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States forget how to cut budgets but love to raise taxes
Governors want to levy higher taxes next year on clothes, soft drinks, gasoline, auto licenses and other items that likely will hit low- and middle-income families struggling to make ends meet in a deepening recession the hardest.
Officials say they are required by law to balance budgets and that tax increases are necessary as state governments face sharply declining tax revenues, but fiscal analysts say raising these taxes during an economic downturn will only worsen local economies and prolong the recession.
One of the most sweeping revenue packages comes out of New York, where Democratic Gov. David A. Paterson wants…
From Eisenhower To Obama… The Firms Poised To Cash In On The New U.S. Infrastructure Revolution
Pack your bags, folks – “There’s no more Wall Street.”
That’s the damning verdict from Alan Greenberg, former CEO of Bear Stearns.
Speaking on Bloomberg’s “Money and Politics” show on Monday, Greenberg declared that the existing Wall Street investment banking model is dead.
I’m not sure about death, but the broader U.S. economy is like a 2:00 AM drunk, continuing to stumble towards the end of a mind-altering 2008, with little long-term relief in sight. Will it ever find its way home again?
One of President-elect Barack Obama’s most ambitious and large-scale plans quite literally seeks to dig America out of this mess – and…
10Dec2008 | Smart Profits Report | 0 comments | ContinuedThe Absent-Minded Credit Cycle
The next big trend, dear reader…
It’s coming. Consumers – especially the baby boomers – are about to change their way of looking at things. And when Bernanke & Co. realize what is happening, they will greet the new trend like the citizens of Atlanta welcomed Sherman.
“War is hell,” said the yankee general, before burning the city down. So is a correction.
Yesterday’s news brought more details. The Dow rose 40 points. Oil remained where it was. Gold lost $3. And the dollar seems to be strengthening a little against the euro. You can now buy a euro for only $1.56.
“Retail sales…
11Aug2008 | Daily Reckoning | Comments Off | ContinuedHousing Prices: Why Greenspan Is Right About Real Estate Investments
I’ve disagreed with some of the things that former Fed Chairman Alan Greenspan has said and done over the years.
But what he said last week – that falling housing prices in America are “nowhere near the bottom” – you can take to the bank.
This may surprise some, especially since the national media just reported the single largest year-over-year drop in U.S. housing prices, May’s record 15.8% plunge.
But over the past several months, I’ve spent time looking at residential housing prices in cities large and small. I’ve been to areas that have held up relatively well, like Dallas, TX and Asheville,…
6Aug2008 | Investment U | Comments Off | ContinuedTHE BIGGEST TRANSFER OF WEALTH IN HISTORY continued…
This week began with alarm bells. First Bridgewater Associates broke the glass and pulled the handle; it said the conflagration in the credit markets might lead to losses four times higher than previous estimates – at $1.6 trillion. A lot of money – even for someone who lives in London.
Bridgewater helpfully pointed out that this was just the beginning; the world would lose an additional $12 trillion in foregone credit. When the going is good, each ounce of a bank’s share capital grows into as much as a pound of credit available to borrowers. But when the cycle turns, the…
12Jul2008 | Daily Reckoning | Comments Off | ContinuedThe End of the Boomland Economy
The Dow resumed its downward slide yesterday. It lost 237 points as the deflation commandos continued their counterattack.
It’s war. And war is hell, as General Sherman said, before burning Atlanta to the ground.
Oil was unchanged in yesterday’s trading. Gold gained $5.
Most of yesterday’s hard fighting took place in the financial sector.
“Fed Sees Turmoil Persisting Deep Into Next Year,” saith the New York Times.
The New York press tells us that Steve & Barry’s, a clothing retailer with 200 stores, has filed for Chapter 11. And Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE) got walloped again. The two Mississippi Companies [a reference…
11Jul2008 | Daily Reckoning | Comments Off | ContinuedThe Five Secrets to Succeed at Bear Market Investing
The Dow Jones Industrial Average is already in the bear’s grasp. And the U.S. economy may well be headed for a recession. But here’s the ultimate irony: Bear-market investing offers a direct pathway to the biggest profit opportunities most investors will ever see.
History shows time and again that the worst returns come to those who buy at – or even near – market peaks, like those of 1928, 1969, 1999 and 2007, when Price/Earnings (P/E) ratios are typically higher than “normal.â€
Conversely, investors who buy when the days are darkest reap the best returns: Think 1932, 1942, 1982, 2003 and –…
3Jul2008 | Money Morning | Comments Off | ContinuedTHE VOLCKER MYTH
Gradually, people are becoming aware that we have an inflation problem, which seems to stretch around the world. Perhaps it is time to think about how to resolve it. Certainly a few coy remarks by some Federal Reserve representative aren’t going to be effective. If that were all it took, then nobody would ever have an inflation problem. You would just say, “we are concerned about inflation,” and it would disappear – poof! – like a cartoon genie.
Sorry: not quite so easy.
Inflation is childishly simple to understand, but economists like to remain confused. When a currency loses value, markets gradually…
3Jul2008 | Daily Reckoning | Comments Off | ContinuedGlobal Investing Roundups
Report: Toyota Plunking $1 Billion on Brazil Plant; India Housing Boom Ending; GDP Revised Up; Home Sales Rise, Values Fall; Anheuser Busch to Reject InBev Bid; Bank of America Sheds Jobs; Gold Shares Glow; Oshkosh Plunges on Lowered Outlook
Toyota Motor Corp. (ADR: TM) plans to drop more than $1 billion on a new factory in Sao Paulo, Brazil, Valor Economico reported without citing a source. The new factory would be a bid to capture a share of the economic growth and rising incomes in South America.
A pair of mortgage executives in India said the country’s five-year property boom is…
27Jun2008 | Money Morning | Comments Off | ContinuedThe Statistical Battleground
With consumer confidence now testing generational lows, our politicians are, nevertheless, continuously assuring us that the economy is strong and that there is no cause for worry.
Although it is standard procedure for governments to soothe their citizenry with placebo politics in order to avoid panic and uprising, there is a line after which such a campaign is counterproductive. In fact, misleading statements about financial security are potentially dangerous to the country’s long-term economic wellbeing, and potentially toxic to investors.
Economic and financial statistics are the battleground over which the war of perception is fought. But as the saying goes:…
5Jun2008 | Money Morning | 1 comment | Continued
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