Monday, July 5, 2010
Analyst: Obama has U.S. economy in 'death spiral'
A new analysis of the U.S. economy shows that since 2007, the private sector has lost 10.5 million jobs while the public sector has added 720,000 jobs, creating a "death spiral" for the nation's economy.
The study comes from The Free Enterprise Nation, a nonpartisan national membership/advocacy organization for individuals and businesses that make up the private sector.
The analysis was done using statistics about employment data from the U.S. Bureau of Labor Statistics.
The recession of the last two years exacerbated the larger problem that already was in place, it revealed. (more)
stock market investing economy real estate America gold silver mutual funds bonds charts
Goldman Sachs warns on global economic slowdown
As Britain enters a self-imposed period of austerity to deal with an historically large budget deficit, Jim O'Neill, one of the world's foremost economists, said that events beyond our shores could pose more of a problem than any domestic economic problems.
Writing in The Sunday Telegraph, Mr O'Neill, head of global economic research at Goldman, said: "What is clear is that a persistently struggling US, in addition to a major disappointment in China, would not be good news for the rest of us."
Mr O'Neill, the man who first identified the BRIC economies of Brazil, Russia, India and China as the future for global economic growth and who has previously been bullish on the recovery, goes on to pinpoint growth in China as the main concern for the global economy.
He does say, though, that the present slowdown in China is to be welcomed as long as it is controlled.
"If we are wrong (about estimates for growth in China) especially significantly, then the world will be a very challenged place, particularly for those living on self-imposed domestic austerity," he said. (more)
Saturday, July 3, 2010
Government for Sale: How Lobbyists Shaped the Financial Reform Bill
Two weeks ago, along a marble corridor in the Rayburn House Office Building in Washington, I watched about 40 well-dressed men (and two women) delivering huge value for their employers. Except that we, the taxpayers, weren't employing them. The nation's banks, mortgage lenders, stockbrokers, private-equity funds and derivatives traders were. They were lobbyists — the best bargain in Washington. Capitol Tax Partners, for example, is one of 1,900 firms that house more than 11,000 lobbyists registered to operate in Washington. Last year, according to the Center for Responsive Politics (CRP), firms like Capitol Tax were paid a total of $3.49 billion for unraveling the mysteries of the tax code for a variety of businesses. According to Capitol Tax co-founder Lindsay Hooper, his firm provided "input and technical advice on various tax matters" to such clients as Morgan Stanley, 3M, Goldman Sachs, Chanel, Ford and the Private Equity Council, which is a trade group trying to head off a plan to increase taxes on what's called carried interest, a form of income enjoyed by the heavy hitters who run venture-capital and other types of private-equity funds. (Time Warner, the parent company of TIME magazine, is also a client of Capitol Tax Partners.) (more)
We’re Going Broke
Best-selling investment author Bill Bonner is the founder and president of Agora Publishing, one of the world's most successful consumer newsletter companies. Owner of both Fleet Street Publications and MoneyWeek magazine in the UK, he is also author of the free daily e-mail The Daily Reckoning.Let's see...what's in the news today?
Stocks went down again yesterday. The Dow got trimmed by 96 points.
Gold, on the other hand, went up $3 to $1,245.
The first half of the year came to a close with the S&P 500 down 6%, global stocks down 10%, oil down 5%, Chinese stocks down 27%, the euro down 14%.
What was up? Gold. Plus 13%.
There are two major pieces of unfinished business in the markets. Stocks have still not completed their bear market drop. Gold has not fully realized its bull market either. (more)
3 Beaten-Down Stocks With Huge Reserves
S&P 500 companies have never held more cash than they do today. Microsoft (MSFT: 23.27, +0.11, +0.47%), Cisco Systems (CSCO: 21.13, -0.13, -0.61%), Google (GOOG: 436.55, -2.94, -0.66%) and Apple (AAPL: 246.94, -1.54, -0.61%) together sit on more than $128 billion in cash and short-term investments. More than two-thirds of countries don't make that much in a year, counting wages and profits for all of their citizens and companies.Such hoarding generally serves stock investors poorly. They should receive larger dividends, but instead they are left to hope that before the money is wasted it's spent on something that results in a higher share price. However, at the moment, mountains of cash might give confidence to investors who fear another sharp market decline. In a downturn, companies can use cash reserves to snap up struggling competitors on the cheap, or to repurchase their own shares.
The three companies below aren't nearly as dominant as the aforementioned ones, and two are struggling to compete with them. What they have going for them is that their cash reserves are huge when calculated as a percentage of their stock market values, and that they're adding to them by generating abundant free cash from operations. Whether all that financial firepower will be put to good use is unknown, but turnarounds are surely easier when companies can fund them properly without taking on excessive debt. (more)
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