So, Who's Going to Bail Out the Consumer?

By: Joseph_Toronto

Since the consumer is now and forever the great engine of all economic activity and growth representing approximately 70% of GDP, doesn't it make sense to re-liquify the balance sheets of the consumers/taxpayers who are arguably in worse shape than any bank, corporation or local/state government?

Isn't it the consumer/taxpayer who is really the most technically insolvent and literally bankrupt (judging by the massive increase in bankruptcy filings)?

If consumers' balance sheets were solvent and they weren't defaulting on debts, would there be any toxic waste assets in the banking system?

When the consumer/taxpayer gets a tax rebate, refund or “cash”, even if they don't spend it, doesn't it always end up as a bank or savings deposit in the system somewhere thereby entering the monetary base or system reserves?

Why do consumers/taxpayers seem to be the very last to get the attention of our government “of the people, by the people, for the people” or any attention at all from their lender of last resort?

Did consumers/taxpayers make any worse economic decisions or judgments in getting into too much debt than did the largest and “most responsible” of our banks and corporations when they became overleveraged and exposed to insolvency from a downturn(and who also are the beneficiaries of the recent massive bailouts)?

I'm just sayin', there seems to be a way to fix the economy and it seems to be to fix the balance sheets of the individual engines of economic growth and activity, the consumers/taxpayers who thereupon would then become able to “fix” (in aggregate) the balance sheets of their servants, the banks and corporations through savings/expenditures. Until the consumer gets fixed, no amount of easy money can find its way into the economy. And until that happens, we'll be looking at a few lost decades (aka, Japan and The Great Depression), which is the amount of time it will take for the consumers/taxpayers to fix their balance sheets themselves.

Very Best Regards,

Joseph Toronto

http://joesinvestoblog.com

Joseph Toronto, has managed stock and bond portfolios for 26 years for some of the largest institutions in the west. He began in 1982 as a portfolio manager and analyst for the LDS Church Investment Trusts. In moving to the Trust Division of West One Bank he became senior investment officer and managed assets in excess of $100 million. Later, as the senior portfolio manager of Pacific American Investors, Inc. he managed stock and bond portfolios for high net-worth individuals nationwide. In 1993, Mr. Toronto founded Affiliated Investment Advisors, Inc., as a registered investment advisor for serious investors seeking professional management for superior safety and returns. Mr. Toronto is a Chartered Financial Analyst and is a member of the Salt Lake City Chapter of the Financial Analysts Society and the Association for Investment Management and Research. He has a Master's degree in investment securities and a B.A. degree with a dual major in finance and management.

Currently, Affiliated Investment Advisors, Inc. manages investment portfolios for retirement plans, profit sharing plans, individuals, IRA's and other trusts.  We believe Affiliated offers professional portfolio management with superior investment returns while steadfastly safeguarding and protecting your capital. As a registered Investment Advisor, Affiliated's portfolio management services are “fee only” and takes no commissions or performance incentive.  It is not a stock broker or financial planner and does not sell any investment or insurance fund or product. joe@aiadvisors.com

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