Have you noticed that the world is on a creeping - some (that would be me) would say cascading - slide into socialism?
It started with one giant step in the direction of economic socialism.
Economic socialism is specifically the shared risk the public has been yoked into pulling on behalf of banks.
The unmistakable and indelible footprints of socialism's latest forward march have been made by collectivist central bankers, pushed forward (at least that's the direction for them) by their constituents, the bankers of the world.
The bankers' jackboots are filled with stinking feet itching from the fungus of greed. And sadly, the sole of those boots bears the unmistakable "Made in America" stamp.
What's flooded into all those succeeding footprints is the stagnant future we all face. The march towards global hegemony of bankers' birthrights makes that evident.
It's not ironic that bankers espouse capitalist, free-market doctrines, but under cover of their ostensible handlers - their central bankers - prosper and propagate behind a Marshall Plan whose manifesto is socialized risk; it's sickening.
The moral hazard of socialized risk, of economic socialism, is unfettered.
The United States let the biggest banks in America get bigger. We let them bridle us, saddle us, and ride us into the ground. And they are all bigger now.
How can there be any free market discipline if there is no free market? How can moral hazard be corralled if there are no fences around the risks banks are allowed to take, given their size and power?
We're facing QE4ever (that's quantitative easing) on account of the banks being subject to lawsuits and an attack on their capital.
Oh, you didn't get that?
Here's the real reason we have stimulus to the nth degree here in America...
Fiscal Policy
Article Index
We're Deep In The March Toward Economic Socialism
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QE3 Is Strong Medicine for Dr. Copper
With QE3, Ben Bernanke just gave Dr. Copper a shot in the arm that should carry prices to new highs.
In fact, shortly after the U.S. Federal Reserve announced its decision to launch a third round of bond buying, copper rallied to $3.84 a pound on the Comex division of the New York Mercantile Exchange, up from around $3.35 in mid-August.
But that is only part of the story...
As "the only metal with a Ph.D. in economics' because of its widespread use in industrial applications copper is an excellent bellwether for the state of global economic activity.
And right now copper is predicting a major global rebound.
"Investors' expectations for global economic growth in the fourth quarter are rising and Dr. Copper is rallying," Andrew Rosenberger, senior portfolio manager at Brinker Capital told MarketWatch.
"Copper and other assets which are linked to global growth are taking the approach of rally now, ask questions later," he said.
For investors, there are lots of reasons to like copper right now.
Let's take a look...
In fact, shortly after the U.S. Federal Reserve announced its decision to launch a third round of bond buying, copper rallied to $3.84 a pound on the Comex division of the New York Mercantile Exchange, up from around $3.35 in mid-August.
But that is only part of the story...
As "the only metal with a Ph.D. in economics' because of its widespread use in industrial applications copper is an excellent bellwether for the state of global economic activity.
And right now copper is predicting a major global rebound.
"Investors' expectations for global economic growth in the fourth quarter are rising and Dr. Copper is rallying," Andrew Rosenberger, senior portfolio manager at Brinker Capital told MarketWatch.
"Copper and other assets which are linked to global growth are taking the approach of rally now, ask questions later," he said.
For investors, there are lots of reasons to like copper right now.
Let's take a look...
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Fed Meeting Today: Are You Ready for QE3?
Investors have prepared for the Federal Open Market Committee (FOMC) meeting today and tomorrow to end with the announcement of a third round of quantitative easing (QE3) - and that's a good bet to make.
Today's Fed meeting will likely end with more of the same information we've been hearing for months from U.S. Federal Reserve Chairman Ben Bernanke. It's been a year and a half since Bernanke first announced that short-term interest rates would remain near zero "for an extended period." That language will likely stay the same tomorrow, and the policy timelines could be drawn out even longer.
There is also no doubt that QE3 or some other meaningful economic stimulus measure is on its way.
Maury Harris, an analyst with UBS, declared in a recent note to clients that, "We now anticipate an announcement of another round of quantitative easing at the FOMC meeting on September 13th. We expect the easing will take the form of a six-month program of at least $500 billion, primarily focused on Treasuries."
Harris also added that, "We also expect the FOMC extends their rate guidance into 2015."
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Today's Fed meeting will likely end with more of the same information we've been hearing for months from U.S. Federal Reserve Chairman Ben Bernanke. It's been a year and a half since Bernanke first announced that short-term interest rates would remain near zero "for an extended period." That language will likely stay the same tomorrow, and the policy timelines could be drawn out even longer.
There is also no doubt that QE3 or some other meaningful economic stimulus measure is on its way.
Maury Harris, an analyst with UBS, declared in a recent note to clients that, "We now anticipate an announcement of another round of quantitative easing at the FOMC meeting on September 13th. We expect the easing will take the form of a six-month program of at least $500 billion, primarily focused on Treasuries."
Harris also added that, "We also expect the FOMC extends their rate guidance into 2015."
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Don't Let Fiscal Cliff 2013 Scare You from Dividend Stocks
Amid all the talks of fiscal cliff 2013, which we'll hit Jan. 1 if Congress doesn't act, some analysts are warning of the impact on dividend stocks.
That's because some of the tax increases associated with the fiscal cliff could deliver a hefty tax hike to dividend income.
But the possibility of higher dividend taxes doesn't mean you should ignore the sector altogether.
History shows that dividend-paying stocks have outperformed non-dividend shares even at a time when taxes were much higher. For income-seeking investors, any pullback in dividend-paying stocks as the fiscal cliff approaches may just be a buying opportunity.
Investors early to the game will enjoy dividend payments and also benefit from these companies' healthy market performance.
Fiscal Cliff Effect on Dividends
If nothing is resolved before year-end and Congress fails to take action, dividends received will be taxed as ordinary income instead of the current maximum 15%. Ordinary income tax rates are scheduled to revert to pre-2003 levels, with a maximum of 39.6%.In addition, a new 3.8% tax will be tacked on to help pay for the Affordable Care Act. For some taxpayers, dividend taxes would nearly triple.
But remember, before investors enjoyed the 2003 dividend tax breaks that put dividend taxes on par with capital gains taxes, payouts had been taxed for decades at ordinary income rates. For some, the tax was as much as 91% in the late 1950s and early 1960s, 70% in the 1970s and 50% in the early 1980s.
Despite those lofty tax rates, dividend stocks continued to maintain a prominent position in portfolios of income oriented investors, and these stocks continue to share their wealth with satisfied shareholders.
From the end of 1979 through July 2012, dividend-paying stocks in the Standard & Poor's 500 Index carried an annualized total return of 12.1%. That compares with a 10.7% return for nonpayers, according to data from research firm S&P Capital IQ.
MarketWatch did the math and calculated that an initial investment of $10,000 in the dividend bunch would have morphed to a whopping $408,000 over that time frame compared to $271,000 for the nonpaying group.
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QE3: Get Ahead of the Fed
The U.S. Federal Reserve has consistently pointed to high unemployment as a reason to deliver more stimulus, which makes this week a perfect time to announce quantitative easing, or QE3.
The Federal Open Market Committee (FOMC) meeting this week is fresh off Friday's Labor Department report that nonfarm payrolls increased by 96,000 jobs last month. Economists were hoping to see an increase of 125,000 jobs.
Unemployment fell to 8.1% from 8.3% as 368,000 people dropped out of the labor force.
The employment numbers were depressing - but for investors this was always a win-win situation.
If the jobs number had blown past 125,000 that would have been good for the markets - but so is a number that missed the mark.
That's because from whichever angle the Fed and Chairman Ben Bernanke look at this, the report is more fuel for the QE3 fire.
"This weak employment report, in jobs, wages, hours worked and participation is probably the last piece the Fed needs before launching another round of quantitative easing next week," Joseph Trevisani, chief market strategist at Worldwide Markets in Woodcliff Lake, NJ told Reuters last week.
Unemployment fell even though fewer jobs were added because the labor participation rate dropped to 63.5%, its lowest level in 30 years. The amount of underemployed and unemployed people is now above 25 million and the U-6 rate, the broad total unemployment rate which many consider to be a more accurate gauge of unemployment, stands at 14.7%.
With the rally the markets had last Thursday after the European Central Bank announced its new bond-buying plan, expect the markets to continue their bullish trend when Bernanke takes action.
That means now's the time for investors to prepare to profit from QE3.
The Federal Open Market Committee (FOMC) meeting this week is fresh off Friday's Labor Department report that nonfarm payrolls increased by 96,000 jobs last month. Economists were hoping to see an increase of 125,000 jobs.
Unemployment fell to 8.1% from 8.3% as 368,000 people dropped out of the labor force.
The employment numbers were depressing - but for investors this was always a win-win situation.
If the jobs number had blown past 125,000 that would have been good for the markets - but so is a number that missed the mark.
That's because from whichever angle the Fed and Chairman Ben Bernanke look at this, the report is more fuel for the QE3 fire.
"This weak employment report, in jobs, wages, hours worked and participation is probably the last piece the Fed needs before launching another round of quantitative easing next week," Joseph Trevisani, chief market strategist at Worldwide Markets in Woodcliff Lake, NJ told Reuters last week.
Unemployment fell even though fewer jobs were added because the labor participation rate dropped to 63.5%, its lowest level in 30 years. The amount of underemployed and unemployed people is now above 25 million and the U-6 rate, the broad total unemployment rate which many consider to be a more accurate gauge of unemployment, stands at 14.7%.
With the rally the markets had last Thursday after the European Central Bank announced its new bond-buying plan, expect the markets to continue their bullish trend when Bernanke takes action.
That means now's the time for investors to prepare to profit from QE3.
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Fiscal Cliff 2013: Global Concern is Growing
It's been a couple months since the Congressional Budget Office shared some negative news about the looming "fiscal cliff" - even suggesting a possible 2013 recession - and investors worldwide are starting to take the warning more seriously.
The fiscal cliff is the coinciding action of tax increases and spending cuts that will activate on Jan. 1, 2013 unless Congress and the White House take some action to either delay or change them.
Should these two actions combine, you'll watch $7 trillion be tagged onto the nation's debt over the next decade. This would come out to around $500 billion next year,according toCNN.
Not helping matters is that we've unofficially hit the middle of summer; the clock is ticking louder for the fiscal cliff as expectations for political stagnation instead of a resolution have increased ahead of Election 2012.
A recent Morgan Stanley (NYSE: MS) survey highlighted the fiscal cliff concerns.
According to MarketWatch, 65% of global investors - 71% of U.S. respondents - believe that "the fiscal cliff will cause significant uncertainty in markets for the rest of the year, but think policy makers will ultimately agree to extend most or all of the expiring stimulus and tax measures."
But only 24% of global investors believe the risks surrounding it are overblown.
The fiscal cliff is the coinciding action of tax increases and spending cuts that will activate on Jan. 1, 2013 unless Congress and the White House take some action to either delay or change them.
Should these two actions combine, you'll watch $7 trillion be tagged onto the nation's debt over the next decade. This would come out to around $500 billion next year,according toCNN.
Not helping matters is that we've unofficially hit the middle of summer; the clock is ticking louder for the fiscal cliff as expectations for political stagnation instead of a resolution have increased ahead of Election 2012.
A recent Morgan Stanley (NYSE: MS) survey highlighted the fiscal cliff concerns.
According to MarketWatch, 65% of global investors - 71% of U.S. respondents - believe that "the fiscal cliff will cause significant uncertainty in markets for the rest of the year, but think policy makers will ultimately agree to extend most or all of the expiring stimulus and tax measures."
But only 24% of global investors believe the risks surrounding it are overblown.
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Fiscal Cliff 2013: IMF Warns of Global Impact
Worries over the looming "fiscal cliff" are spreading, and implications of the scheduled tax increases have become a growing global concern.
The fiscal cliff is the coinciding action of tax increases and spending cuts that will activate on Jan. 1, 2013, unless Congress and the White House change or at least delay them.
Everyone has an opinion on the matter, and this week the International Monetary Fund added its two cents.
The IMF issued a fresh report Tuesday warning that failure to avoid the fiscal cliff in 2013 could put the brakes on the U.S. growth rate, pushing it under 1%. Such a slowdown poses great risk to economies worldwide.
The IMF said the global implications for early 2013 are a negative growth rate with "significant negative repercussions on an already fragile world economy."
"It is critical to remove the uncertainty created by the "fiscal cliff" well as promptly raise the debt ceiling, pursing a pace of deficit reduction that does not sap the economic recovery," the IMF said in its annual health check of the U.S. economy.
Under current fiscal cliff terms, the proposed spending cuts and tax increases would minimize the deficit by approximately 4% of GDP in 2013.
Lawmakers should, the IMF counseled, replace the fiscal cliff with a program of small deficit reductions in the short-term with a longer term fiscal sustainability program.
Christine Lagarde, IMF Managing Director, said at a press conference Tuesday that a small deficit reduction means cuts amounting to 1% of GDP next year. The downside risks to the U.S. economy as well as worldwide financial systems have deepened, she noted.
"We believe that fiscal consolidation is necessary but not just any fiscal consolidation. It has to be sensible and certainly not excessive," said Lagarde.
The fiscal cliff is the coinciding action of tax increases and spending cuts that will activate on Jan. 1, 2013, unless Congress and the White House change or at least delay them.
Everyone has an opinion on the matter, and this week the International Monetary Fund added its two cents.
The IMF issued a fresh report Tuesday warning that failure to avoid the fiscal cliff in 2013 could put the brakes on the U.S. growth rate, pushing it under 1%. Such a slowdown poses great risk to economies worldwide.
The IMF said the global implications for early 2013 are a negative growth rate with "significant negative repercussions on an already fragile world economy."
"It is critical to remove the uncertainty created by the "fiscal cliff" well as promptly raise the debt ceiling, pursing a pace of deficit reduction that does not sap the economic recovery," the IMF said in its annual health check of the U.S. economy.
Under current fiscal cliff terms, the proposed spending cuts and tax increases would minimize the deficit by approximately 4% of GDP in 2013.
Lawmakers should, the IMF counseled, replace the fiscal cliff with a program of small deficit reductions in the short-term with a longer term fiscal sustainability program.
Christine Lagarde, IMF Managing Director, said at a press conference Tuesday that a small deficit reduction means cuts amounting to 1% of GDP next year. The downside risks to the U.S. economy as well as worldwide financial systems have deepened, she noted.
"We believe that fiscal consolidation is necessary but not just any fiscal consolidation. It has to be sensible and certainly not excessive," said Lagarde.
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G20 Summit Bogged Down by a Shaky Global Recovery
The Group of 20 (G20) countries concluded their weekend summit with an outline for reducing budget deficits and a delay in global banking reform, but failed to create a unified policy as nations find themselves in different phases of economic recovery.
Leaders pushed decisions on global banking regulations to the agenda of the November session in Seoul, South Korea. The meeting's concluding statement expressed unity in countries' desires to reduce debt, but did little to alter austerity plans and stimulus measures countries have already created.
"With the common efforts of G20 members and the international community, the world economy is gradually recovering, but the foundations of the recovery are still not solid, the process is not balanced and there are still many uncertainties," said Chinese President Hu Jintao. "All this shows that the deeper impacts of the financial crisis have still not been surmounted, and systemic and structural risks to the world economy remain very grave."
The G20 communique underscored the countries' focus on achieving "growth friendly" fiscal policies while acknowledging that leaders must reduce the budget deficits, although policies and budget cuts should be tailored to suit each individual nation.
"The path of adjustment must be carefully calibrated to sustain the recovery in private demand," the G20 nations wrote. "There is a risk that synchronized fiscal adjustment across several major economies could adversely impact the recovery. There is also a risk that the failure to implement consolidation where necessary would undermine confidence and hamper growth."
Analysts said the divergent views on how to sustain economic recovery marked the lack of effectiveness of the G20 forum.
Leaders pushed decisions on global banking regulations to the agenda of the November session in Seoul, South Korea. The meeting's concluding statement expressed unity in countries' desires to reduce debt, but did little to alter austerity plans and stimulus measures countries have already created.
"With the common efforts of G20 members and the international community, the world economy is gradually recovering, but the foundations of the recovery are still not solid, the process is not balanced and there are still many uncertainties," said Chinese President Hu Jintao. "All this shows that the deeper impacts of the financial crisis have still not been surmounted, and systemic and structural risks to the world economy remain very grave."
The G20 communique underscored the countries' focus on achieving "growth friendly" fiscal policies while acknowledging that leaders must reduce the budget deficits, although policies and budget cuts should be tailored to suit each individual nation.
"The path of adjustment must be carefully calibrated to sustain the recovery in private demand," the G20 nations wrote. "There is a risk that synchronized fiscal adjustment across several major economies could adversely impact the recovery. There is also a risk that the failure to implement consolidation where necessary would undermine confidence and hamper growth."
Analysts said the divergent views on how to sustain economic recovery marked the lack of effectiveness of the G20 forum.
Fed Preparing Unorthodox Exit Strategy
The U.S. Federal Reserve may take an unorthodox approach to raising interest rates by paying interest on bank reserves rather than relying on traditional open market remedies, as it exits from its long-term fiscal stimulus programs, Reuters reported today (Tuesday).
Paying interest on reserves is mostly untested and would represent an unexpected twist in the Fed's response to the financial meltdown.
"In the old days ... the Fed controlled the federal funds rate with open market operations," Antulio Bomfim, a former Fed economist now with Macroeconomic Advisors LLC in Washington told Reuters. "Now, at least in this period when reserves are over-abundant, the way the Fed hopes to raise the federal funds rate will be primarily by raising the interest rate it pays on reserves."
Paying interest on reserves is mostly untested and would represent an unexpected twist in the Fed's response to the financial meltdown.
"In the old days ... the Fed controlled the federal funds rate with open market operations," Antulio Bomfim, a former Fed economist now with Macroeconomic Advisors LLC in Washington told Reuters. "Now, at least in this period when reserves are over-abundant, the way the Fed hopes to raise the federal funds rate will be primarily by raising the interest rate it pays on reserves."
Japan's Economic Growth Accelerates, but Deficit Raises Concerns
Stimulus measures in Japan helped the world's second-largest economy grow at its fastest pace in more than two years, but it's unlikely policymakers will reduce spending despite the nation's rapidly growing debt.
Gross domestic product (GDP) in Japan grew at 4.8% annual rate in the third quarter, surpassing all the forecasts of 20 economists polled by Bloomberg News. That follows a revised gain of 2.7% in the three months ended June 30, according to Japan's Cabinet Office. Japan's economy grew 1.2% on a quarterly basis.
"The turnaround in public investment has definitely contributed to the rebound in GDP, so if they do start to cut it'll weigh on growth,” Hiromichi Shirakawa, chief Japan economist at Credit Suisse Group AG (NYSE ADR: CS), told Bloomberg.
Gross domestic product (GDP) in Japan grew at 4.8% annual rate in the third quarter, surpassing all the forecasts of 20 economists polled by Bloomberg News. That follows a revised gain of 2.7% in the three months ended June 30, according to Japan's Cabinet Office. Japan's economy grew 1.2% on a quarterly basis.
"The turnaround in public investment has definitely contributed to the rebound in GDP, so if they do start to cut it'll weigh on growth,” Hiromichi Shirakawa, chief Japan economist at Credit Suisse Group AG (NYSE ADR: CS), told Bloomberg.