According to Shah Gilani, the usual suspects are at it again and nobody but Elizabeth Warren is willing to push back. Read more...
- The Next Bank Meltdown Won't Be an "Accident"
- Paul Krugman May Be the World's Last Flat Earth Economist
- Why There's No Real Inflation (Yet)
- Why The Fiscal Cliff "Deal" is Spelled P-O-R-K
- Why Japan's "Lost Decades" Are Headed to America in 2016
- Here's What President Obama's Win Means For Your Money
- What the Last Roman Emperor Would Tell President Obama Today
- How the Fiscal Cliff will Deal a Blow to U.S. Defense Industry
- Recession 2013: Retail Sales Figures are the Latest Sign of a Slowing Economy
- Both Parties Have it Wrong
- Recession 2013: Prepare Your Portfolio with These Rock-Solid Dividend Payers
- U.S. Economy 2012: Jack Welch on What's Stifling Job Creation
- Five with Fitz: What I See When I Look Over the Horizon
- Obamanomics: What You Can Expect if President Obama Wins the Election
- What U.S. Consumer Spending Data Is Telling Us
- How Political Spin Skewed the U.S. Jobs Report
Emails uncovered by British media and a DC-based group show $32 trillion has been hidden in offshore accounts. Guess who the culprits are... Read more...
Two Senators have just introduced their own TBTF bill. It stands for “Terminating Bailouts for Taxpayer Fairness” and it’s a thing of beauty. Read more...
Shah Gilani pulls back the curtain on dangerous big bank shenanigans. The bottom line: The 2008 financial crisis could happen all over again. Read more...
Do you want the truth about what shape banks are in right now? Sure you can handle it? Shah Gilani explains why nothing has really changed. Read more...
Nobel Prize-winning economist and New York Times columnist Dr. Paul Krugman is at it again. He claimed earlier this week that fixing the deficit is important, but added that "doing it now would be disastrous." He also observed that the 10-year U.S. debt situation isn't really all that bad.
I don’t know how he can make that argument with a straight face.
For five years now, Dr. Krugman has argued that increasing U.S. government spending is vital to our nation's recovery. And for five years he's been dead wrong.
Dr. Krugman claims that "we" just haven't spent enough money... yet.
Here's why that makes him very dangerous...
According to Nobel Prize-winning economist Milton Friedman, "inflation is always and everywhere a monetary phenomenon."
Well, apparently not...
There's certainly plenty of cause for inflation today. Every central bank in the Western world is holding interest rates down, and almost all of them are printing money like it's going out of style. And the big deficits governments were running should be making inflationary matters even worse. Taken together, monetary and fiscal policies are far more extreme than they have ever been.
But today inflation is only running at around 2% - well below where it should be, according to Milton's monetarist theories.
What does it all mean?
Behind the scenes of the Fiscal Cliff debate, there was plenty of f-bombing, poison pilling, and grandstanding leading up to the deal - and that was before the members of Congress and the Senate actually got serious with their usual ultimatums, followed by earnest- looking sound bites and posturing. But what gets me really riled up is the amount of "pork" contained in the bill...
The hope is that Abe's promises of fresh stimulus, unlimited spending and placing a priority on domestic infrastructure will be the elixir that restores Japan's global muscle.
As a veteran global trader who actually lives in Japan part time each year, and who has for the last 20+ years, let me make a counterpoint with particular force - don't fall for it.
I've heard this mantra eight times since Japan's market collapsed in 1990 - each time a new stimulus plan was launched - and six times since 2006 as each of the six former "newly elected" Prime Ministers came to power.
The bottom line: The Nikkei is still down 73.89% from its December 29, 1989 peak. That means it's going to have to rebound a staggering 283% just to break even.
Now here's the thing. What's happening in Japan is not "someone else's" problem. Nor is it something you should gloss over.
In fact, the pain Japan continues to suffer should scare the hell out of you.
And here's why ...
The so-called "Lost Decade" that's now more than 20 years long in Japan is a portrait of precisely what's to come for us here in the United States.
Perhaps not for a few years yet, but it will happen just as we have already followed in Japan's footsteps with a "lost decade" of our own.
The parallels are staggering.
To continue reading, please click here...
Evidently, the markets are struggling, too.
As was widely expected leading up to the election, all of the major averages got slammed in early trading on news of President Obama's victory. Just over an hour into yesterday's session, the Dow dropped 262.51, the S&P 500 tumbled 27.58 and the tech- laden Nasdaq fell 59.55. Oil tanked 2.95% and $2.62 per barrel to $86.08 while 10-year bonds saw yields plummet 6.20% to 1.63%.
There is a bright side, though. Now that all the hoopla is over, investors can get down to business.
Here's what I'm expecting:
As one of the world's first true superpowers, the Empire's achievements included the world's first standing professional army, economic prowess, intellectual growth and governance principles that are commonly regarded as the basis for modern society.
But it is also remembered for its spectacular collapse in less than a century under the weight of bad debt, an overextension of the Empire, a collapse of morals that led to a deluded and self-absorbed political elite and reckless public spending that far outweighed collections.
Given the parallels to our situation, I can only imagine what Romulus Augustus, widely considered to be the last of the Roman Emperors, would tell President Barack Obama today about how to prevent the wholesale destruction of our own "Empire."
But it would probably go like this...
Cara praeses Obama, (Dear President Obama)
Like mine, your world is changing fast. No doubt it's very different from the one you thought you'd inherited. Your success will depend on new thinking and an eye to the future taken from lessons of the past.
I wouldn't be offended if you have never heard of me.
I oversaw the dying days of what you know as the Classic Western Roman Empire. My fall in September 476 marked the end of centuries of greatness and the fall of ancient Rome.
Some historians consider my departure as the beginning of the Middle Ages. I understand the nature of collapse: how it begins, how it progresses, and where it all ends.
As a historical footnote to a once great empire, here's my advice to you, Mr. President.
At the end of this year, current tax policies are set to expire and new ones will go into effect at the start of 2013. What Americans can expect if the policies are not extended is a painful combo of tax increases and spending cuts that will thrust the struggling U.S. economy back into a recession.
If U.S. lawmakers fail to act, scores of economists agree what we'll get is a $600 billion drag on the already sluggish economy. The tax implications have been widely discussed, but there has been little chatter about the impact on the defense sector, which stands to sorely suffer since it is subjected to half of the proposed spending cuts.
The Commerce Department reported Monday that retail sales dipped 0.5% in June, much less than analysts' forecasts of a 0.2% rise. The decline marked the first time retail sales had fallen for three straight months since late 2008, near the height of the Great Recession.
Most noticeable in the rash of declining sales was the 0.6% drop in motor vehicles and parts, an area that was widely expected to show an uptick.
Also showing a sharp slump were receipts for electronics and appliances which fell 0.8%. Sales of building materials sagged 1.6%, and receipts at gasoline stations dried up some 1.8% even while gasoline price fell during the month.
The report adds more fodder to the lingering hope that the Federal Reserve could launch another round of quantitative easing.
The dismal commerce numbers also add to the recent wave of weak economic data.
On Monday, the International Monetary Fund (IMF) cut is forecast for global economic growth and urged European policy makers to take more aggressive measures to curtail their crisis, while cautioning that China's economy is at risk for taking a hard fall.
Meanwhile, Reuters reported a poll released on Monday that revealed American companies have tempered any plans to hire workers, while a growing number of firms believe the mess in Europe is hurting sales. The poll showed nearly half (47%) of companies polled believe their sales have suffered thanks to the Eurozone debt crisis.
- Do you think that financial services should be more regulated or less regulated?
- Do you think that the Dodd-Frank Act (Dodd-Frank Wall Street Reform and Consumer Protection Act), signed into law two years ago on July 21, has hurt:
- You personally?
- Businesspeople or businesses you know of?
- The economy in general?
Here's my opinion; not that it matters that I'm an expert on the subject, or that I have 30 years in the financial services business, or that I own a couple of businesses, or that I'm getting back into the financial services game in a big way (more on that sometime in the future).
It's just my stupid opinion. It really doesn't matter that I'm right, either, because it's just my opinion; did I say that?
The correct answer (according to me) to question No. 1 is itself an economic postulate: "More is always better sooner." As in, we need more and better regulation, sooner rather than later. That's my final answer.
The correct answer, in other words, my answer, to question No. 2 is: no, no, and no.
I'm going to make this short and simple, because I want to hear from you on this subject. (Just click below and leave your answers in the comments section.)
Unfortunately, today's dots are pointing towards a recession.
With first-quarter GDP growth under 2% and a whole host of indicators moving in the wrong direction, it looks as though the U.S. economy has stalled.
That leaves income investors like us faced with a very important question: how do we best protect our portfolios from the stock price declines and dividend cuts that a recession would bring?
One simple answer is to invest in those countries that are not suffering recession. That opens up a world of possibilities.
For instance, you might consider investing in Japan, which grew at over 4% in the first quarter. Orix Corporation (NYSE: IX) is a name I like.
Or better yet you could invest in emerging markets where growth continues to sizzle.
That makes stocks like the Aberdeen Chile Fund (NYSE: CH) a good buy-especially considering the fund offers a dividend yield over 10%. The fund is attractive to me for two reasons.
First, it's because Chile is a well-run country, standing higher than the U.S. on several international business surveys. But more importantly, its dependence on copper and other commodities is not a problem unless the global economy as a whole goes into recession, which I don't expect.
With assets in primarily Chilean securities, the fund also offers investors a nice measure of diversification from the U.S. economy, since they can expect Chile to keep on growing-- even if the U.S. economy takes a step backwards.
But that doesn't mean you need to avoid the U.S. altogether, either.
In fact, there is a key indicator I'll discuss in a moment which will allow you to preserve your income and the value of your investments through all but the deepest recessions.
First though, you'll need to avoid a few pitfalls. As always, it's never just a matter of picking the stocks with the highest dividend yield. It's just not that simple.