US Economy
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U.S. Economy Forecast: Five Ways to Profit in 2011 – Even With a Double Dip Recession
It's been a dull year for the U.S. economy.
But don't expect a repeat in 2011.
In fact, as we enter the New Year for the U.S. economy, investors face some major risks. Should the U.S. Federal Reserve opt to maintain its record-low-level of interest rates, it's very likely that we'll see the kind of virulent inflation that will send commodity prices skyward, and inflict some real long-term damage in the process.
With higher rates, the U.S. economy could experience its second downturn in three years, the kind of "double-dip" recession that would boost an already scary jobless rate - while also sending U.S. stocks into a bearish tailspin.
With uncertainty the watchword for the New Year economy, U.S. investors need to position themselves to cash in should the currently anemic U.S. advance continue, while at the same time making sure to protect themselves against a potential downturn.
As contradictory as that might sound, it is possible to do both.
For top investment ideas for 2011, please read on...
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Don't Let the Third-Quarter GDP Revision Sour You On Stocks
There has been a lot of hand wringing and tongue clucking about the latest revision to U.S. gross domestic product (GDP). But the reality is that the third-quarter U.S. GDP data isn't as important as most people think.
In fact, there are plenty of reasons to remain bullish on stocks.
The second read on third-quarter GDP growth came in at 2.5%. That is nothing like the 9% growth of China, the 8% of Singapore or the 5% growth of Thailand. It's not even like the 4% growth that we expect from of a full-strength U.S. economy.
However, forward indications of economic growth suggest the economy is stabilizing.
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Why the Federal Reserve's Quantitative Easing Strategy Won't Save the US Economy
With a second round of "quantitative easing" underway, the U.S. Federal Reserve wants us to believe that it is doing its duty as the nation's central bank – promoting maximum employment, keeping a lid on inflation and making sure that long-term interest rates remain at reasonable levels.
This is known as the Fed's "dual mandate," since the inflation and interest-rate objectives are really the same goal.
But here's a shocker: The Federal Reserve's real dual mandate is to enrich the banks the central bank is created by and works for – and to cover Congress when its laws enrich banks at the expense of jobless American taxpayers.
Understanding how quantitative easing works is simple. Understanding how banks and Congress are manipulating this economic tool is just a tad more complicated. Understanding how quantitative easing will impact your life – and your financial future – is just a matter of understanding the facts
For additional insights on the Fed's true workings, please read on... -
Deficit Reduction Plan Promises Painful Prescription For U.S.
A bipartisan White House commission this week announced a sweeping proposal to slash the federal deficit by hundreds of billions of dollars a year by taking aim at virtually every sacrosanct area of U.S tax and spending policy, including Social Security and Medicare, middle-class tax breaks and defense spending.
But while the proposal has enough teeth to put a real dent in the mushrooming deficit, the political reality is that it has virtually no chance of passing through a divided Congress without major changes.
"Mathematically it apparently works...[but] politcally, it is going to have a lot of trouble getting support from more than just the two co-chairs," Stan Collender, a former Democratic House and Senate budget analyst and managing director of Qorvis Communications in Washington told Bloomberg News.
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Money Morning Mailbag: Mortgage Rates Slip But U.S. Housing Market Still Unfriendly for Some Seeking Refinancing
U.S. mortgage rates dropped to a record low this week as the U.S. Federal Reserve started its second round of quantitative easing (QE2).
The 30-year fixed loan rate fell to 4.17% from 4.24%, Freddie Mac (OTC: FMCC) said yesterday (Thursday). The average 15-year rate fell to 3.57% from 3.63%.
Lower rates pushed up refinancing applications by 6%, according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey for the week ending Nov. 5. The refinancing gauge has more than doubled since the beginning of 2010.
