Posted on 23 June 2010.Standard Podcast: Hide Player | Play in Popup | Download
Thursday, June 24, 2010
He warns that time is running out to do something to avoid such an economic doomsday.
The Treasury also estimated that total U.S. debt will top $13.6 trillion this year and rise to 102 percent of GDP by 2015, and that publicly traded debt would reach $14 trillion by 2015, up from last year's debt of “just” $7.5 trillion.
“The problem is that growing GDP when debt levels are so high is extremely difficult,” Pento wrote in a note to investors. (more)
• The Conference Board’s Leading Economic Index (LEI), and
• The Weekly U.S. Leading Economic Index published by the Economic Cycle Research Institute.
I use them both in my analytical work to better understand the economy’s actual position in the business cycle. And in 2007, they gave me clear, recession warning signs. (more)
Congress is planting the seeds of the next big bank bailout.
Attention is focused on the House-Senate conference on a once-in-a-generation rewrite of the rules of finance. Meanwhile, a provision added, almost unnoticed, to a help-small-business bill that passed the House last week would allow all but the 100 largest banks to pretend they haven't made bad loans. The goal is to prompt them to lend more readily to small businesses.
The provision would permit more than 7,800 banks, with nearly $3 trillion in assets among them, to spread losses on bad real estate loans over six to 10 years instead of recognizing reality immediately. (more)
Europe is on sale.
A friend of mine left this week for Paris and a charming Left Bank hotel for less than $200 a night. A quick glance at some Internet travel sites indicated a slew of bargains, including cruises of the Greek isles for travelers who want to contribute to the country's struggling economy.
With the euro worth about $1.23, it might be time to book a long-delayed visit to a euro-zone country. But it’s not only hotels and restaurants that are attractively priced. Everything priced in euros is cheaper than it was as long as a buyer is paying in a currency that has appreciated against the euro. That’s not just dollars, especially since China said over the weekend that it would allow the yuan to appreciate. (more)
Can't control your finances? Get yourself a coach.
Financial coaching is a relatively new concept, and it's available -- free -- to folks who realize they're headed for trouble as well as to those in crisis situations like collections or foreclosure.Most programs are set up for low-income workers. Action for Boston Community Development, for example, is designed for Beantown residents living at 200% or less of the federal poverty level.
Other programs don't have income limits. After all, it isn't only the working poor who have financial problems. Tiffany, a 33-year-old Connecticut resident, says she and her husband both have good jobs. But one month they couldn't find the money to pay a utility bill. (Last names have been withheld for privacy.) (more)
While there's no "sure thing," one can look back over the last ten years and find various asset classes that have steadily outperformed the S&P 500 and might continue to do so in the future.
In this article we'll take a look at two of these and examine how they've fared and how and why they might continue to outperform in the future. (more)
Acknowledging significant cracks in the economic recovery, Ben Bernanke and his U.S. Federal Reserve colleagues voted again Wednesday to keep priming the pump with record-low interest rates.
The decision to leave the central bank’s key interest rate ultra-low at zero to 0.25 per cent wasn’t unexpected.
That being said, trading the move may be a great way to increase that pile of cash and buy all the more oz’s once gold does exhibit some weakness.
Surprisingly the all-time high gold prices are attracting little more than a headline, or if a story is done it’s usually bearish. That’s bullish!
Sentiment is abysmal. If this were tech stocks, it would be touted everywhere and talk of a bubble would not even be tolerated, let alone given credence. (more)
It sure looks like a bunch of country's central banks have caught the gold bug. The dollar might be the world's reserve currency, but something about the U.S. being $13 trillion in debt -- or roughly the equivalent of its gross domestic product -- has other nations taking on greater reserves of the yellow metal. (more)
Were I without family ties, I might consider expatriating to one of the quiet, out-of-the-way towns in Central- or South America that I drove my VW bus through in 1977-1978. Spending a year and a half living life at a slower pace and speaking in a second language was world view- opening for this California born American. Through it all, I met many wonderful, amazingly generous people. Unfortunately, I also saw a lot of grinding poverty and misery. I finally lost count of how many times I stared into the barrel of a loaded submachine gun held by an edgy 19 year-old soldier at some border crossing or roadblock.
My experience was life-changing, and made me appreciate the blessings of life in the United States - such as they were then. Thirty years later, I am not sure what I would feel coming home from such an adventure. I am saddened that governments at all levels have completely lost self-control. I am distressed that corporations now find it more profitable to pay off politicians for special subsidies and protections than to compete. I am depressed that Americans now walk away from commitments and belly up to the entitlement bar without any compunctions. We have spent the last forty years eating our seed corn and frittering away our wealth on trifles. (more)
By that measure there has been plenty of opportunity of late. The Dow Jones industrial average (INDU) registered triple-digit gains or declines 22 times between April 20 and June 9, the most since the financial crisis of late 2008. Here, then, are three approaches to volatility that anyone can take -- provided you have the stomach and the attention span to do so. (more)