Fiscal Cliff
Legislation to avert the fiscal cliff passed both chambers of Congress yesterday. President Obama is expected to sign it into law today. In short, the bill lets a variety of taxes increase for wealthy Americans, averts most middle class tax hikes and leaves entitlement programs untouched. Although all of the details of the legislation are […]
Searching For Growth
The two areas that have helped the US economy grow since the 2008 collapse have been manufacturing and exports. Things may be changing, however, as we are beginning to see a real decline in exports – see chart below. The contraction in Europe is also starting to spread. This is not surprising as we are […]
Over the Cliff?
The “Fiscal Cliff” is the popular term used to describe the conundrum that we face at the end of this year when the terms of the Budget Control Act of 2011 are scheduled to go into effect. This Act’s combination of higher taxes and spending cuts would have a dramatic effect on the economy and […]
Difficult Few Weeks Ahead for the Euro
The Euro is likely to have a few rough weeks ahead that may cause indigestion for some at Thanksgiving. The problems in Europe still linger and, along with the fiscal cliff in the United States, likely will take center stage in the coming weeks. A couple of things coming up in Europe are: 1) The […]
Election Day Hangover
The stock market is reacting to the results of yesterday’s elections very poorly with the Dow Jones off by over 250 points as of the time of the writing of this update. Is this justified? In our opinion, much of this downward movement is justified for the following reasons: 1) Uncertainty. The Bush tax cuts […]
Pension, Election and Hurricane Reflections
Pension: There was a provision in the Highway Bill passed in July that allows companies to calculate their future pension obligations by using longer-term interest rates instead of the current low interest rates. The impact of this is that current earnings will be overstated for those companies that choose to use this method and pension […]
The problem with socialism is that sooner or later you run out of other people’s money – Margaret Thatcher, Prime Minister of Great Britain
In our last update, we talked about the Bavarians and Catalonians’ desire to separate from Germany and Spain respectfully. There is now a separatist movement in of all places – Belgium. Recently, in local elections, separatists had sweeping gains in Belgium. Venice now also wants to separate from Italy. What is interesting to note is […]
Self-determination – the EURO's end?
Saving the Euro, at any cost, has been a mainstay of politicians throughout Europe. It has been our contention that the Euro will eventually collapse because of the social stresses caused by the economic stresses of keeping it together. The unemployment rate in Spain is almost matching that in Greece and more people are forced […]
Our Open Letter to Ben Bernanke
Dear Ben: When the financial crisis hit in 2008, we were glad to have your expertise at the helm of the Federal Reserve because of your keen knowledge of the Great Depression. Your courageous moves of 0% interest rates and QE1 were steps in the right direction to ensure there was enough liquidity in the […]
Thoughts on Economy – Market Implications
We have all heard the saying “this time is different”, and in this case it may be. On the other hand, it may not be. The stock market has been heading higher the past few months despite economic data that continues to show global weakness. Below is a chart showing the Purchasing Managers Index (“PMI”) […]