Today on MoneyLife with Chuck Bentley
Friday, January 15, 2010
Rusty Leonard: Update on the Economy
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December was the worst month for job loss since the recession began. Defaults and repossession of homes is over 300,000 a month. More foreclosures are expected in 2010. The economic outlook is tough for Main Street, but a recovery seems to be happening on Wall Street. Rusty Leonard is here today to help us understand why. Rusty Leonard is the Founder and CEO of Stewardship Partners Investment Council. Rusty's an expert investor, and he’s also going to help us make wise investment decisions in light of current conditions. Rusty takes a hard and realistic look at the economy. I'm concerned about the disparity between Wall Street and Main Street.
Democrats are committed to passing it while they have the power no matter what the political consequences this year. They figure they have to start somewhere and will improve it in future years. Republicans won’t be able to undo it. Some people will be helped by health care reform by gaining access to health care insurance. But the cost will be high. Rusty says there are better ways to do it than this. This bill is being crafted secretly; there's a lot of uncertainty about it, which is discouraging investment. Rusty predicts the bill will probably be a big mess and a negative overall for the economy. Government already has huge spending problems outside of health care. It's borrowing money and living beyond its means. Rusty understands the sentiment of wanting to help people but there’s got to be a better way. Democrats say it will reduce the deficit, most people don’t believe that. The bill could be rescued by common sense, but that seems to be lacking in Washington. Meanwhile, a day of reckoning for the debt is coming. Cap and Trade is about setting caps on greenhouse gas emissions by businesses. Companies that don’t reduce emissions have to buy credits from companies that are. The bill attempts to create an economic incentive for reducing emissions. It's not the best solution and it hurts developed countries most. Rusty doubts this legislation will be passed this year. Rusty says we're looking at higher federal government deficits in 2010. Eventually investors will refuse to buy U.S. bonds. That will force elected leaders to face reality. He doubts it will happen this year and expects more debt to be added. Democrats will focus on trying to get people back to work to keep power. Inflation is unlikely in 2010. Rusty believes the economy is still oversupplied. Factories are not operating at capacity. Some inflation is still possible because of the stimulus spending and the monetization of the debt. Anything developing countries are buying are the things most likely to inflate, such as commodities. Anything developing countries are selling won’t inflate. New housing starts may be up slightly this year. It's difficult to make predictions in this area because the economy has partially recovered. Rusty expects interest rates to start slowly rising, mortgages won’t be as easy to get. That will make it more difficult for people to buy a home. People will be saving more than spending. Meanwhile, Rusty says the stock market will likely be up early this year, but it’s vulnerable. It could be easily damaged by interest rates going up too fast, or a geo-political crisis. He cautions investors against being super-aggressive. You should understand the risks with any investment. I've been encouraging you to get out of debt this yar, and Rusty agrees you should try to limit spending and focus on paying down debt. If you have debt when the economy goes into a recession or depression, you’ll be liable for it. That could be disastrous to your personal finances. I hope you have a balanced economic perspective for this year. No one knows the future and there is a lot of uncertainty. We can expect a bumpy ride. Next week, I'll do a program on the Top 5 Trends for 2010. I've also addressed this in the January Money Matters newsletter. Also, I'll be appearing at two events next month as part of the God Provides™ film tour. I'll be in Atlanta, February 11, at Hebron Baptist Church and Chattanooga, February 18, at Ridgedale Baptist Church. These events are family friendly and free, bring your children. We'll be showing Abraham and Isaac and the Widow and Oil films. You can register here. I encourage you to see God as your provider during these difficult economic times. I hope you’ll make plans to be there if you live in those areas. If you do, please say hello and let me know you're a MoneyLife listener. |
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7-Step Solution to the Economic CrisisIt is time we stop looking to the federal government and mobilize the grassroots of this nation to bring about the economic change that is desperately needed. |
Is Welfare Scriptural?Welfare was transferred from the church because the church neglected it. It can be recovered, and the church can become a leader in caring for the needy. |
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Morality and EconomicsThe decline in moral standards and values not only affects our spiritual and emotional welfare, but it directly influences our value system. |
Federal Reserve SystemAlthough the Federal Reserve may not always operate in the best interest of the nation, it’s regulatory use is presently the law of the land. |
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Other Resources: |
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Today we’re going to talk about the state of the economy as we start 2010. Do you have predictions? Send them to 
Rusty says health care reform legislation is now at the reconciliation stage between the House and Senate versions. He believes a compromise bill will emerge.
