Financial Advisor Sees Bubbles Everywhere

Online, March 30, 2011 (Newswire.com) - Although Dennis Tubbergen typically stays extremely busy as a financial advisor, advisor to financial advisors, and talk show host, he manages to find time to write a financial blog and newsletter. Now Tubbergen is undertaking the writing of another book to go alongside the two books he has already authored in the past few years.

"I recently began work on a book that discusses my view of where the economy and markets may be headed given current circumstances," explains Tubbergen. "Twenty years ago, a man by the name of Larry Burkett, founder and president of Christian Financial Concepts, Inc., wrote a book titled 'The Coming Economic Earthquake.' In it he outlined the potential consequences of massive debt both public and private, oppressive and over-reaching government regulation, and the potential for an 'economic earthquake' resulting in a deflationary depression."

Tubbergen goes on to say that in his book Burkett stated he was not a prophet and that the timing of such an earthquake was very difficult to predict; however, Burkett was sure the cost of the U.S. government's policies would be high. After the Clinton tax increases of 1993 and the first crack at a national healthcare reform bill, Burkett thought the effects may be felt by the mid-90s, economically speaking.

"I believe that the consequences Burkett warned about are now possibly upon us, delayed only by adding even more debt to an already-strapped global financial system, allowing the world to 'extend the credit party' and delay the consequences," warns Tubbergen. "Now it's time to pay up and recover from the worst credit hangover in 80 years."

Tubbergen believes the next several years will be difficult economically.
"I also think that it will be possible not only to survive financially, but to succeed," notes Tubbergen. "But the politicians and the government will likely not be much help. Instead of being part of the solution, they will continue to be part of the problem."

After Burkett wrote an updated version of his book in the early 1990s, President Clinton was elected to a second term, and although Clinton claimed to have balanced the budget, he never accomplished that feat.

"One look at the national debt outstanding confirms that," states Tubbergen. "In 1992, the year that Clinton was elected, the total outstanding national debt was about $4 trillion. When he left office at the end of 2000, the total outstanding debt was almost $5.7 trillion. Although the national debt increased only nominally from 1999 to 2000, there was an increase."

Tubbergen claims the economic prosperity that seemed to abound during President Clinton's second term was largely policy related. The Taxpayer Relief Act of 1997 reduced the capital gains tax on assets held for 18 months or more from 28% to 20% while continuing to tax dividend income at the same rates as capital gain income. According to Tubbergen, that helped fuel the bubble in the dot.com stocks, as many stock investors began to shift their focus from dividend-paying stocks to growth stocks.

"From 1997 to 2001, the percentage of S&P 500 stocks paying dividends fell from approximately 85% to 70%," quotes Tubbergen. "In 2001, a recession officially began. Was there real economic expansion in the late 1990s? Or, was this economic prosperity simply an illusion, borrowing against future production in order to enjoy a party today at the expense of tomorrow?"

In his March 8, 2011 blog Tubbergen shows a chart of Gross Domestic Product (GDP) ranging from 1947 to 2004. The chart shows that when one looks at GDP over the Clinton timeframe, economic growth actually slowed while the dot.com bubble was raging. The chart also illustrates that from 1997 to 2001, GDP growth fell from a high of 5% annually to negative growth during the official recession.

Tubbergen concludes, "Based on these facts, we might assume that the prosperity of the late 1990s was actually an illusion, fueled by a new technology bubble that was inflated due in part, in my opinion, to U.S. tax policy and accumulation of debt by consumers."

To read additional excerpts from his upcoming book, visit Tubbergen's website at www.dennistubbergen.com

Dennis Tubbergen has been in the financial industry for over 25 years and has his corporate offices in the USA Wealth Management Building in downtown Grand Rapids, Michigan. Tubbergen is CEO of USA Wealth Management, LLC and has an online blog that can be viewed at the above website. His weekly talk show The Everything Financial Radio Show is simulcast on two Michigan metro stations and also airs to over 600,000 financial advisors, with recent podcasts available at www.everythingfinancialradio.com.

The opinions expressed herein are those of the writer and not necessarily those of USA Wealth Management, LLC. This update may contain forward-looking statements, including, but not limited to, statements as to future events that involve various risks and uncertainties. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual events or results to differ materially from those that were forecasted. Therefore, no forecast should be construed as a guarantee. Prior to making any investment decision, individuals should consult a professional to determine the risks, costs, benefits and fees associated with a particular investment. Information obtained from third party resources is believed to be reliable but the accuracy cannot be guaranteed.