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Statistics can paint a picture that reflects our current values and our future prosperity. 1. 15% of us are in a breadline. Altogether, there are now almost 46 million people in the United States on food stamps, roughly 15 percent of the population. That’s an increase of 74 percent since 2007, just before the financial crisis and Continue reading We Produce Breadlines and Deficits With spending and investment portfolios declining in the midst of a household debt contraction our chances of going into recession are rising. Household spending fell in June for the third straight month; never in the past five decades has this happened outside of a slump. The Standard & Poor’s 500 Index plunged 16.8 percent in 11 days, Continue reading Spending and Investments Decline, Chance of Recession Rises The national discussion on how to get our debt problem under control and reduce our spending raises many various arguments. A recent example offered that our pluralistic society is causing the givers to resent giving to the takers. Now, Arthur Brooks, president of the American Enterprise Institute, shares that only by allowing people to struggle to improve Continue reading Our Federal Debt and the Pursuit of Wealth and Happiness Marc Faber believes bonds are currently a bad investment. “I disagree with the bond bulls that are basing their case on a deflationary environment. In such an outcome tax revenues would collapse and stocks would fall heavily.” Should stocks fall the Fed would initiate more quantitative easing. Faber says people shouldn’t be buying bonds with yields trading Continue reading Dollar will Drop so Don’t Invest in Dollar Assets – Marc Faber A financial crisis initiates a sudden flight to safety among bondholders – widening interest-rate spreads, diminishing the private sector’s desire to sell bonds to raise capital and encouraging individuals to save more and consume less as they, too, hunker down. Thus bond prices rise, and interest rates drop. As rates fall, firms see that they Continue reading A Liquidity Trap – Monetary Policy Unable to Stimulate the Economy The attempt by households and governments to reduce debt is showing that it is difficult to do. Today, U.S. consumers have more mortgage and credit-card debt than they did five years ago, and the U.S. budget deficit is worsening. The government and individuals alike are still heavily in debt. U.S. consumer debt has skyrocketed by 37% Continue reading Attempt to Reduce Debt is Difficult and Impacts Global Economy The U.S. government can choose one of two economic paths: Austerity or irrelevance. Our debt burden and money-happy efforts to avoid the difficult parts of an economic crisis have left an economy virtually immune to stimulus yet devoid of actual growth in jobs or GDP. On the other hand, clamping down on stimulus in a world Continue reading Our Economy: No-Growth and Immune to Stimulus New York University professor Nouriel Roubini said two days ago that in the U.S., a failure to address the budget deficit risks a bond market “revolt.” President Barack Obama’s administration has been negotiating with Republicans, who control the House of Representatives, over cutting the federal government’s long-term shortfall and raising the debt ceiling. “We’re still running Continue reading Debt a Threat to Global Economy – Roubini Even if Fed Chairman Ben S. Bernanke decides to not implement QE3 to provide more quantitative easing, it’s now clear that rates everywhere will stay unusually low for longer than many investors expected. And with the most developed economies barely growing, Asia will be getting an even bigger share of the loose cash careening around the Continue reading Asian Perspectives on U.S. Quantitative Easing The focus of families, statehouses and the White House is “balance sheets”. Reducing liabilities is what everyone is doing. Mohamed A. El-Erian of PIMCO tells us it is a global phenomenon: Balance sheets, both across and within economies, are still out of equilibrium in what remains an excessively asset-based global economy. This raises the question Continue reading Balance Sheets are the Focus in Age of Deleveraging |
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