Online Trading Academy Officer John O'Donnell Offers His Take on Economy

Originally published on, August 7, 2010.

John O'Donnell says it doesn't matter which direction markets move, money can be made.

That's fortunate for market traders, because O'Donnell, chief knowledge officer for Online Trading Academy, isn't optimistic about the U.S. economy. He believes there is a good chance of a double-dip recession.

"I see no incentive at all for the small business man or woman to create new jobs," he said. "I think the solution to this mess is through the small business sector, and I just don't see it."

Online Trading Academy is an Irvine, Calif.-based global network of more than 30 financial education centers. The Wisconsin franchise, based in Germantown, is owned by Scott Turriff of De Pere. O'Donnell, who has appeared on CNBC, Bloomberg, CNN and Fox Business networks, will be one of the guest speakers at a free seminar Monday at the Online Trading Academy office, 738 Ford St., Kimberly. The event will be from 8 a.m. to 5 p.m.

O'Donnell contends that government, under both Presidents George W. Bush and Barack Obama, has followed the wrong course for dealing with the recession, and he fears the country is headed for a Japanese-style stagnation of the economy.

"They took their federal debt from 52 percent of GDP to 200 percent of GDP; they propped up zombie banks and corporations. Simultaneously, the private sector took its debt from 240 percent of GDP to 113 percent of GDP," he said.

He referred to recent reports that American corporations are hoarding $2 trillion in capital, and individual Americans have increased their savings rate from less than zero to 6 percent.

"If it did not work in Japan, tell me why it's going to work in America," he said.

Add to that changing spending patterns of baby boomers, who are retiring and worried about whether they will outlive their savings, the ongoing real estate finance crisis and failure to create more jobs, and another recession seems likely, he said.

"The weight of the evidence is very compelling. The (Federal Reserve Board) is nearly out of bullets," he said.

O'Donnell expects a record turnout at the polls this year.

"My feeling is there are a lot of very angry people. The (baby) boomers are in the street again and they are angry," he said. "They are angry at all politicians regardless of party. There will be a warning shot that will tell all politicians you better get your house in order. This move toward socialism is totally unacceptable."

O'Donnell said investors can protect themselves through education.

"There are several keys to success. We have to recognize we are in a unique period of economic history. We are in a credit purge. We need to know what's happening in the world credit market," he said. "They need to have the right set of tools and they need to be in the right support system."

Prices for investment instruments — whether stocks, bonds or commodities — are going to increase, decrease or stay flat, and there are ways to make money in each situation, he said.

"Volatility is our friend. We have tools and are trained to handle volatility. Generally, the public does not have that," he said.

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