Liberty

U.S. Government's Size: The Slow-Motion Crisis

In the year 1900 the total US federal spending was only 3.0% of GDP. There was not even a need for an income tax during this time. The US government spending fluctuated between 2.15% and 2.87% of GDP until 1913 when the current federal income tax largely came into being. Since 1913, the federal government has grown to about 28% of US GDP in 2009, with govt. spending peaking in war years.

The early 1900’s was the golden age of America, when the following inventions occurred.
• The Wright brothers invent the first gas motored and manned airplane.
• William Coolidge invents ductile tungsten used in lightbulbs.
• Benjamin Holt invents a tractor.
• Albert Einstein published the Theory of Relativity
• Leo Baekeland invents the first synthetic plastic called Bakelite.
• Color photography invented by Auguste and Louis Lumiere.
• The very first piloted helicopter was invented by Paul Cornu.
• Model T first sold.

I believe the best thing for the US would be to dial back its spending to less than 10.0% of GDP, and let the private sector handle virtually everything, just as it did so incredibly well before the income tax changed everything.

Commercial Real Estate: The Reality Is Not as Bad as It Looks

I think the author makes a good point, which is commercial real estate is not as bad as it seems. I think its understood by all that CRE is doing poorly. 'Maturity defaults' appears to be the best answer for most lenders facing a loan expiration that cannot be refinanced at today's more onerous loan terms. (The banks and borrowers actually have little choice on this). Commercial real estate values are probably fairly close to their values in 2003-2005 in my experience. Hence, the author's example is a fairly good one - reflective of typical properties today. Give the economy about 24 to 36 months, and rents will be growing again and vacancy fundamentals will be more sound. Borrowers will generally be much more able to refinance at market oriented terms in 2 to 3 years from now, not really a long timeframe for most RE investors.

S&P Set To Launch New Indexes of Condo Prices

25 Year Appraiser,
I feel differently - Home & condo prices have been tracked for long time periods by National Association of Realtor. I believe giving Wall Streeter's a more transparent view of the condo prices through more/better indexes will improve market info. Although, I have problems with the Case Shiller numbers as well. I prefer the NAR figures on home prices to S&P/Case Shiller as the numbers can be better verified in my book.

China: The One Global Market with Gains Behind the Gloom

China does not wage continuous wars against countries which are not a threat. It spends its money on productive investments like infrastucture for its own citizens. Its time for the US to end its wars against those in Iraq, Afghanistan, and other wars is beginning.

Preparing for the Fall

So the author argues that today's investors are generally amateurs and therefore the market is overpriced. Then he rolls into a few years over the last hundred where a "March fnancial crisis" occurs, followed by an "intervention". I'm sorry but, anyone can find 'historical patterns' to support any market movement that want by cherry picking the years that work for their model. I do not subscribe to technical analysis. The author will have to show a fundamental reason for his prediction of a 20% or more correction if he wants to convince me. The author predicts the market will be 20% or below "in the coming months". Therefore, it is reasonable to assume he believes the S&P 500 will be at 1,100 or below "in the coming months". If it the market ever goes below 1,100, then I guess his prediction will have come true, but it doesn't sound like something of use to many investors.

5 Reasons Why the U.S. Dollar Will Weaken Further

Simple D - thanks for your comment. Interesting take on Monetary policy as it relates to the possibility of the "Amero" currency. This is an issue that needs to be kept on the radar screen for further scrutiny.

5 Reasons Why the U.S. Dollar Will Weaken Further

"The Fed’s doing a lot right now and they are being extremely aggressive and this would be especially true if they cut interest rates by another 50 to 75bp this month. Imagine the relief for US consumers and businesses if interest rates came back down towards 1.00 percent. " Lien

Of course everything done by the Fed to print more more (i.e. rate cuts) results in greater inflation and hence a weaker dollar, all other things being equal. So, I don't necessarily see as much upward pressure on the dollar in second half. However Lien makes excellent points here that the Fed is stepping in here so agressively to avoid a US recession. Good points Lien, as this is not generally being reflected by the mainstream press.