If your mother asked you where to
invest her money, what would you tell her? This was the question posed
to Jim O’Neill, chairman of Goldman Sachs Asset Management, on Friday. After rambling something about India perhaps doing a little better
than expected Mr. O’Neill said that he is still in the camp that
America’s “choppy” markets will probably recover toward the end of this
year.
America’s saving grace is that much of the world’s focus is still on
the problems in Europe. While that lasts, attention is distracted from
America’s equally precarious financial condition. But Europe is at least
dealing with its financial issues. All America’s leaders can seem to do
is kick the can down the road. So where is the best place to put your money? Not betting on American consumers, according to O’Neill. Even though
Europe is making the headlines, America’s weak employment picture poses
a bigger threat to global markets than the European debt crisis,
according to O’Neill. There is a “lack of self confidence” in corporate
America, he said.
But this is the state of the world today. Nothing is safe, and even the
brightest financial minds don’t have answers to our most pressing
problems.
For those who missed it, weekly jobless claims
for the most recent reporting period stood at 377,000, which is
uncomfortably close to the 400,000 mark that is often considered the red
line for an “improving economy.” The jobless rate rose to 8.2 percent. With employment down, it is hard to count on consumers to save the economy.
“If people don’t have cash and they have limited access to credit, than
there’s just so much that they can run up in terms of bills,” says
Jerry Webman, chief economist at Oppenheimer Funds.
Not betting on American consumers, according to O’Neill. Even though
Europe is making the headlines, America’s weak employment picture poses a
bigger threat to global markets than the European debt crisis,
according to O’Neill. There is a “lack of self confidence” in corporate
America, he said.
But unless people spend more, why would America’s debt-based,
consumption-oriented economy create more jobs? Who are businesses going
to sell more stuff too? Americans already have too much stuff—and have
the credit card bills to prove it.
