Dear Friends:

The fear factor is taking over the markets, the economy and the public psyche. And no matter what programs or photo ops the new administration stages, it won't help restore public confidence if the rhetoric and the policies are surrounded by gloom.

This is not to say that "positive thinking" can turn the stock market around, or restore jobs, or create incentives for business to expand production, or even for consumers to start spending again. That would require real incentives -- things like lower tax rates on risky investments or capital gains. Or tax breaks for entrepreneurs to create businesses and expand hiring.

The combination of fear and politics is especially combustible. It blinds us to the consequences of rash actions. It turns one group against the other, whether based on political thinking or on perceptions of "winners and losers." America doesn't need class warfare, generation warfare, tax warfare or culture warfare. As the late Dr. Adrian Rogers said: "You cannot multiply wealth by dividing it." (Special thanks to Bert Dohmen -- for reminding me of that statement.)

History shows that America does best when we are mostly united in optimism, no matter which political party is in power. Reagan had it. Kennedy had it. And President Obama has it within him to rally that kind of confidence. What our country needs right now is a little positive thinking.

Positive thinking: One of the great motivational books of all time, "The Strangest Secret" by Earl Nightingale, was written 75 years ago. The "secret" was this: "We become what we think about!"

And all we think about, and talk about, these days is economic failure. The latest headlines about unemployment are just the latest example. Yes, more than 8% of the population is unemployed, but that means 90% are still working!

This is not meant to be a paean to Pollyanna. But it is a request that we start putting all this bad news in perspective. Especially the media, and the administration.

Last week Sheila Bair, who's done a great job as head of the FDIC, inadvertently raised the fear level with the announcement that the FDIC fund was running low. How ridiculous! They have a direct line of credit from the Treasury for $30 billion. And does anyone think the government won't extend more help to prevent a run on the banks?

Now there's a bill in Congress to extend the FDIC's line of credit at the Treasury to $500 billion by dodging TARP limitations. This is politics at its worst. Everyone knows that whether labeled TARP or Treasury, all the money comes out of the same pocket -- yours!

Then the president bashed the AIG ( AIG) bailout revision. Of course, this failing company could not pay 10% interest in the money it received! Despite the phenomenally stupid credit default guarantees this company wrote, the government won't let them fail and destroy the retirement funds of America's teachers, invested in VALIC annuities (AIG products).

We're scaring people beyond belief. Here are excerpts from emails I received in just the past two days, regarding the safety of money in banks and insurance companies:

"My husband and I are in our seventies. We have our entire retirement fund in bank CDs. Every day we hear more dire reports concerning our bank . And now the FDIC is almost bankrupt. We are worried and feel we should take our money out of the bank, but where would we put it?"

The simple fact is that the weight of the government stands behind all insured bank deposits. The Savage Truth is, there aren't enough trees on the continent to print all the paper dollars that would be necessary to give every depositor his or her cash if they wanted it! We all understand that our banking system is built on confidence. Political bickering only undermines confidence, and the system.

"I have retirement annuities with AIG. How is AIG insured and should I move it out of AIG into another company or different product in another company or a CD?"

Despite the fact that there is no federal backing of insurance company products, the government will not let major insurers fail. Most large insurers have reserves for unexpected events, whether hurricanes, earthquakes or financial uncertainty. But the government can't let big insurers fail because they'd bring down the system. So let's stop complaining over the details of the AIG rescue, and revisions, and get back to work on the economy.

President Kennedy, a positive example: Economic growth solves most of these problems. Tax cuts are the prescription for economic growth. That is not a partisan political analysis. Proof? Try this statement from President John F. Kennedy on July 17, 1963:

"The most urgent economic business before the nation is a prompt and substantial reduction and revision of federal income taxes in order to speed up our economic growth and wipe out our present excessive unemployment."

President Kennedy is remembered not only for his tax cuts, but for his positive attitude. He said we could put a man on the moon. We believed him and we did it.

We can't let fear rule today. Let's try the power of positive thinking, for a change. Let's think about prosperity. Yes, we need sensible tax-and-spending policies to get us there. But let's stop looking down, and start talking up! At least we'll be thinking in the right direction. And that's the Savage Truth.
Terry Savage is an expert on personal finance and also appears as a commentator on national television on issues related to investing and the financial markets. Savage's personal finance column in the Chicago Sun-Times is nationally syndicated. She was the first woman trader on the Chicago Board Options Exchange and is a registered investment adviser for stocks and futures. Savage currently serves as a director of the Chicago Mercantile Exchange Corp.