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  • President Obama will go into budget negotiations with Congressional leaders on Friday calling for a $1.6T increase in tax revenues over 10 years, double the $800B discussed during debt-ceiling talks in 2011. The sides are sticking to their guns over tax hikes for the rich, while the GOP also want entitlement changes. Obama is due to today meet a who's who of top CEOs, including those of Wal-Mart, IBM and Ford. [View news story]
    In the monetary system the US has, any tax cut is the same thing as the Federal Reserve shrinking its balance sheet, raising the Fed Fund rate, or increasing required reserves. Taxes in the US don't "fund" the gov, the way the would if the money medium were something the gov did not have a monopoly on, like gold or silver.

    So, in an environment where the central bank is attempting to get Federal Reserve notes into the hands of the people, the Executive is trying to get Federal Reserve notes out of the hands of the people.

    If such an event occurs, it will most likely produce a recession. The reduced amount of Federal Reserve notes, means there will be less notes to bid up asset prices, like equities. Equities will fall, people will feel as if they have less savings, and in order to compensate they will spend less.

    Depending on the size of the reduced spending, GDP could go negative. If it is negative for two quarters, then you have a recession. Either way, it may be better to anticipate lower equity prices, and take actions that are commensurate with that view.

    Obama is not a very thoughtful person. He seems to share the puppy dog on a leash mentality his supporters exhibit, as such, it does not appear he will embark on actions that represent informed decisions. You will need to take actions to protect yourself from such amateurish behavior.
    Nov 14 07:19 AM | 1 Like Like |Link to Comment
  • Greece would need an extra €32.6B in financing if given extra time to meet deficit-cutting targets, according to a Troika report prepared for tonight's meeting of EU finmins. Two sections of the report - an analysis of the country's debt sustainability and next steps - are thus far left blank. GREK -6.3%, NBG -12%[View news story]
    Can kicking
    Nov 14 03:58 AM | Likes Like |Link to Comment
1 Like