Thank Europe For Friday's Market Upheaval [View article]
It's highly unlikely the Jobs program will pass and the uber liberal NYT ran a piece today saying reductions in payroll taxes would not spur job growth as the math is not compelling. And the idea the program would be paid for by cuts is laughable as any cuts would be largely illusory and in future years, increasing the deficits and debt in the short term because of asymmetry between spending and savings.
As the author notes, the real problem is in Europe where Greece is not implementing measures approved by parliament in the face of widespread opposition to spending cuts and labor market reforms. Resultantly, there is now open talk about Greece leaving the euro area and fending for itself.
Wolfgang Schäuble, the German finance minister, said if Greece does not meet the conditions it agreed to, as assessed by monitors from the International Monetary Fund, European Central Bank and European Commission, then payments will stop. He then added, Greece would then need to determine how to access financial markets without help from the troika.
The prime minister of the Netherlands on Wednesday said that countries receiving aid should either cede control over their budgets or leave the euro zone. “Countries which are not prepared to be placed under administratorship can choose to use the possibility to leave the euro zone."
There are fissures all across Europe with little support for transfers to profligate and reluctant states. It's only a matter of time before Greece, and perhaps others, leave the zone. And when this happens the markets will shudder as the costs will be staggering.
Money Supply Explosion: It Doesn't Matter [View article]
Without doing the math, we know that GDP is stagnating and it must follow that the spending multiplier must be contracting while the money supply expands which is not uncommon during a balance sheet recession.
Wall Street Breakfast: Must-Know News [View article]
Trader you are spot on. This guy and his rogue band from Chicago know how to fight dirty, party, talk smack and engineer elections but they are way out of their DEPTH (pun) when it comes to solving complex problems that require initiative, judgment, decisive thinking and keen intellect. As George Wills recently noted, Obama delivers beautiful speeches but usually is no relationship between the rhetoric and the topic being discussed. It's simply lyrical language. Nobody is home.
Wall Street Breakfast: Must-Know News [View article]
U.S. bankruptcies near five-year high. The pace of U.S. bankruptcies in May reached the second-highest daily level since 2005, as an improving economy failed to significantly help Americans struggling with debt payments. May saw 133,459 bankruptcy petitions, a 10% rise from the year before. If there's any silver lining to be found, bankruptcies usually peak in an economic cycle between six and eighteen months after an economy bottoms out, so the high May figure could potentially signal the road to recovery. ______________________...
That would be true unless June is higher but I hope you are right.
Preview from Europe: Fear Trumps Hope as Dow Falls Below 8,000 [View article]
In my mind, it is clearly the global financial crisis that strikes fear and terror into this market. While banking and the real economy are intertwined, yesterdays action was driven by the former.
The comment by Roubini, State Street earnings, a report the BAC would need an additional $80 billion of capital and the international stories all contributed to the massive sell-off.
Credit will not thaw until the global credit crisis is resoved and it is my belief the host of measures already taken will prove insufficient. Sorry for being such a pessimist.
Cramer's Mad Money (1/6/09) China Saves the World [View article]
I watched the show and noted Cramer's comments about China. In thinking about investment themes for the new year, China shows up on the radar screen because it's size and the fact that it is still growing.........maybe 5% down from 10%. Wireless and other consumer sectors appear interesting.
With respect to the stimulus package and China fueling exports, I would urge caution. Reuters quoted Shanghai Citigroup Ken Peng as saying, “The stimulus package is big, but it’s actually a combination of a lot of things that have already been announced.”
A glaring example of China’s PR machine in action is that the $600-billion package included nearly $3 billion that Beijing had already earmarked for rebuilding in Sichuan province and other regions devastated by the earthquake earlier this year.
The stimulus plan also called for some $292 billion on the railway system. But Ting Lu, a Merrill Lynch analyst, reported that most of it had been previously allocated. He pegged the real number at $58 billion of new funds — still a sizeable number but far short of what China led the world to believe.
The US consumer has been the foundation for our economy and the growth of many foreign economies. Supporting this spending habit has been mortgage equity withdrawals and balooning credit card and installment debt.
Now envision a scenario in which unemployment increases to 9% to 10% and credit is curtailed and/or reduced. It is exactly this we are in the midst of and it will be some time before the consumer regains his footing.
I would have liked the author to develop a currency thesis for the dollar. As of late, the euro has appreciated against the dollar.........helping the conversion of overseas earnings through FX conversions.
Thank Europe For Friday's Market Upheaval [View article]
As the author notes, the real problem is in Europe where Greece is not implementing measures approved by parliament in the face of widespread opposition to spending cuts and labor market reforms. Resultantly, there is now open talk about Greece leaving the euro area and fending for itself.
Wolfgang Schäuble, the German finance minister, said if Greece does not meet the conditions it agreed to, as assessed by monitors from the International Monetary Fund, European Central Bank and European Commission, then payments will stop. He then added, Greece would then need to determine how to access financial markets without help from the troika.
The prime minister of the Netherlands on Wednesday said that countries receiving aid should either cede control over their budgets or leave the euro zone. “Countries which are not prepared to be placed under administratorship can choose to use the possibility to leave the euro zone."
There are fissures all across Europe with little support for transfers to profligate and reluctant states. It's only a matter of time before Greece, and perhaps others, leave the zone. And when this happens the markets will shudder as the costs will be staggering.
Money Supply Explosion: It Doesn't Matter [View article]
Wall Street Breakfast: Must-Know News [View article]
Wall Street Breakfast: Must-Know News [View article]
______________________...
That would be true unless June is higher but I hope you are right.
Preview from Europe: Fear Trumps Hope as Dow Falls Below 8,000 [View article]
The comment by Roubini, State Street earnings, a report the BAC would need an additional $80 billion of capital and the international stories all contributed to the massive sell-off.
Credit will not thaw until the global credit crisis is resoved and it is my belief the host of measures already taken will prove insufficient. Sorry for being such a pessimist.
Cramer's Mad Money (1/6/09) China Saves the World [View article]
With respect to the stimulus package and China fueling exports, I would urge caution. Reuters quoted Shanghai Citigroup Ken Peng as saying, “The stimulus package is big, but it’s actually a combination of a lot of things that have already been announced.”
A glaring example of China’s PR machine in action is that the $600-billion package included nearly $3 billion that Beijing had already earmarked for rebuilding in Sichuan province and other regions devastated by the earthquake earlier this year.
The stimulus plan also called for some $292 billion on the railway system. But Ting Lu, a Merrill Lynch analyst, reported that most of it had been previously allocated. He pegged the real number at $58 billion of new funds — still a sizeable number but far short of what China led the world to believe.
Is the U.S. Consumer Really Dead? [View article]
Now envision a scenario in which unemployment increases to 9% to 10% and credit is curtailed and/or reduced. It is exactly this we are in the midst of and it will be some time before the consumer regains his footing.
Some Investment Themes for 2009 [View article]