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  • “Because We Can’t Afford It:” Reining in Government at All Levels  [View instapost]
    Brilliant article Joseph! I agree that fiscal responsibility should be at the center of our goals and objectives as a nation. Your most poignant commentary dealt with the issue of raising taxes. Politicians love to talk about all the different things that can be done and aren't being done, yet very few address the elephant in the room. Reason being it usually has the same effect as attempting to curb the power of unions- loss of votes. While I'm on the subject of pachyderms rest assured there are no white elephants in our budget. Our government must be Aron Rolstanesque and will have to cut an arm off to save our country's life.

    I also think that America's problem goes beyond government fiscal responsibility. There is a fundamental problem with the general consumer business model, which seeks to induce spending from consumers without regard to their financial standing. Look at consumer credit. Here's an industry whose business model before the most recent financial crisis was built on extracting fees from the most fiscally irresponsible consumers(it has been restructured post-financial crisis). The housing crisis has its roots in sub-prime mortgage customers, again people that have a history of poor financial management. Every retail shop and grocery chain across America has adds which persuade the consumer to buy more than they need and receive a discount on the per unit price, yet ultimately the underlying problem is they are walking away with MORE than they need. Through a bombardment of advertisements on all levels excess has become an integrated part of Americana. Just as Nancy Reagan's "Just Say No." campaign was a painfully inadequate solution in addressing America's war on drugs, simply saying American's should spend less and save more oversimplifies the issue. It will be a heady task to change this cultural problem, but the financial crisis went a long way to addressing it. When a man loses his house and his job he gains a new appreciation of true subsistent living.

    Apr 24, 2011. 03:23 PM | Likes Like |Link to Comment
  • China Inflation Hits New High  [View article]
    I think with government allowing the Yaun to appreciate it will blunt the effects of inflation to some degree. However, wage increases will be a boon to inflationary pressure- increasing consumption and/ or investment in real assets and increasing costs for firms in China and as the article states, asking companies to eat costs can't be a long term solution to their inflation problems. China created artificial value in their economy with an undervalued currency. The most plausible solution is substantial Yuan appreciation. I doubt seriously Hu is entertaining thoughts of seeing the Yuan trade at its true intrinsic value.
    Apr 16, 2011. 10:24 AM | Likes Like |Link to Comment
  • Will Brazil's Monetary Policy Tightening Help or Hurt?  [View article]
    I think they've made a concious choice to put the brakes on the growth train, or at least slow it down some. If you decrease government spending won't that potentially decrease current subsidies for households thereby decreasing household discretionary income? It will be hard to run an election campaign with that strategy. I think the rate hike accompanied with the increased taxes in FDI was the right way to go. I just think it's the underlying fundamentals (lowered gov't debt, growing middle class, energy independence, commodities) of the Brazilian economy that attracts the majority of the FDI, FDI tax be damned.
    Jan 24, 2011. 09:22 PM | Likes Like |Link to Comment
  • Mexico: A Notable Exception Among Emerging Economies  [View article]
    Unless your looking for more exposure to the US market I don't see Mexico as an ideal investment opportunity. With the US as the number one source of foreign direct investment, and 80% of the exports- of this export driven economy- going to the US, Mexico lacks the diversification upside that most emerging market economies offer. It does, however, include all of the risks associated with EM economies.
    Jan 23, 2011. 07:19 AM | 1 Like Like |Link to Comment
  • Emerging Markets: The Bubbles Are Real  [View article]
    "bubbles occur when you get people investing in markets who are not familiar with the markets -- people who don’t really understand the fundamental characteristics of the new market they are investing in. "

    I disagree with this one point. I think the most recent financial crisis was a stark reminder that investment professionals with comprehensive knowledge of the fundamentals simply ignore the obvious and prioritize short-term return over long-term risk. In my opinion these decisions are definitely not made out of ignorance, but of a shrewd understanding of absolute return.
    Jan 16, 2011. 01:23 AM | 1 Like Like |Link to Comment