Ratcheting Down 2012 Growth Already!

"While the crash only took place six months ago, I am convinced that we have now passed the worst and with continued unity of effort we shall rapidly recover." - Herbert Hoover

At the time that Herbert Hoover made these comments he was President of the United States.  The statement was made on May 1, 1930 right at the beginning of the great depression.  The statement may have been made out of utter lack of knowledge but I believe that he truly thought that he could fix the problem with some tinkering and some back to grindstone effort of the common man.  This was not the case and the problems of the great depression dragged on for years to come.

One important point to remember about politicians and leaders is that they have their own agenda and saying that we will be in for some tough sledding is not going to attract votes.  They are forced in some respects to propagate their story in the hopes that enough people believe them and change the inevitable.  Time and time again this has proven to be incorrect.  The only way to solve the problem is to take the bull by the horns and wrestle it to the ground.  In this case the debt problem is not just going to magically disappear because we are in January, we have to find a way to pay it down without crimping growth!

I received my daily email from JP Morgan today and they are already ratcheting down their growth forecasts for 2012.  According to my calendar it is only January 13.  So in only 13 days they have decided that they are too aggressive with their 2012 outlook?  In true salesman style they moved their growth numbers around so that the net effect was minimal move for the year (down only 0.1%) but they lowered the first quarter growth rate from 2.5% to 2.0% or a 20% reduction.  This is significant and in my eyes still way too high.  It is only a matter of time until all the other major houses follow.

In another headline this week Bill gross the head of Pimco the largest bond fund in the world commented that investors ought to expect far lower rates of return on their investment in the future than they had become used to.  I have been crying that message for at least a year but now maybe people will listen as it comes from Bill.  Regardless of this the point is that the market is not a place to be for 2012.  With that said you need to understand that a return of 4% on your cash is as good as it can get unless you want to take on inordinate amounts of risk.

Your local stock salesman will want an investment in stocks and it is your job to tell him to find you something else in which to invest.  I still believe that it is too early to get into housing and by my calculation the best risk to reward place that you can go is my very own fixed rate deposit investment.  On a risk adjusted basis there is nothing that comes close.  I know that this sounds very much tongue in cheek (great Steve bash the stock guys and push your own investment) but the fact of the matter is that based on my 2012 outlook of downside everywhere there is nothing that compares with this investment on a risk adjusted basis.  I implore you to seriously look at the product to save yourself from an impending dump in the market and to earn a good rate of return on your assets in a safe, secure manner.