Showing posts with label tax. Show all posts
Showing posts with label tax. Show all posts
Thursday, April 15, 2010
Happy Tax Day
This day always presents an excellent opportunity to complain about the tax rate in the United States. The graph below might bring you some comfort from a personal tax perspective. All countries will be raising their taxes in the years to come to pay for our 28 year "credit orgy". We will likely stay in the same relative position which is lower than most. It's a great blessing to live in this country.
Saturday, April 10, 2010
The Wall of Worry
On http://www.financialsense.com/, Kelley Wright makes an interesting case for market correction:
"The above notwithstanding, many in the punditry and on the sell side of Wall Street are trumpeting that investors are missing out on a new secular bull market by focusing too much on the ever present wall of worry. Let me tell you why I think they will rue the day. Germany is not going to come to the rescue of Greece, or any other country for that matter. In fact, I would suggest that we are witnessing the beginning of the end of Europe's economic and monetary union as we know it. This will have consequences across the global financial markets. Recently signed health care legislation is a disaster for the US across many different fronts, the least of which is there still isn’t enough money to pay for it, which will result in a VAT tax and austerity initiatives; neither of which is pro-growth and drains consumption. State budgets are a mess; California is probably bankrupt. With unfunded pension liabilities into the hundreds of billions, not to mention the added costs of new health care mandates, the states will be the next group to line up for bailouts. Officially, unemployment is just below 10%. When looked at fully, however, the number is closer to 17%. People without a job do not consume; people worried about their job act in much the same way. The next change in trend for interest rates will most surely result in higher yields. While this may be a plus for coupon clippers, it will be a drain on those carrying consumer debts. Housing is still a mess. Commercial real estate loans are the next shoe to drop. So to those who think we are in a new secular bull market, I suggest you take off your rose colored glasses and look at bear market history. All major bear markets have had a similar pattern; three down legs interspersed by two, usually profitable, counter-trend rallies. If the present bear market began in 2000, the first down leg ended in late 2002. The first counter-trend rally topped in 2007 and the second leg down ended in March, 2009. So if history repeats a third leg waits out there. Is it chiseled in stone? Of course not; there is always the possibility that this time it is different."
"The above notwithstanding, many in the punditry and on the sell side of Wall Street are trumpeting that investors are missing out on a new secular bull market by focusing too much on the ever present wall of worry. Let me tell you why I think they will rue the day. Germany is not going to come to the rescue of Greece, or any other country for that matter. In fact, I would suggest that we are witnessing the beginning of the end of Europe's economic and monetary union as we know it. This will have consequences across the global financial markets. Recently signed health care legislation is a disaster for the US across many different fronts, the least of which is there still isn’t enough money to pay for it, which will result in a VAT tax and austerity initiatives; neither of which is pro-growth and drains consumption. State budgets are a mess; California is probably bankrupt. With unfunded pension liabilities into the hundreds of billions, not to mention the added costs of new health care mandates, the states will be the next group to line up for bailouts. Officially, unemployment is just below 10%. When looked at fully, however, the number is closer to 17%. People without a job do not consume; people worried about their job act in much the same way. The next change in trend for interest rates will most surely result in higher yields. While this may be a plus for coupon clippers, it will be a drain on those carrying consumer debts. Housing is still a mess. Commercial real estate loans are the next shoe to drop. So to those who think we are in a new secular bull market, I suggest you take off your rose colored glasses and look at bear market history. All major bear markets have had a similar pattern; three down legs interspersed by two, usually profitable, counter-trend rallies. If the present bear market began in 2000, the first down leg ended in late 2002. The first counter-trend rally topped in 2007 and the second leg down ended in March, 2009. So if history repeats a third leg waits out there. Is it chiseled in stone? Of course not; there is always the possibility that this time it is different."
Monday, June 8, 2009
Big Ben Lays An Egg
" 'Unless we demonstrate a strong commitment to fiscal sustainability in the longer term, we will have neither financial stability nor healthy economic growth,' Bernanke said in testimony to lawmakers today. 'Maintaining the confidence of the financial markets requires that we, as a nation, begin planning now for the restoration of fiscal balance. Either cuts in spending or increases in taxes will be necessary to stabilize the fiscal situation,' Bernanke said in response to a question. 'The Federal Reserve will not monetize the debt.'"From Federal Reserve Chairman Ben Bernanke, in testimony before House Budget Committee on June 3rd, as quoted by Bloomberg
60 Minutes had a segment last night with him and it was very informative:
http://www.cbsnews.com/stories/2009/03/12/60minutes/main4862191.shtml
Subscribe to:
Posts (Atom)