PIMCO's Bill Gross Sees a Bleak Future 86 comments
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This isn’t really news but Bill Gross set forth his expectations for the economy over the medium term. It’s pretty much the same pitch we’ve heard from PIMCO over the last month or so but still worth revisiting.
From Fox Business:
Bill Gross, co-chief investment officer of bond mutual-fund giant Pimco, on Thursday offered investors a sobering market outlook in which he sees lower returns, decreased U.S. growth and the loss of the dollar’s status as the world’s reserve currency.
In a speech delivered to advisers and investment managers at the Morningstar Investment Conference, Gross outlined what Pimco colleague Mohamed El-Erian has termed the “New Normal.”
In a world of more regulation, private-sector deleveraging and less consumption, “it’s hard for [Pimco] to imagine” the Dow Jones Industrial Average ($INDU) climbing back to 14,000 or home prices returning to 2006 levels, Gross said.
“Growth will be stunted,” he said. “It will be a different type of world and we have to get used to that.”
The U.S. economy will grow at between 1% and 2% a year rather than 2% to 3% a year for the next three to five years at least, Gross said. “That will make a significant difference for corporate profit growth,” he said.
Moreover, unemployment will hover around 7% to 8% rather than the recently typical 4% to 5%, he added, and the higher rate would be around “for a long time to come.”
Gross added that inflation would also start to accelerate in about three to five years’ time.
Gross also said that the dollar will lose its reserve status and that the government will focus more on middle class wage earners at the expense of business. He bases the latter statement on the preferences he detects in the Obama administration’s approach to the Chrysler and GM restructurings.
It’s a pretty stark assessment when you stop and think about it. If he’s right about growth as low as one or two percent, then I wonder exactly what currency he sees replacing the dollar. So long as the U.S. grows that slowly, the rest of the world, at least in the medium term, is not going to go racing away. Therefore, what economy is all of a sudden going to look to be such a great place to hold liquid funds? I buy into the argument that the dollar fades but not that it is supplanted.
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This article has 86 comments:
But what is the alternative? The yen? Uh, have you seen Japan's economy recently? The euro? Because the EU doesn't have problems with its banking system or anything like that. The pound? Sure, why not give reserve status to a currency where the country may lose its AAA rating. The yuan? Do we really want a reserve status currency where a bunch of thugs control it?
I do agree with Gross that we will not see a typical recovery and we will not see the kind of growth we were used to. We've still got a lot of debt to pay off, in both the private and public sector.
I f you take PIMCO's view and compare it CBO forecasts, it is immediately apparent that the CBO is not buying into the new normal or simply ignoring it; they are forecasting nominal growth of 4.5% a year through 2015.
If PIMCO ir right, which I believe they are, and CBO wrong, it has enormous implications for the budget deficit.........which will only get worse. And this will spill over into tax policy, another piece of the new normal.
With the most optimistic forecasts and creative accounting, the administration is being challenged to balance the budget; Obama and the administration will be forced to raise taxes to balance the budget and will be forced to increase them further to fund healthcare reform.
Obama wants to raise income taxes for high earners, impose new levies on business and tax greenhouse emissions, but those moves would not generate enough cash to cover the cost of health care, much less balance the budget, and they have not been fully embraced by Congress. Lawmakers are considering other ways to pay for health reform, including new taxes on sugary soda, alcohol and employer-provided health insurance.
The latest revenue generating idea is the Value Added Tax, a tax imposed upon the profit generated at every level of manufacturing. Effectively it is a national sales tax cooked into the price of a finished product as opposed to 10% slapped on at the register.
Taken together all of these taxes, assuming they pass through Congress, will drain the live out of what was once a robust and vibrant economy. This will come to characterize our new normal, something the Europeans have been dealing with for some time inside their sluggish and sclerotic economies.
On May 31 08:15 AM CautiousInvestor wrote:
> While somewhat troubling, I happen to share his view as it seems
> most consistent with the facts.
>
> I f you take PIMCO's view and compare it CBO forecasts, it is immediately
> apparent that the CBO is not buying into the new normal or simply
> ignoring it; they are forecasting nominal growth of 4.5% a year through
> 2015.
>
> If PIMCO ir right, which I believe they are, and CBO wrong, it has
> enormous implications for the budget deficit.........which will only
> get worse. And this will spill over into tax policy, another piece
> of the new normal.
>
> With the most optimistic forecasts and creative accounting, the administration
> is being challenged to balance the budget; Obama and the administration
> will be forced to raise taxes to balance the budget and will be forced
> to increase them further to fund healthcare reform.
>
> Obama wants to raise income taxes for high earners, impose new levies
> on business and tax greenhouse emissions, but those moves would not
> generate enough cash to cover the cost of health care, much less
> balance the budget, and they have not been fully embraced by Congress.
> Lawmakers are considering other ways to pay for health reform, including
> new taxes on sugary soda, alcohol and employer-provided health insurance.
>
>
> The latest revenue generating idea is the Value Added Tax, a tax
> imposed upon the profit generated at every level of manufacturing.
> Effectively it is a national sales tax cooked into the price of a
> finished product as opposed to 10% slapped on at the register.<br/>
>
> Taken together all of these taxes, assuming they pass through Congress,
> will drain the live out of what was once a robust and vibrant economy.
> This will come to characterize our new normal, something the Europeans
> have been dealing with for some time inside their sluggish and sclerotic
> economies.
The Washington Post notes:
Global financial chiefs agreed yesterday to reshape the International Monetary Fund, moving to broaden its mission ...
The IMF, which in recent years had become largely an advisory body to nations in crisis, will now be charged with aggressive monitoring of the global economy. Underscoring that role, Treasury Secretary Timothy F. Geithner said yesterday that Washington had consented to a rigorous IMF review of the U.S. financial system for the first time since the fund was created at the end of World War II.
The IMF will also, apparently, sell treasury-like bonds to raise money for loans it makes to ailing countries. This ties into statements some time ago by an economist that investors would eventually buy IMF bonds as a safe-haven investment, thus quickening the shift away from the dollar and American treasuries as reserve currency and safe-haven investments.
As previously noted, the IMF's Special Drawing Rights currency may replace the dollar as world reserve currency.
Indeed, the Telegraph's lead financial writer Ambrose Evans-Pritchard argues that "the world is a step closer to a global currency, backed by a global central bank, running monetary policy
If interest rates go anywhere near levels in the 1970s or 1990s then Uncle Sam is going to be insolvent, unless the debt can be inflated away first.
The only game in town is to let inflation roar, which is exactly what happened last time the US was in this much debt. However, at that time the US was the last man standing and able to capitalize on a World whose infrastructure had been crushed.
On May 31 08:15 AM CautiousInvestor wrote:
> While somewhat troubling, I happen to share his view as it seems
> most consistent with the facts.
>
> I f you take PIMCO's view and compare it CBO forecasts, it is immediately
> apparent that the CBO is not buying into the new normal or simply
> ignoring it; they are forecasting nominal growth of 4.5% a year through
> 2015.
>
> If PIMCO ir right, which I believe they are, and CBO wrong, it has
> enormous implications for the budget deficit.........which will only
> get worse. And this will spill over into tax policy, another piece
> of the new normal.
>
> With the most optimistic forecasts and creative accounting, the administration
> is being challenged to balance the budget; Obama and the administration
> will be forced to raise taxes to balance the budget and will be forced
> to increase them further to fund healthcare reform.
>
> Obama wants to raise income taxes for high earners, impose new levies
> on business and tax greenhouse emissions, but those moves would not
> generate enough cash to cover the cost of health care, much less
> balance the budget, and they have not been fully embraced by Congress.
> Lawmakers are considering other ways to pay for health reform, including
> new taxes on sugary soda, alcohol and employer-provided health insurance.
>
>
> The latest revenue generating idea is the Value Added Tax, a tax
> imposed upon the profit generated at every level of manufacturing.
> Effectively it is a national sales tax cooked into the price of a
> finished product as opposed to 10% slapped on at the register.<br/>
>
> Taken together all of these taxes, assuming they pass through Congress,
> will drain the live out of what was once a robust and vibrant economy.
> This will come to characterize our new normal, something the Europeans
> have been dealing with for some time inside their sluggish and sclerotic
> economies.
As for the view of the future, what happens when a person, family, business or government passes the tipping point where they become unable to service their debt is predictable. The IOUSA has passed that point. And like every empire in the history of the world, we are spending/have spent ourselves to death. It will probably not be a quick demise. Rather, it will be a slow and painful process.
Real wages have not increased since the early 1970's. We made believe we were richer than we really were by the indiscriminate use of credit. An economy with a foundation of credit/debt is a house of cards.
Personally, I find predictions of ANY GDP growth overly optimistic.
Adjusted for inflation I expect to see GDP somewhere between stagnant - no growth - or mild contraction. What the government is shoveling into the system is not "real" money. It's just more of what got us here in the first place.
Wealth preservation ? Gold, productive land like organic farms, businesses that enable people to become more efficient, and NO debt. Sounds downright "unAmerican" doesn't it.
The difference is, expect a lot more of them during its decline. Axelrod makes sense with gold (silver) and farming but also add oil, especially oil sands production. In addition, industrial minerals such as phosphate, lead, zinc and copper should do well.
A lower dollar will spur the return of a new economic base. In time.
Whatever happens to this economy Pimco will be there to grab some commissions. So, Bill Gross is nothing more than a posturer.
As for the dollar, we just concluded some fairly successful auctions. This is the "less worse" environment. Hence, the dollar will do fine as there are no other currencies even close to the dollar's status. That is written in stone and will never change. The market will slog on because hedge funds and mutual funds must justify their miserable existence. Fundamentals have lost all meaning. Whatever the sector du jour is, try to be there and make a profit. The manipulated market is nothing more than a casino. It's gambling pure and simple. The Bill Gross's of the world may sound good, but in the long run Pimco's won't put a dime in your pocket.
I wish I knew, too - I'd start converting now.
Blather.
All debt will be paid. Either by the debtor or by the lender. Either with pennies on the dollar or with dollars that are worth pennies.
Decoupling is occuring. The flight from the dollar and dollar backed assets has been picking up velocity as can be seen in the markets with the plunging value of the dollar and quickly changing yields on Treasuries. In the words of Peter Shiff, "we are not the engine, we are the caboose and we are being cut loose."
Further evidence can be seen when comparing the S&P 500 performance as versus the BRIC countries;
Russia up 72.1%
India up 51.6%
China up 44.6%
Brazil up 39.7%
S&P 500 up 0.22%
If you are invested domestically it may seem you are profiting and receiving returns of even 10 to 20 percent, however you are still losing money! Devaluation, inflation, and asset deflation contracts any gain along with currency conversion if going overseas. American dollars around the world are being treated as 'hot potatoes'. The US could find themselves isolated along with their toxic debt, corrupt financial system and less than honest political elites.
I tend to agree with you. I too have seen too many end of the world cycles that turned out to be bumps in the road. This one is a big bump but I suspect that somehow enterprising Americans will figure out a way to get through this one, reinvent some businesses or invent some new ones and send us off on another good track. The only thing that can probably keep that from happening is too much "help" from the government class.
On May 31 12:47 PM Phil Trupp wrote:
> Bill Gross is a conventional corporate thinker. As such, he is hardly
> a reliable prognosticator. Still, there are bits and pieces of wisdom
> in what he says, truisms we all know. He takes into account the obvious
> indicators upon which other writers have elaborated, but he has failed
> to see that action at the surface of the financial world almost never
> reflects what is happening in the deeper, more opaque reality of
> the ever-shifting world economy. The superficial (read immediate)
> problems of the dollar will eventually be resolved out of sheer necessity.
> Rates of global growth, nation by nation, are cyclical and are at
> the mercy of unpredictable shifts in power and the often shocking
> events of realpolitik. There's an old saying: "Bulls slowly climb
> the stairs, bears jump out the window." Mr. Gross has done the latter.
> Paul Krugman is right behind him, falling through space into a world
> he has predicted will be a sunless abyss. Not long ago, he said if
> we knew what was really going on in the economy, we'd buy up all
> the canned goods and head for the bunkers. Forgive me for having
> lived too long and having seen too much to wear the sandwich board
> that cries, "REPENT OR PERISH!" We will work our way out of the current
> crisis as we have worked through others, and we will do so by the
> efforts of pragmatists, not hysterical "prophets."
And in the end analysis, what is the need? After all isn't deficit just a matter of "borrowing money from ourselves"? To put that differently is to say that deficit spending is just another form of taxation except that it is forced borrowing including from foreign interests under which they can get paid back with more worthless dollars; so in effect Americans can continue a more lavish lifestyle with confiscated money without all the paperwork and such of a taxation system.
In fact, why not carry this notion to its logical conclusion; just do away with taxes altogether and if we need money, just print it, after all why have a press if you aren't going to use it?
It's not personal.
So much opinion on these blogs is not analysis, they're feelings.
To analyze:
You have to operationally define teh argument. (ie inflation for this argument is defined as....)
Define your premises in operational terms.
Spell out your premises.
Give pro and con with data that's able to be confirmed.
Argue with the data that either pro or con is more likely, based on MY ANALYSIS.
Give your conclusion, best as a conditional probability.
This may get me thumbs down, but we have a lot of good minds posting. I'd like to see more analsis and less opinion. This is about money.
G
On May 31 08:02 AM Buy and Hold Plus wrote:
> It will take a long time before the dollar loses its reserve status.
> If he's talking about how it won't automatically be the place to
> turn when you're looking to flee to safety, that very well may have
> already happened.
>
> But what is the alternative? The yen? Uh, have you seen Japan's
> economy recently? The euro? Because the EU doesn't have problems
> with its banking system or anything like that. The pound? Sure,
> why not give reserve status to a currency where the country may lose
> its AAA rating. The yuan? Do we really want a reserve status currency
> where a bunch of thugs control it?
>
> I do agree with Gross that we will not see a typical recovery and
> we will not see the kind of growth we were used to. We've still
> got a lot of debt to pay off, in both the private and public sector.
And because a rising middle class consumes more, which makes businesses make more revenue, the problem is.....?
Gross is what we in the T-Bond pit called; "a fade".
His political endorsements are as trustworthy as his economic wisdom.
I agree. Little to no grow due to oppressive conditions on business, due to lack of demand on a tapped out consumer and due to flushing billions down the toilet keeping any number of zombie industries and states afloat on the federal dole.
We pay a fair amount of tax ourselves but we get two wars that we can't seem to put away with another possibly developing in Pakistan and much sabre rattling over N. Korea. We also get decaying infrastructure. But let's not go the way of France!
On May 31 08:15 AM CautiousInvestor wrote:
> ...
> Taken together all of these taxes, assuming they pass through Congress,
> will drain the live out of what was once a robust and vibrant economy.
> This will come to characterize our new normal, something the Europeans
> have been dealing with for some time inside their sluggish and sclerotic
> economies.
------------
Treasury Dumping- even though the prices have fallen recently there is lot more buying:
June 1 (Bloomberg) -- For all the hand-wringing over the dollar’s slide, the expanding U.S. deficit and the nation’s AAA credit rating, the bond market shows international demand for American financial assets is as high as ever.
The Federal Reserve’s holdings of Treasuries on behalf of central banks and institutions from China to Norway rose by $68.8 billion, or 3.3 percent, in May, the third most on record, data compiled by Bloomberg show.
----------------------...
Inflation/Deflation: Paul Krugman has firmly joined the Deflation camp, his recent OpEd: The Big Inflation Scare
“…there’s no hint of inflationary pressures in the economy right now. Consumer prices are lower now than they were a year ago, and wage increases have stalled in the face of high unemployment. Deflation, not inflation, is the clear and present danger.
… But when it comes to inflation, the only thing we have to fear is inflation fear itself.”
This statement appears to contradict the evidence. the way the government is bending backwards for the banking industry says more.
“…there’s no hint of inflationary pressures in the economy right now. Consumer prices are lower now than they were a year ago, and wage increases have stalled in the face of high unemployment. Deflation, not inflation, is the clear and present danger.
… But when it comes to inflation, the only thing we have to fear is inflation fear itself.”
Krugman's observation is silly. A year ago we were dealing with sky high commodity prices. I fail to understand why macoeconomists are so obsessed with deflation. In fact it should be part of the normal business cycle. This insane fear of any deflation is the root of our problems. because of this they keep making credit cheaper and flooding the system with money that has no where to go. this creates bubbles.
If we loose two years of price increases it isn't a big deal.
On May 31 04:50 PM BreH wrote:
> Do realize that there are two levels at play here. The instinctive,
> animal level, where we want to punish those who have done us wrong,
> while those who have done us wrong have done it following their animal
> desires. There is also the rational level, of which to I am referring
> to above. Realistically, I know the beast in us will take over and
> this will end like it did in France in the 1790's. I will, however,
> not be the one holding the sword.
>
> I came across this cool finance site..check it out url.moosaico.com/10424
> beats those slow news days
Additionally since I believe most of our banks are insolvent that may be the case. While you are seeing signs of improving spreads and returns of risk aversion we must remember that without federal actions we do not have a functioning banking system. I believe they are talking about increasing support and not decreasing it. That implies he may be correct.
On May 31 12:47 PM Phil Trupp wrote:
> Bill Gross is a conventional corporate thinker. As such, he is hardly
> a reliable prognosticator. Still, there are bits and pieces of wisdom
> in what he says, truisms we all know. He takes into account the obvious
> indicators upon which other writers have elaborated, but he has failed
> to see that action at the surface of the financial world almost never
> reflects what is happening in the deeper, more opaque reality of
> the ever-shifting world economy. The superficial (read immediate)
> problems of the dollar will eventually be resolved out of sheer necessity.
> Rates of global growth, nation by nation, are cyclical and are at
> the mercy of unpredictable shifts in power and the often shocking
> events of realpolitik. There's an old saying: "Bulls slowly climb
> the stairs, bears jump out the window." Mr. Gross has done the latter.
> Paul Krugman is right behind him, falling through space into a world
> he has predicted will be a sunless abyss. Not long ago, he said if
> we knew what was really going on in the economy, we'd buy up all
> the canned goods and head for the bunkers. Forgive me for having
> lived too long and having seen too much to wear the sandwich board
> that cries, "REPENT OR PERISH!" We will work our way out of the current
> crisis as we have worked through others, and we will do so by the
> efforts of pragmatists, not hysterical "prophets."
On May 31 09:51 PM dcb wrote:
> this is a link showing cetins nailing address. does does anyone know
> how to jam a site. perhaps we as a community should consider engaging
> in sabotage because he doesn't have a problem doing it here.
On May 31 09:37 AM dnnsds wrote:
> all are too pessimistic. the economies, other than the us, will
> return to normal quite readily. the chain pulling the economies
> from the economic muck will be the emerging economies--asia, sa,
> & central europe. remember, the world has tasted economic success
> & will learn the correct formula to achieve success again. the
> us economy will be struggling with ombamanomics. we are stuck with
> this dude for at least 8 years.
despite what our government states I believe this to be their real plan.
On May 31 09:19 AM Dave Wrixon wrote:
> It is precisely the knock on effects of everything on the ability
> of the US Government to fund its deficits that lead me to believe
> he is being overly optimistic.
>
> If interest rates go anywhere near levels in the 1970s or 1990s then
> Uncle Sam is going to be insolvent, unless the debt can be inflated
> away first.
>
> The only game in town is to let inflation roar, which is exactly
> what happened last time the US was in this much debt. However, at
> that time the US was the last man standing and able to capitalize
> on a World whose infrastructure had been crushed.
Were it not for that tax code and the concept of 'redistribution of wealth' to keep social order, the economic friction caused by spending many hours a year on taxes and tax-related bookkeeping would disappear.
So, it's a good idea, and it won't happen.
On May 31 01:35 PM Spartacuss wrote:
> There seems to be a preoccupation with new taxes and such. However,
> it would seem to me that if unabashedly the administration can create
> new money out of nothing and run humongous deficits, then why of
> a sudden is there this overt pang of consciousness that the budget
> needs balancing. After all, through all these years this talk up
> of balanced budget is just a talk up.
>
> And in the end analysis, what is the need? After all isn't deficit
> just a matter of "borrowing money from ourselves"? To put that differently
> is to say that deficit spending is just another form of taxation
> except that it is forced borrowing including from foreign interests
> under which they can get paid back with more worthless dollars; so
> in effect Americans can continue a more lavish lifestyle with confiscated
> money without all the paperwork and such of a taxation system.<br/>
>
> In fact, why not carry this notion to its logical conclusion; just
> do away with taxes altogether and if we need money, just print it,
> after all why have a press if you aren't going to use it?
2.) Buy residential rental property (at extreme short-sale prices)
3.) buy Artwork
4.) Invest in tax defered oil and gas trusts
5.) Start an R&D company with Venture Capital and a few years to develop before going to market
6.) VOTE out Democrat congress and senate at mid-term election
Figuring out "how to invest around it" , to me, anyway, is somewhat like saying "When the liberals give you urine...make urinaid."
How about we just get the tar and feathers ready ? (Before we have to pay a VAT tax on tar and feathers)
On May 31 08:34 AM The Geoffster wrote:
> The leftists seem to prefer punitive taxation and inefficient government
> to the free allocation of capital. As perverse as this sounds, it
> does lead to more equality of outcome which is what they're all about.
> Rather than bemoan the coming welfare state, let's figure out how
> to invest around it. Capital outflow and tax avoidance are a given.
> I'd welcome any wealth preservation ideas that don't run afoul of
> the law.
arabianmoney.net/2009/.../
That's staggering in size, and whenever they talk, they are effectively negotiating with the Treasury and the Federal Reserve: "If you do X, I'll do Y"
I don't think they're bad guys, but they're talking their book-- it would be irresponsible of them _not_ to do so, but its equally irresponsible to presume that their comments as disinterested.
On May 31 08:02 AM Buy and Hold Plus wrote:
> It will take a long time before the dollar loses its reserve status.
> If he's talking about how it won't automatically be the place to
> turn when you're looking to flee to safety, that very well may have
> already happened.
>
> But what is the alternative? The yen? Uh, have you seen Japan's
> economy recently? The euro? Because the EU doesn't have problems
> with its banking system or anything like that. The pound? Sure,
> why not give reserve status to a currency where the country may lose
> its AAA rating. The yuan? Do we really want a reserve status currency
> where a bunch of thugs control it?
>
> I do agree with Gross that we will not see a typical recovery and
> we will not see the kind of growth we were used to. We've still
> got a lot of debt to pay off, in both the private and public sector.
On May 31 12:47 PM Phil Trupp wrote:
> Bill Gross is a conventional corporate thinker. As such, he is hardly
> a reliable prognosticator. Still, there are bits and pieces of wisdom
> in what he says, truisms we all know. He takes into account the obvious
> indicators upon which other writers have elaborated, but he has failed
> to see that action at the surface of the financial world almost never
> reflects what is happening in the deeper, more opaque reality of
> the ever-shifting world economy. The superficial (read immediate)
> problems of the dollar will eventually be resolved out of sheer necessity.
> Rates of global growth, nation by nation, are cyclical and are at
> the mercy of unpredictable shifts in power and the often shocking
> events of realpolitik. There's an old saying: "Bulls slowly climb
> the stairs, bears jump out the window." Mr. Gross has done the latter.
> Paul Krugman is right behind him, falling through space into a world
> he has predicted will be a sunless abyss. Not long ago, he said if
> we knew what was really going on in the economy, we'd buy up all
> the canned goods and head for the bunkers. Forgive me for having
> lived too long and having seen too much to wear the sandwich board
> that cries, "REPENT OR PERISH!" We will work our way out of the current
> crisis as we have worked through others, and we will do so by the
> efforts of pragmatists, not hysterical "prophets."
On May 31 12:47 PM Phil Trupp wrote:
> Bill Gross is a conventional corporate thinker. As such, he is hardly
> a reliable prognosticator. Still, there are bits and pieces of wisdom
> in what he says, truisms we all know. He takes into account the obvious
> indicators upon which other writers have elaborated, but he has failed
> to see that action at the surface of the financial world almost never
> reflects what is happening in the deeper, more opaque reality of
> the ever-shifting world economy. The superficial (read immediate)
> problems of the dollar will eventually be resolved out of sheer necessity.
> Rates of global growth, nation by nation, are cyclical and are at
> the mercy of unpredictable shifts in power and the often shocking
> events of realpolitik. There's an old saying: "Bulls slowly climb
> the stairs, bears jump out the window." Mr. Gross has done the latter.
> Paul Krugman is right behind him, falling through space into a world
> he has predicted will be a sunless abyss. Not long ago, he said if
> we knew what was really going on in the economy, we'd buy up all
> the canned goods and head for the bunkers. Forgive me for having
> lived too long and having seen too much to wear the sandwich board
> that cries, "REPENT OR PERISH!" We will work our way out of the current
> crisis as we have worked through others, and we will do so by the
> efforts of pragmatists, not hysterical "prophets."
Similarly with regulation, I'm happy to see more regulation to the extent that it leads to transparency and honesty. Excessive deregulation is part of the reason we're in this mess. I'd like to know that if something is rated AAA that really means something. I'd like to know that if a company publishes earnings statements that those are close to realistic.
On May 31 10:04 PM Tom Lindmark wrote:
> I'm surprised Seeking Alpha doesn't have a spam filter for this.
> Seeing more and more of it. My little wordpress site catches this
> stuff. There must be a way for SA to do it.
I was at the conference, and yes, Gross's growth expectations are muted. But calling for 1% to 2% real growth in GDP over the next 5 years is hardly calling for an economic backdrop that would signal a the death of equities. I agree that we won't see Dow 14,000 soon, but I also agree it doesn't mean that we will never see it.
On May 31 01:41 PM Michael Young wrote:
> Excellent thread. I always wonder if Bill Gross is a little more
> pessimistic than he could/should be. Has he ever been bearish on
> bonds?
I was at the conference, and yes, Gross's growth expectations are muted. But calling for 1% to 2% real growth in GDP over the next 5 years is hardly calling for an economic backdrop that would signal a the death of equities. I agree that we won't see Dow 14,000 soon, but I also agree it doesn't mean that we will never see it.
On May 31 01:41 PM Michael Young wrote:
> Excellent thread. I always wonder if Bill Gross is a little more
> pessimistic than he could/should be. Has he ever been bearish on
> bonds?
On Jun 01 12:40 PM neutrino23 wrote:
> So what is wrong with focusing on middle class wager earners? Seems
> like it would be good for business if buying power increases.
>
> Similarly with regulation, I'm happy to see more regulation to the
> extent that it leads to transparency and honesty. Excessive deregulation
> is part of the reason we're in this mess. I'd like to know that if
> something is rated AAA that really means something. I'd like to know
> that if a company publishes earnings statements that those are close
> to realistic.
<<Just a minute - just a minute. Now, hold on, Mr. Potter. You're right when you say my father was no businessman. I know that. Why he ever started this cheap, penny-ante Building and Loan, I'll never know. But neither you nor anyone else can say anything against his character, because his whole life was - why, in the twenty-five years since he and Uncle Billy started this thing, he never once thought of himself. Isn't that right, Uncle Billy? He didn't save enough money to send Harry to school, let alone me. But he did help a few people get out of your slums, Mr. Potter, and what's wrong with that? Why - here, you're all businessmen here. Doesn't it make them better citizens? Doesn't it make them better customers? You - you said - what'd you say a minute ago? They had to wait and save their money before they even ought to think of a decent home. Wait? Wait for what? Until their children grow up and leave them? Until they're so old and broken down that they... Do you know how long it takes a working man to save five thousand dollars? Just remember this, Mr. Potter, that this rabble you're talking about... they do most of the working and paying and living and dying in this community. Well, is it too much to have them work and pay and live and die in a couple of decent rooms and a bath? Anyway, my father didn't think so. People were human beings to him. But to you, a warped, frustrated old man, they're cattle. Well, in my book he died a much richer man than you'll ever be.>>
I think about that scene often. Kinda funny after the housing bubble. Also when people start getting high and mighty about the "idiots" who bought too much home. Yeah, some were greedy, some were idiots. Some were reaching for a version of the american dream. Some were duped.
Capra was very much inspired by A.P. Giannini, founder of Bank of America. Interesting that, huh?
And you would never think it from the speech, but he was "rabidly" Republican and anti-Roosevelt.
On Jun 01 02:16 PM wobatus wrote:
> Ah Neutrino, that reminds me of the seen in It's a Wonderful Life
> when Old Man Potter and half the board want to shut down the Bailey
> Building and Loan when George's father dies, and Jimmy Stewart gives
> the impassioned speech. The line is something like "Doesn't it make
> them better citizens, better customers if they own the roof over
> their head?"
I predict it's impossible to know what will happen - too many variables that affect market movement. Buy the dips and sell the rips. Repeat often.
On May 31 01:41 PM Michael Young wrote:
> Excellent thread. I always wonder if Bill Gross is a little more
> pessimistic than he could/should be. Has he ever been bearish on
> bonds?
>Do we really want a reserve status currency where a bunch
> of thugs control it?
they want to prop up the housing markets via low interst rates to save the banks, they want to flood the system with money, and they are determined to keep the stock markets inflated, and they want a stable currency. the main issue is that you must sacrifice something to get something else.
if they actually allowed the market to correct from this level they could get what they want. But they aren't going to go after the people manipuating the markets because goldman owns the government. The idiots we elect continue to appear to think these people are on our team when they are not.
Allow the market to work, this will result in asset prince falling, and they will be able to fund.
When money was flowing out of the market from april 19th to may 27 and via maniplation the prices didn't fall. this allowed people to further invest in "risky" asset classes killed the dollar and killed the long bond.
the government want the market propped becaise it make people feel good, but then doesn't want to face the results of what happens when that happens.
As for any analysis of the future of the behavior of the markets you it is immaterial when they are manipulated. they will not be manipulated when many go back into them. this is all about wall street profits at the expense of the american consumer.
theburningplatform.com...
And fail it will.
By their OWN bill, it will cost us around 11 million jobs while only creating 2 million.
And most of the "green" new jobs will go to the same third world countries that have our other jobs too.
On May 31 10:42 AM Jimbo wrote:
> I see inflation coming sooner, rather than later. I fear that we
> may have a "double dip" recession(depression?). The looming resets
> of mortgages, together with a poor employment picture,seem to combine
> for the perfect storm. The price of oil is now determined by a world
> market. If other countries increase their use, this means higher
> prices for a stressed U.S. economy and we can do nothing about it
> with an administration and Congress dead set against increasing domestic
> production. I suspect the agenda is to starve the oil based economy
> to force a "new age" of green fuels. But what if this plan fails?
I agreed with your comments until this one: I don't see how you can conclude Obama is building up the middle class. I suppose it depends upon what your definition of middle class is-
To me, it looks like he is killing the middle class, planning on taxing it to death in order to give more to the "have nots", more socialist in nature, bringing up the economic standards of the poor at the expense of everyone else. I am sure this will get a lot of thumbs down, (if it is read at all) but I don't care. When you start taxing people that make $150K- 250K a year and lumping them in with "the rich", you are undermining the middle class.
President Obama took the first lady on a "date night" to Manhattan the other day. They flew in on the first jet, had dinner and saw a show. The tax payers foot the bill in excess of $150K for their little date night. They tied up traffic for hours in Manhattan, too.
Wow, now we have American royalty. Nothing like leveling the playing field, right?
On May 31 02:47 PM thotdoc wrote:
> I agree that Obama is focusing on building the middle class.
>
> And because a rising middle class consumes more, which makes businesses
> make more revenue, the problem is.....?
So much of Seeking Alpha are these ham-fisted, "I am not deceived by the conspiracy and know better than the teeming masses" of other people, homebuyers, consumers, investors, voters, etc. It's really kind of disgusting the level of self-congratulation of some folks on these boards.
Negative rec away.
On Jun 01 02:26 PM wobatus wrote:
> Oops, scene, not seen, of course. And here is the full scene:
>
> <<Just a minute - just a minute. Now, hold on, Mr. Potter. You're
> right when you say my father was no businessman. I know that. Why
> he ever started this cheap, penny-ante Building and Loan, I'll never
> know. But neither you nor anyone else can say anything against his
> character, because his whole life was - why, in the twenty-five years
> since he and Uncle Billy started this thing, he never once thought
> of himself. Isn't that right, Uncle Billy? He didn't save enough
> money to send Harry to school, let alone me. But he did help a few
> people get out of your slums, Mr. Potter, and what's wrong with that?
> Why - here, you're all businessmen here. Doesn't it make them better
> citizens? Doesn't it make them better customers? You - you said -
> what'd you say a minute ago? They had to wait and save their money
> before they even ought to think of a decent home. Wait? Wait for
> what? Until their children grow up and leave them? Until they're
> so old and broken down that they... Do you know how long it takes
> a working man to save five thousand dollars? Just remember this,
> Mr. Potter, that this rabble you're talking about... they do most
> of the working and paying and living and dying in this community.
> Well, is it too much to have them work and pay and live and die in
> a couple of decent rooms and a bath? Anyway, my father didn't think
> so. People were human beings to him. But to you, a warped, frustrated
> old man, they're cattle. Well, in my book he died a much richer man
> than you'll ever be.>>
>
> I think about that scene often. Kinda funny after the housing bubble.
> Also when people start getting high and mighty about the "idiots"
> who bought too much home. Yeah, some were greedy, some were idiots.
> Some were reaching for a version of the american dream. Some were
> duped.
>
> Capra was very much inspired by A.P. Giannini, founder of Bank of
> America. Interesting that, huh?
>
> And you would never think it from the speech, but he was "rabidly"
> Republican and anti-Roosevelt.
My wife and I had a nice dinner at a place in our neighborhood. Didn't notice traffic. The next day I showed my wife the headlines. We had no idea they were here. And my wife goes "You never take me to plays and I've asked you a thousand times to take me to Blue Hill for dinner." Something about 3 michelin stars. :)
On Jun 02 12:49 PM optionsgirl wrote:
>
> I agreed with your comments until this one: I don't see how you can
> conclude Obama is building up the middle class. I suppose it depends
> upon what your definition of middle class is-
> To me, it looks like he is killing the middle class, planning on
> taxing it to death in order to give more to the "have nots", more
> socialist in nature, bringing up the economic standards of the poor
> at the expense of everyone else. I am sure this will get a lot of
> thumbs down, (if it is read at all) but I don't care. When you start
> taxing people that make $150K- 250K a year and lumping them in with
> "the rich", you are undermining the middle class.
>
> President Obama took the first lady on a "date night" to Manhattan
> the other day. They flew in on the first jet, had dinner and saw
> a show. The tax payers foot the bill in excess of $150K for their
> little date night. They tied up traffic for hours in Manhattan, too.
>
> Wow, now we have American royalty. Nothing like leveling the playing
> field, right?
>
> On May 31 02:47 PM thotdoc wrote:
Yes, it's a Win-Win-Win for the banks, and a Lose-Lose-Lose for the taxpayer, who will pick up 93% of all losses. Any astute investor knows that. So I have to endores what James Quinn said, as noted below:
On Jun 02 09:57 AM James Quinn wrote:
> Gross is extremely smart, but he is now in bed with the Government.
> Nothing he says can be trusted.
>
> theburningplatform.com...
On May 31 12:47 PM Phil Trupp wrote:
> Bill Gross is a conventional corporate thinker. As such, he is hardly
> a reliable prognosticator. Still, there are bits and pieces of wisdom
> in what he says, truisms we all know. He takes into account the obvious
> indicators upon which other writers have elaborated, but he has failed
> to see that action at the surface of the financial world almost never
> reflects what is happening in the deeper, more opaque reality of
> the ever-shifting world economy. The superficial (read immediate)
> problems of the dollar will eventually be resolved out of sheer necessity.
> Rates of global growth, nation by nation, are cyclical and are at
> the mercy of unpredictable shifts in power and the often shocking
> events of realpolitik. There's an old saying: "Bulls slowly climb
> the stairs, bears jump out the window." Mr. Gross has done the latter.
> Paul Krugman is right behind him, falling through space into a world
> he has predicted will be a sunless abyss. Not long ago, he said if
> we knew what was really going on in the economy, we'd buy up all
> the canned goods and head for the bunkers. Forgive me for having
> lived too long and having seen too much to wear the sandwich board
> that cries, "REPENT OR PERISH!" We will work our way out of the current
> crisis as we have worked through others, and we will do so by the
> efforts of pragmatists, not hysterical "prophets."
B of A, JPMorgan, others raise $19 billion
Tue Jun 2, 2009 4:40pm EDT Email | Print | Share| Reprints | Wall Street analysts cheer U.S. banks' capital raise
4:40pm EDT
By Steve Eder and Jonathan Stempel
NEW YORK (Reuters) - Bank of America Corp, JPMorgan Chase & Co and several other banks said they have raised more than $19 billion as lenders scramble to extricate themselves from Washington's grip.
Lenders are trying to show regulators they are capable of functioning without government support. The Federal Reserve will announce next week which of the 19 big lenders that underwent "stress tests" will be allowed to repay government bailout funds.
"Markets are providing an avenue for banks of all sizes and stripes to raise money unless you are at death's door," said Gary Townsend, co-founder of Hill-Townsend Capital in Chevy Chase, Maryland. "The market also seems to be making an assessment that credit problems are manageable and that the environment is improving. In my view, that is correct."
JPMorgan sold $5 billion of stock, Morgan Stanley $2.2 billion and American Express Co $500 million at a discount to Monday's prices after the Fed imposed new capital-raising requirements on large banks hoping to repay the Treasury Department's Troubled Asset Relief Program.
Goldman Sachs Group Inc, which also hopes to exit TARP, sold $1.9 billion of its stake in Industrial and Commercial Bank of China.
Meanwhile, Bank of America said it has raised close to $33 billion since early May, including $7 billion over six days, closing nearly all of the $33.9 billion capital shortfall that regulators found through its stress test. The largest U.S. bank said it expects to "comfortably exceed" that sum.
Also, KeyCorp said it has raised $1.3 billion, including $1 billion from selling stock, to help plug a $1.8 billion shortfall, while SunTrust Banks Inc late Monday sold $1.4 billion of stock to help fill a $2.2 billion hole.
Of the 19 banks to undergo stress tests that assessed their readiness for a deep recession, 10 were ordered to raise $74.6 billion. The others had enough capital.
American Express shares closed down 4.9 percent to $24.71, Bank of America rose 1.8 percent to $11.41, Goldman fell 0.8 percent to $143.13, JPMorgan fell 4.5 percent to $34.50, KeyCorp rose 1.7 percent to $4.82, Morgan Stanley rose 0.7 percent to $30.09 and SunTrust rose 15.5 percent to $15.94.
NEW RULES
The Fed said large banks hoping to repay TARP must show an ability to access public equity markets, sell long-term debt without government backing, lend sufficiently, meet their funding obligations and support their subsidiaries.
American Express, Bank of New York Mellon Corp, BB&T Corp, Goldman, JPMorgan, Morgan Stanley, State Street Corp and U.S. Bancorp have signaled their intent to repay the government, people familiar with the matter have said. Some of the requests have not been made public.
Many banks have complained about the increased government scrutiny and pay restrictions that accompany TARP funds. To free themselves from Washington, banks still need to buy back or get rid of government warrants to buy their shares.
"For any bank that can raise capital and pay off TARP, they should so they can get the government out of their hair," said Joseph Gordon, president of Gordon Asset Management LLC in Durham, North Carolina.
Repaying TARP could leave banks "free and clear, like a real American free citizen, corporate citizen, like we were in the past," JPMorgan Chief Executive Jamie Dimon said on a conference call on Monday. Continued...
Is there anyone who finds this remotely fishey!!!
On Jun 01 12:17 PM commoinsense1211 wrote:
> where are these pragmatists? I thought Obamam may have been one but
> he's going down the same ole road. We have given away most of or
> manuafacturing base and continue to otsource any job over $10/hr
> to india, china and other places. Unless the banks open up and start
> giving loans to the undeserving again we're running out of bullets.
>
Jimbo,
I worked for ten years in the geo-stratigraphic departments of Shell and various BP antecedents (Sohio and Amoco). I wasn't a geoscientist myself; I wrote programs and databases for them.
But I got to know them and they ALL understand and recognize the difficulty of Peak Oil. The fact is that oil was sourced only in certain sedimentary environments, and must have been trapped by impervious deposition above the source rock. The necessary antecedents were fairly uncommon but frequent enough to have produced large accumulations in a few regions of the globe.
Since the oil industry was created in the United States, we spent the first sixty years of the oil age poking holes throughout the contiguous 48 states. There are over 2 million 10 digit API numbers, each of which identifies a penetration of the surface of the Earth with the intention of finding and/or producing liquid hydrocarbons.
Obviously they are clustered in the reef and dome formations that are characteristic of North American oil deposits. It makes a lot more sense to drill next to a well which is producing oil than one hundred miles away. But they are nearly EVERYwhere that granite doesn't protrude.
Certainly modern geoscience technology and enhanced recovery technologies have allowed us to extract a greater percentage of the original oil in place. Horizontal drilling has allowed us to exploit thin deposits that would not have been economic with vertical penetration.
But THERE ARE NO MORE GLORY HOLES ONSHORE in North America. Or offshore in less than 1000 feet of water. Every day there are dozens of aircraft and seismic trucks fanned out over the continent looking for that little squiggle in some electric field plot nobody has noticed before. They rarely succeed.
There are significant deposits in the deep water Gulf, but nobody is blocking development of them except possibly off the west coast of Florida. Possibly because there is no direct proof that accumulations in likely deposits have been trapped properly. There has as yet been no actual drilling in the precincts of interest that would show accumulated captured hydrocarbons.
I was in Anchorage when Sohio shut in the Mukluk well in the Beaufort Sea. The seismic results show a beautiful structure in the same sandstones that supply the Prudhoe and Kuparuk fields, at about the same mean sea level depth. Sohio was willing to bet $1 billion in the late 1970's and early 1980's that there was a lollapalooza field there. So sure they built a gravel island on which to place the exploration wells. It turned out that there was only one exploration well, because the caprock was fractured. There is clear sign that oil once inhabited the formation but that it leaked out several million years ago.
Obviously neither of us can be sure about the "agenda" you suppose, but it may be true. Certainly from a national security point of view, it's a good idea. Most of the places that have large accumulations of oil don't much like us and will be happy -- at least temporarily -- to take yuan instead of dollars for oil.
But the truth is the world MUST!!!!!!! convert to a green energy economy. ANY alternative that depends on non-renewable resources, be it "sequestered" coal, fission -- even the holy grail of fusion -- will run out one day. The resources the Earth has today can only be depleted by a technological civilization. It is far better to save them for use as chemical inputs and use the genuinely permanent sources of solar theromofusion (solar and wind) and gravitation (tides) to power our civilization.
The necessary technologies are available. The only thing stopping it is entrenched wealth.
On May 31 10:42 AM Jimbo wrote:
> I see inflation coming sooner, rather than later. I fear that we
> may have a "double dip" recession(depression?). The looming resets
> of mortgages, together with a poor employment picture,seem to combine
> for the perfect storm. The price of oil is now determined by a world
> market. If other countries increase their use, this means higher
> prices for a stressed U.S. economy and we can do nothing about it
> with an administration and Congress dead set against increasing domestic
> production. I suspect the agenda is to starve the oil based economy
> to force a "new age" of green fuels. But what if this plan fails?
What i think this reserve status comments mean is that instead of most of the world ( non US citizens) holding US dollars to trade and for reserves, as has been the trend over the last 100 years or so (used to be the pound stirling), US citizens will have currency reserves in other currencies, ie Euro, gold, Aussie, etc, and the world will more freely trade in world currencies other than the US dollar.
As an example it is already common for sellers of domain names to list the price in Euros, or US dollars, whilst in the past it was an almost US dollar trade. People are now (mostly) world citizens, and i expect world currency trading to reflect this.
My observations conclude that most hard core gold bugs are from the US, as many US citizens can not foresee any other currency other than the US dollar being of real use and importance.
This current financial crisis has exposed this form of thinking, and if it was not for the emergence of popular currencies such as Aussie, Euro, Kiwi etc, i would have thought that the price of gold would already be higher.
And I thought you said his outlook was "bleak"?
( - ;
On May 31 08:15 AM CautiousInvestor wrote:
> While somewhat troubling, I happen to share his view as it seems
> most consistent with the facts.
>
> I f you take PIMCO's view and compare it CBO forecasts, it is immediately
> apparent that the CBO is not buying into the new normal or simply
> ignoring it; they are forecasting nominal growth of 4.5% a year through
> 2015.
>
> If PIMCO ir right, which I believe they are, and CBO wrong, it has
> enormous implications for the budget deficit.........which will only
> get worse. And this will spill over into tax policy, another piece
> of the new normal.
>
> With the most optimistic forecasts and creative accounting, the administration
> is being challenged to balance the budget; Obama and the administration
> will be forced to raise taxes to balance the budget and will be forced
> to increase them further to fund healthcare reform.
>
> Obama wants to raise income taxes for high earners, impose new levies
> on business and tax greenhouse emissions, but those moves would not
> generate enough cash to cover the cost of health care, much less
> balance the budget, and they have not been fully embraced by Congress.
> Lawmakers are considering other ways to pay for health reform, including
> new taxes on sugary soda, alcohol and employer-provided health insurance.
>
>
> The latest revenue generating idea is the Value Added Tax, a tax
> imposed upon the profit generated at every level of manufacturing.
> Effectively it is a national sales tax cooked into the price of a
> finished product as opposed to 10% slapped on at the register.<br/>
>
> Taken together all of these taxes, assuming they pass through Congress,
> will drain the live out of what was once a robust and vibrant economy.
> This will come to characterize our new normal, something the Europeans
> have been dealing with for some time inside their sluggish and sclerotic
> economies.
see, here's the thing. despite the good press they got for sending us the statue of liberty, the french have never made an unselfish domestic or foreign policy decision. they got us into vietnam because they never treated any of their colonies with any decency. (whereas, the british always left their colonies better off for being there.) the french think they are still a world power, but they are actually world class irritants in every peaceful interaction of nations. (on a personal level, they have always treated tourists with disrespect and contempt.) is that any way to run a country? hey, don't let me get started on this rant, but their judgement has always been an issue, (see jerry lewis).
focusing on your comment of world class health care. you should know that there is no other country in the world that lives up to the standard of care in the u.s.a. we don't just have standards, let's say for cleanliness, we created the standard. we don't just have new miracle drugs for our patients because another country spent countless dollars developing and testing them and we then infringed on their patents. no, we have them because we invested in them.
bottom line, no matter what country you live in, investors must be able to earn a return for their risk. if you fail to keep that option open, investors stop investing in production and begin searching for ways to hide their capital. when you remove incentive, you destroy innovation. progress is halted and left leaning political structures begin to promise more and more benefits to pacify the masses. those benefits are not manna from heaven though, they come from someone else's pocket. there are no free lunches. everything has a price. if you don't pay it, someone else is.
our government is not here to make your life perfect or make you happy. its function is to preserve your right to the pursuit of happiness. if you think so highly of france, i think we both know, you will never be happy here. you can get a passport at the post office.
"Keep On Smilin" - advice from Wet Willie
The English left their colonies better off? Sure?
For one who spent years sailing the Caribbean visiting most of the islands there I can unequivocally call bullshit on your theory. Each if the formerly English islands were nightmares of ugliness, poverty, hatefulness, thievery, and bureaucratic red tape from the locals with the exception of the Abacos in the Bahamas. On the other hand, the French islands were all clean, harmonious, efficient and easy to clear in and out. Same goes with the Dutch islands. My experiences are the same in other parts of the planet.
As for being rude to tourists you should really look at how the USA treats its tourists. Starting from before they book their ticket, get on the plane or arrive in USA. I was in USA a year ago and I'll never return. Meanest nastiest people on the planet and damned proud of it!
As for health care. I have been to hospitals in Asia, Europe, Africa, South America, USA and France. I'd take any of them other than Africa over USA any day and twice on Sunday! I'd rather die than let the US for profit medical system get its hooks into me.
As for medical "discoveries", Does the name Louis Pasteur mean anything to you? Perhaps Bayer? There are many more of course.
The French certainly have a much better standard of living than Americans do. Perhaps you object to their wonderful effective and accepted custom of "Bossnapping"? Perhaps you'd be a frequent target of same?
Government isn't there to make you happy? It makes me happy when the government makes businesses pay their fair share of taxes, makes them stop polluting my water, land and sky, and prevents them from making products like the Pinto.
I suggest that IF you hold a US passport you surrender it at once to the Dept of State and remain in your country so as not to cause yourself a crippling shock when the truth of how great the world is outside USA collides with your propagandized ideologies.
Have a nice day.
On Jun 05 12:58 AM curious cat wrote:
> grh1212, are you kidding me? the french? please, forgive me for
> being skeptical, but you are seriously putting the french economic
> model up as a positive example for the united states of america?
> even california, with their unbalanced population, no offense arnold,
> would never go that far. ok, maybe pelosi would, but the rest of
> the state is bound to realize that eventually, you have to step away
> from the trough.
>
> see, here's the thing. despite the good press they got for sending
> us the statue of liberty, the french have never made an unselfish
> domestic or foreign policy decision. they got us into vietnam because
> they never treated any of their colonies with any decency. (whereas,
> the british always left their colonies better off for being there.)
> the french think they are still a world power, but they are actually
> world class irritants in every peaceful interaction of nations.
> (on a personal level, they have always treated tourists with disrespect
> and contempt.) is that any way to run a country? hey, don't let
> me get started on this rant, but their judgement has always been
> an issue, (see jerry lewis).
>
> focusing on your comment of world class health care. you should
> know that there is no other country in the world that lives up to
> the standard of care in the u.s.a. we don't just have standards,
> let's say for cleanliness, we created the standard. we don't just
> have new miracle drugs for our patients because another country spent
> countless dollars developing and testing them and we then infringed
> on their patents. no, we have them because we invested in them.
>
>
> bottom line, no matter what country you live in, investors must be
> able to earn a return for their risk. if you fail to keep that
> option open, investors stop investing in production and begin searching
> for ways to hide their capital. when you remove incentive, you
> destroy innovation. progress is halted and left leaning political
> structures begin to promise more and more benefits to pacify the
> masses. those benefits are not manna from heaven though, they come
> from someone else's pocket. there are no free lunches. everything
> has a price. if you don't pay it, someone else is.
>
> our government is not here to make your life perfect or make you
> happy. its function is to preserve your right to the pursuit of
> happiness. if you think so highly of france, i think we both know,
> you will never be happy here. you can get a passport at the post
> office.
On Jun 03 04:25 PM MrZack888 wrote:
> US got land, lots of good land. US assets are highly prized by foreigners.
I am glad I am not living there. Just about everything is priced as if its made of gold, thanks to VAT. People do not buy much there, except for Beer and food and clothes.
On May 31 08:15 AM CautiousInvestor wrote:
> While somewhat troubling, I happen to share his view as it seems
> most consistent with the facts.
>
> I f you take PIMCO's view and compare it CBO forecasts, it is immediately
> apparent that the CBO is not buying into the new normal or simply
> ignoring it; they are forecasting nominal growth of 4.5% a year through
> 2015.
>
> If PIMCO ir right, which I believe they are, and CBO wrong, it has
> enormous implications for the budget deficit.........which will only
> get worse. And this will spill over into tax policy, another piece
> of the new normal.
>
> With the most optimistic forecasts and creative accounting, the administration
> is being challenged to balance the budget; Obama and the administration
> will be forced to raise taxes to balance the budget and will be forced
> to increase them further to fund healthcare reform.
>
> Obama wants to raise income taxes for high earners, impose new levies
> on business and tax greenhouse emissions, but those moves would not
> generate enough cash to cover the cost of health care, much less
> balance the budget, and they have not been fully embraced by Congress.
> Lawmakers are considering other ways to pay for health reform, including
> new taxes on sugary soda, alcohol and employer-provided health insurance.
>
>
> The latest revenue generating idea is the Value Added Tax, a tax
> imposed upon the profit generated at every level of manufacturing.
> Effectively it is a national sales tax cooked into the price of a
> finished product as opposed to 10% slapped on at the register.<br/>
>
> Taken together all of these taxes, assuming they pass through Congress,
> will drain the live out of what was once a robust and vibrant economy.
> This will come to characterize our new normal, something the Europeans
> have been dealing with for some time inside their sluggish and sclerotic
> economies.