Psychology and Economic Recovery - The Sky is Not Falling!

It's important to recognize that market psychology has a huge impact on how fast, when, and if, an economic slump will recover, especially in a consumption-based economy like ours in America. American investors need faith that companies will grow and prosper before investing in the stock market (the major source of expansion and growth capital for American companies). Americans won't spend their money (real or borrowed) unless they feel confident their employment future is well secured. Although partially true, new jobs don't just come from the rich and large, untaxed companies, they come from middle-class Americans spending their money (the "demand" part of the equation, remember?). American citizens must believe that their elected politicians are capable, honest and dedicated to helping America and not just themselves. In short, economic activity is based heavily on consumers' perception of the "future." Economic recovery in our system is based on employed consumers willing to spend their money.

I am a registered Republican, but I am deeply saddened by the rhetoric oozing out of the Republican camp. "The sky is falling" is the wrong message to send to Americans whose economic transactions are critical to our very economic recovery. With low consumer confidence and dampened reasonable optimism, our recovery can only move forward painfully slowly. The Democrats aren't much better as they paint a picture of economic bliss. Nobody seems to be truthfully informing the American people that their role in our economic recovery is what really counts. Everyone needs to focus on what's good for the whole and not what's good for the individual.

Taxation is an important tool to stimulate economic activity. The focus of tax reductions, however, should be on the group who can achieve the most effective impact on economic recovery: middle-class America. Handouts, generally implemented by Democrats to gain votes, don't produce responsible spending habits. Although income redistribution is an important element of our economic recovery, no one should have a free ride. Our legislators should stop emulating Robin Hood and responsibly execute their constitutional duties. A working public pays taxes and creates jobs through consumption. Too bad all of the bailout funds we spend on big industry didn't go toward infrastructure, new plants and more jobs; what a terrible waste of time and effort!

The political gridlock we've had for the past several years has created a sense of frustration and despair in many Americans and in most of the Americans who can affect our economic recovery the most. Petty political bickering continues while the rich get richer and the poor get poorer. Is that what America is all about? We clearly have a political structure that cares more about ego and self-enrichment that about American and its people. Unless political idealism, ethics and morality reemerge, the path back to economic prosperity will indeed be long and rocky.

After all of this doom and gloom, America will recover and retake its place in world leadership. It may take generations for the American people to wake up and realize that they are the key to success and their own prosperity. When our society finally accepts accountability and responsibility, the "sky's the limit." What will it take to get us there?