Will More Stimulus Dollars Really Help?
President Obama this week sent a letter to members of congress asking for billions of dollars in âemergency aid’ to prevent the layoffs of school teachers, police officers and firefighters. Here’s an excerpt of the story from FoxNews:
President Obama is pressing Congress to approve emergency aid money to support economic recovery and help avoid widespread layoffs of public workers, the Washington Post reported Saturday.
Congressional leaders received a letter from the president asking for almost $50 billion for distribution to state and local governments, saying that increased spending is “urgent and unavoidable,” the Post reported. The money would protect the jobs of teachers, police and firefighters.
July 14, 2010
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Will Switzerland Undermine the European Economic Recovery?
A Bloomberg article published today highlighted the recent push by the Swiss to attract businesses to the country via tax breaks. This from the article (emphasis added):
Schaffhausen, the northernmost part of Switzerland, used tax breaks to lure Tyco Electronics Ltd. from Bermuda to a new base on the River Rhine as Swiss cantons offer a tonic to European austerity.
The agreement gives the worldâs biggest maker of electronic connectors, whose top managers sit in Pennsylvania, a discount on the cantonâs 16 percent corporate tax rate for 10 years, said Schaffhausen Executive Vice President of International Affairs Marcus Cajacob. The exact terms are confidential, he said.
“It makes Schaffhausen attractive,” said Priska Roesli, a senior director in Tycoâs finance department, which nestles between mural-clad houses and a 16th century fortress. “It is such a small canton, you have access to the authorities.”
Schaffhausen, the size of the New York City borough of Queens, is one of 26 Swiss cantons offering tax deals to attract hedge funds, biotechnology firms and Internet entrepreneurs, and companies fleeing tax havens such as the Cayman Islands that are encountering international pressure. The practice threatens to undermine efforts by countries seeking to tame budget deficits that ballooned in the wake of the global financial crisis.
June 28, 2010
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Who is Right About the Market?
A Bloomberg article published recently (June 2, 2010) offered two very different opinions as to the future direction of the US Stock Market. This from the article:
The biggest monthly drop in the Standard & Poor’s 500 Index since February 2009 is ratifying Mohamed El-Erian’s prediction for a new normal of below-average returns. Analysts say not so fast.
Combined price estimates from more than 2,000 forecasters tracked by Bloomberg show the S&P 500 will rise 27 percent in the next year, the fastest projected rate since February 2009, data compiled by Bloomberg show. The rally above 1,350 will be led by industries most tied to the economy, according to analysts who boosted individual share projections by an average of 0.9 percent in May, the 14th straight monthly increase.
The estimates show Wall Street firms are discounting El- Erian’s assertions as well as Europe’s credit crisis and instead focusing on economists’ growth projections, which call for U.S. gross domestic product to expand 3.2 percent this year and 3.1 percent in 2011. Analysts are telling investors to buy landlord AvalonBay Communities Inc. and tractor maker Deere & Co. to benefit from the fastest expansion in six years.
So who is right? Read the rest of this post »
June 25, 2010
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What I Learned About Fiscal Responsibility and Politicians
With all the attention thatâs been given to the Greek debt situation, the budget woes of most states in the US is no longer front page news. But, maybe it should be.
The interactive map above illustrates each stateâs budget deficit on a per capita basis. Note that only North Dakota, Wyoming and Montana have no budget deficits. Read the rest of this post »
June 17, 2010
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Is the Market Correction Over?
Many analysts, bullish on domestic stocks, believe the market correction that weâve seen over the past weeks is about over, pointing to the fact that the markets are oversold â a term analysts use to describe the state of the market when prices have fallen so far from the mean or average that a rebound has to occur. Of course, depending on the time frame that one is using, the term oversold is pretty subjective.
Is the market decline over? Are stocks ready to rebound?
In my opinion, in a word, NO. Read the rest of this post »
June 14, 2010
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Catching Wild Pigs
A friend of mine sent this to me this week. If political statements bother you, donât read this entry. When I read it, it rang pretty true. Read the rest of this post »
June 11, 2010
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Housing Continues to Falter
A âWashington Postâ article on May 14, 2010 revealed that the housing market will continue to be soft. Over one year ago, I forecasted that real estate values would continue to decline through 2012 at a minimum. Unfortunately, that appears to be the case. This from the article (emphasis added): Read the rest of this post »
June 9, 2010
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Greece to Take Legal Action Against US Banks?
A Bloomberg article yesterday quoted Greek Prime Minister George Papandreou who said that Greece may consider taking legal action against some US Banks due to the difficult financial circumstances in which Greece finds itself. This from the article:
Greece is considering taking legal action against U.S. investment banks that might have contributed to the countryâs debt crisis, Prime Minister George Papandreou said.
âI wouldnât rule out that this may be a recourse,â Papandreou said, in response to questions about the role of U.S. banks in the crisis, in an interview on CNNâs âFareed Zakaria GPS.â The program, scheduled for broadcast today, was taped on May 13. Neither Papandreou nor Zakaria mentioned any banks by name.
U.S. stocks fell and the euro slumped on concern that Europe wouldnât be able to contain the debt crisis stemming from Greece. The Standard & Poorâs 500 Index declined 1.9 percent May 14, while the euro fell below $1.24 for the first time since November 2008.
Papandreou said the decision on whether to go after U.S. banks will be made after a Greek parliamentary investigation into the cause of the crisis.
âGreece will look into the past and see how things went,â Papandreou said. âThere are similar investigations going on in other countries and in the United States. This is where I think, yes, the financial sector, I hear the words fraud and lack of transparency. So yes, yes, there is great responsibility here.â
June 7, 2010
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Is the âSpend Now â Pay Laterâ Game Over?
This post is an excerpt from the current âMoving Marketsâ newsletter. You can get a free copy by requesting it on this site.
There were lots of market and economic headlines over the past week or so. One of the biggest being the Greek financial bailout package. Over the past several months, weâve been commenting that the Greek debt situation had the potential to be one of the catalysts that might initiate the second phase of the economic downturn we think is possible. And, markets around the world have not favorably reacted to the news.
Itâs been our point of view that the economic mess in which we found ourselves a couple of years ago was largely a result of excessive debt, or as we like to describe debt, borrowing against future production. This is not news to those of you who have been reading âMoving Marketsâ for any length of time. Read the rest of this post »
June 4, 2010
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Would You Loan Greece Money? You Might Be
Iâve got to get this off my chest.
You might be surprised to learn, as I was, that in a roundabout way, American taxpayers may be helping with the Greek bailout. Yep, in spite of our own ridiculous levels of spending and extreme fiscal irresponsibility, we might be shipping US Dollars to Greece to help them subsidize their own extreme fiscal responsibility. If this is happening, Iâm outraged. And, you should be too.
How could this possibly happen? Read the rest of this post »
June 1, 2010
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