; unfortunately, the weak will live in chaos. Hopefully there will be change in the future. What we really care about is the price of oil. I believe there is only one long term direction for the price of oil; that's up.
America has many solutions to the oil problem and we need to employ them. In fact, we have so much natural gas we don't know what to do with it. We produce electricity with natural gas in California. Electric cars are such a simple and obvious choice. If you don't like the price of oil, buy an electric car now, or drive less and wait a few years. In the future there will be many more choices of electric cars.
I believe that we have high unemployment in America because we have so many under-educated people. This has been going on for twenty years and now it is affecting us profoundly because our economy is so knowledge based. If you attend a good college and study something relevant, trust me, you will get a job. What if you drop out of high school? What can you do? We need to invest more in education. It's that simple.
I also think that in this economy there are many people doing freelance work. At eleven in the morning, at any Starbucks, you can see men and women sitting at tables drinking coffee, working and taking business calls. Are these people employed? Unemployed? These "Starbucks workers" are earning money working outside of traditional businesses, but the employment numbers just don't show them as employed. Companies have learned that they can be more profitable by hiring contractors and focusing on efficiency rather than adding full-time employees.
In this environment, when employees are so expensive, fewer people are doing more work. Companies are making record profits yet they are not hiring new people. Today our workers are using computers in offices; they are not working in factories making widgets. Widgets are made everywhere else in the world. Widgets are made in countries that don't have unions, intellectual property and employment lawyers or minimum hourly wages that are four times more than the daily wage elsewhere. Over time we will adapt to this reality and we will have lower unemployment numbers. It will just take more time.
I believe that America is the best place in the world to invest your money - simple as that. US companies have record profits, we innovate the most amazing things and we have an incredible drive to succeed. In fact, America is in the best position to be the leader of the world, economically as well as militarily. If I hear another person tell me China is going to do this or that, I'll tell them to try to get a straight answer from a Chinese politician about the state of the economy there. Try Googling or Facebooking in China. You can't. Why? Because the country would fall apart. And Russia, forget about it. Brazil or India - way behind. America is the greatest, and I say - bet on it.
President and CEO
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This material contains forward looking statements and projections. There are no guarantees that these results will be achieved. Investing involves risk including potential loss of principal.