Before you invest any money, you must do some research. You must find out which companies are doing the best and what market trends are like.
Right now, the state of the world does not indicate that now is the best time to invest. There are many warning signs of potential downward slopes on future market graphs.
One of these warning signs is an increase in taxes. Currently, the United States debt is tremendous at almost 14 trillion.
The plan right now is to use $100 billion to pay off part of this debt. This money is going to come from taxes, but the government has other expenditures as well.
These expenditures must also be covered. This means that the government is going to need more funds in order to cover its expenditures.
The best way to raise this kind of money is to raise taxes. Taxes are going to be raised especially now that the tax cuts Bush implements for those making over $200,000 per year have expired.
When the government takes this money, the average citizens have less to spend on creating and building up their businesses. In addition, business owners will be less likely to take risks because they have less money with which to fall back on.
It is estimated that for the $100 billion used to pay off the debt, GDP will decrease by $300 billion. The United States GDP is not doing very well right now either.
These combined things indicate that the United States economy could tip back into a recession if barely touched. This makes the risk of investing in the market significantly higher.
The second warning sign that this may not be the time to invest is the state of Europe’s economy. The economies of the United States’ trade partners will also have an impact on the United State’s market.
Most of the countries in Europe are also struggling with debt and a fear of facing the truth. The book keeping standards in these countries are also much lower.
This means that more people can get away with more false financing. Of course, people in the United States get away with mistakes in book keeping as well.
The third warning sign that indicates that right now is not the best time to invest is the state of China’s economy.
China has one of the largest economies in the world. Their economy also indicates the state of the world economy.
Right now, China’s stock market is down by 20 percent this year. This does not bode well for the rest of the world.
Many believe that China’s economy indicates where the world is going because their economy turned up before the United States’ did. Some view China as a hopeful sign.
However, a quick look at the housing market also indicates foreboding of the future. China’s real estate market is severely worse that the real estate market in the market’s worst parts of California.
Going back to the United State’s debt, it does not look very good. The total debt of government, personal, and business debt is about 390 percent of gross domestic product.
This is a record high, even for the United States, and the debt is still growing. Most businesses and average citizens are striving hard to lower their debt and to be free of their financial commitments.
They are going through a process called deleveraging. Deleveraging is when the business pays off as much debt as possible in order to be more attractive to customers and investors.
Unfortunately, the government is continuing at full steam ahead. They do not seem to be cutting their spending or paying off the debt as much as they definitely should be.
Most of the debt pulled out by businesses and average citizens is productive and will contribute to the economy. For example, an average citizen gets a loan to build a business.
After awhile, his business will earn money, he will pay off his debt, and his business will be a contributing member of the economy. In contrast, the government’s debt is not productive.
The worst sign of all is that the world is struggling so much during a time of general peace. Most of the time, these kinds of economic struggles only come during times of war…
Tags: Finance, investing, money