From CNN:
Fewer Americans filed for their first week of unemployment benefits last week. So few in fact, that initial jobless claims were at their lowest level since May 2008.
About 366,000 people filed initial jobless claims in the week ended Dec. 10, the Labor Department said Thursday. That was a decrease of 19,000 from the prior week, and far better than the bigger influx of claims that economists were expecting....
That said, the United States job market is still far from robust. About 8.8. million jobs were lost in the financial crisis, and as of November, still less than a third of those have been added back. Plus, the population has also grown during that time.
Still, 3.6 million people filled for their second week of unemployment benefits or more, in the week ended Dec. 3, the most recent data available.
---------
Link: http://money.cnn.com/2011/12/15/news/economy/unemployment_benefits/index.htm
Thursday, December 15, 2011
New Foreclosure Wave is Coming
From CNBC:
Despite a seasonal slowdown in overall foreclosure activity, and a process still bogged down and backed up by the "robo-signing" processing scandal, the U.S real estate market is about to be hit by another surge of bank repossessions, according to a new report from the online foreclosure sale site RealtyTrac.
As banks resubmit millions of documents and courts begin hearing cases again, the backlog of over four million delinquent loans will start surging through the pipeline again....
While overall inventories of homes for sale have been dropping somewhat steadily over the past year, these new distressed properties will put increasing downward pressure on home prices nationally.... Both government and the private sector know that until the backlog of distressed properties is cleared, the housing market will have little chance of regaining a solid footing.
--------------
Link: http://www.cnbc.com/id/45682960
Despite a seasonal slowdown in overall foreclosure activity, and a process still bogged down and backed up by the "robo-signing" processing scandal, the U.S real estate market is about to be hit by another surge of bank repossessions, according to a new report from the online foreclosure sale site RealtyTrac.
As banks resubmit millions of documents and courts begin hearing cases again, the backlog of over four million delinquent loans will start surging through the pipeline again....
While overall inventories of homes for sale have been dropping somewhat steadily over the past year, these new distressed properties will put increasing downward pressure on home prices nationally.... Both government and the private sector know that until the backlog of distressed properties is cleared, the housing market will have little chance of regaining a solid footing.
--------------
Link: http://www.cnbc.com/id/45682960
Roubini: Fragile and Unbalanced in 2012
Commentary from Nouriel Roubini:
The outlook for the global economy in 2012 is clear, but it isn’t pretty: recession in Europe, anemic growth at best in the United States, and a sharp slowdown in China and in most emerging-market economies...
At this point, a eurozone recession is certain. While its depth and length cannot be predicted, a continued credit crunch, sovereign-debt problems, lack of competitiveness, and fiscal austerity imply a serious downturn....
Restoring robust growth is difficult enough without the ever-present specter of deleveraging and a severe shortage of policy ammunition. But that is the challenge that a fragile and unbalanced global economy faces in 2012. To paraphrase Bette Davis in All About Eve, “Fasten your seat belts, it’s going to be a bumpy year!”
--------
Link: http://www.project-syndicate.org/commentary/roubini45/English
The outlook for the global economy in 2012 is clear, but it isn’t pretty: recession in Europe, anemic growth at best in the United States, and a sharp slowdown in China and in most emerging-market economies...
At this point, a eurozone recession is certain. While its depth and length cannot be predicted, a continued credit crunch, sovereign-debt problems, lack of competitiveness, and fiscal austerity imply a serious downturn....
Restoring robust growth is difficult enough without the ever-present specter of deleveraging and a severe shortage of policy ammunition. But that is the challenge that a fragile and unbalanced global economy faces in 2012. To paraphrase Bette Davis in All About Eve, “Fasten your seat belts, it’s going to be a bumpy year!”
--------
Link: http://www.project-syndicate.org/commentary/roubini45/English
Tuesday, December 13, 2011
Now they tell us: Realtors say they Overcounted Home Sales for Five Years
From CNBC online:
Data on sales of previously owned U.S. homes from 2007 through October this year will be revised down next week because of double counting, indicating a much weaker housing market than previously thought.
The National Association of Realtors said a benchmarking exercise had revealed that some properties were listed more than once, and in some instances, new home sales were also captured.
"All the sales and inventory data that have been reported since January 2007 are being downwardly revised. Sales were weaker than people thought," NAR spokesman Walter Malony told Reuters.
"We're capturing some new home data that should have been filtered out and we also discovered that some properties were being listed in more than one list."
....The depressed housing market is one of the key obstacles to strong economic growth and an oversupply of unsold homes on the market continues to stifle the sector.
-------------------
Link: http://www.cnbc.com/id/45659547
Data on sales of previously owned U.S. homes from 2007 through October this year will be revised down next week because of double counting, indicating a much weaker housing market than previously thought.
The National Association of Realtors said a benchmarking exercise had revealed that some properties were listed more than once, and in some instances, new home sales were also captured.
"All the sales and inventory data that have been reported since January 2007 are being downwardly revised. Sales were weaker than people thought," NAR spokesman Walter Malony told Reuters.
"We're capturing some new home data that should have been filtered out and we also discovered that some properties were being listed in more than one list."
....The depressed housing market is one of the key obstacles to strong economic growth and an oversupply of unsold homes on the market continues to stifle the sector.
-------------------
Link: http://www.cnbc.com/id/45659547
More: Corzine knew of $175M loan
From the Washington Post online:
A financial-exchange executive said that Jon Corzine [former co-Chairman of Goldman Sachs, U.S. Senator, New Jersey Governor] might have known that MF Global customers’ money was transferred earlier than Corzine has admitted.
CME Group Inc. Executive Chairman Terrence Duffy told a Senate panel that Corzine knew before Oct. 30 about a transfer of $175 million in the form of a loan to a European affiliate of MF Global.
Corzine, a former senator, has testified that he didn’t know any customer money was missing until Oct. 30, the day before MF Global became the eighth-largest bankruptcy in U.S. history....
Under a 2002 anti-corporate-fraud law that Corzine co-wrote as a U.S. senator, the CEO and chief financial officer of public companies must personally certify the accuracy of their company’s financial statements. It can be a violation of the law for executives to sign a false statement.
The three executives say that they didn’t become aware of the shortfall until hours before the firm filed for bankruptcy protection on Oct. 31....
The Senate panel is one of three committees to have issued subpoenas to compel Corzine’s testimony on the issue. It marked the first time a former senator has been subpoenaed by his former peers in more than 100 years, according to the Senate historian’s office....
---------------
Link: http://www.washingtonpost.com/business/corzine-and-2-other-top-mf-global-executives-deny-role-in-missing-12b-of-clients-money/2011/12/13/.html
A financial-exchange executive said that Jon Corzine [former co-Chairman of Goldman Sachs, U.S. Senator, New Jersey Governor] might have known that MF Global customers’ money was transferred earlier than Corzine has admitted.
CME Group Inc. Executive Chairman Terrence Duffy told a Senate panel that Corzine knew before Oct. 30 about a transfer of $175 million in the form of a loan to a European affiliate of MF Global.
Corzine, a former senator, has testified that he didn’t know any customer money was missing until Oct. 30, the day before MF Global became the eighth-largest bankruptcy in U.S. history....
Under a 2002 anti-corporate-fraud law that Corzine co-wrote as a U.S. senator, the CEO and chief financial officer of public companies must personally certify the accuracy of their company’s financial statements. It can be a violation of the law for executives to sign a false statement.
The three executives say that they didn’t become aware of the shortfall until hours before the firm filed for bankruptcy protection on Oct. 31....
The Senate panel is one of three committees to have issued subpoenas to compel Corzine’s testimony on the issue. It marked the first time a former senator has been subpoenaed by his former peers in more than 100 years, according to the Senate historian’s office....
---------------
Link: http://www.washingtonpost.com/business/corzine-and-2-other-top-mf-global-executives-deny-role-in-missing-12b-of-clients-money/2011/12/13/.html
Sunday, December 11, 2011
The Fattest or the Fittest?
From Gretchen Morgenson on the New York Times website:
Institutions most likely to receive assistance from the federal government if they become troubled — behemoths like Citigroup, Bank of America or Wells Fargo — have grown only larger in recent years.
... the army arguing for change is far outgunned by the battalions of bankers and lobbyists working to maintain the status quo. But some combatants seeking reform believe they are making headway.
Richard W. Fisher, the president of the Federal Reserve Bank of Dallas ... described, quite colorfully, the problems of these unwieldy institutions and the regulatory ethic “that coddles survival of the fattest rather than promoting survival of the fittest.”
...Sheila Bair, former chairwoman of the Federal Deposit Insurance Corporation ... “I know that many members of this subcommittee heard the same arguments that I heard during the crisis — that bailouts were necessary or the ‘entire system’ would come down,” she said. “But we never really had good, detailed information about the derivatives counterparties, bond holders and others who were ultimately benefiting from the bailouts and why they needed protecting.”
Such details are still kept under wraps. Ms. Bair urged the Fed and the F.D.I.C. to write rules requiring banks to report on their interrelationships. That way, distress at one institution can be recognized before it causes crippling losses at another.
In her testimony, Ms. Bair also urged regulators to write rules requiring executives and boards to be “personally accountable for monitoring and compliance” of the institutions they oversee.
...“What in the world are they being paid for?”
At the moment, they are being paid for taking risks that generate lush bonuses when things go well but that require taxpayer bailouts when the tide turns. Main Street understands that this is wrong and that allowing it to continue is dangerous. It’s past time that Washington did something about it.
--------------------
Link: http://www.nytimes.com/2011/12/11/business/a-fed-banker-wants-to-break-up-some-banks.html
Institutions most likely to receive assistance from the federal government if they become troubled — behemoths like Citigroup, Bank of America or Wells Fargo — have grown only larger in recent years.
... the army arguing for change is far outgunned by the battalions of bankers and lobbyists working to maintain the status quo. But some combatants seeking reform believe they are making headway.
Richard W. Fisher, the president of the Federal Reserve Bank of Dallas ... described, quite colorfully, the problems of these unwieldy institutions and the regulatory ethic “that coddles survival of the fattest rather than promoting survival of the fittest.”
...Sheila Bair, former chairwoman of the Federal Deposit Insurance Corporation ... “I know that many members of this subcommittee heard the same arguments that I heard during the crisis — that bailouts were necessary or the ‘entire system’ would come down,” she said. “But we never really had good, detailed information about the derivatives counterparties, bond holders and others who were ultimately benefiting from the bailouts and why they needed protecting.”
Such details are still kept under wraps. Ms. Bair urged the Fed and the F.D.I.C. to write rules requiring banks to report on their interrelationships. That way, distress at one institution can be recognized before it causes crippling losses at another.
In her testimony, Ms. Bair also urged regulators to write rules requiring executives and boards to be “personally accountable for monitoring and compliance” of the institutions they oversee.
...“What in the world are they being paid for?”
At the moment, they are being paid for taking risks that generate lush bonuses when things go well but that require taxpayer bailouts when the tide turns. Main Street understands that this is wrong and that allowing it to continue is dangerous. It’s past time that Washington did something about it.
--------------------
Link: http://www.nytimes.com/2011/12/11/business/a-fed-banker-wants-to-break-up-some-banks.html
Saturday, December 10, 2011
Corzine offers Testimony of the Week
From the Washington Post website:
“I simply do not know where the money is, or why the accounts have not been reconciled to date,” Corzine said, according to the testimony....
Jon S. Corzine, the former U.S. senator and governor who presided over the collapse of the commodities brokerage MF Global, told lawmakers Thursday that he never intended to authorize a transfer of customer funds to the firm’s accounts and that if he did “it was a misunderstanding.”
...Corzine served as chairman and chief executive of Goldman Sachs but, according to published accounts, was forced out.
He used the personal fortune he built at Goldman to fuel his ascent to the U.S. Senate, where he served on the Banking Committee. He later won the New Jersey governorship. In 2007, he was badly injured in a car crash.
He ran for reelection as governor of New Jersey in 2009 but was defeated by Republican Chris Christie...
At MF Global, Corzine was returning to his Wall Street roots. The job could have served as a step toward a political comeback. As recently as last spring, he hosted a fundraiser for President Obama.
Now, Corzine’s disastrous tenure at MF Global has left him in a harsh spotlight. The House Agriculture Committee isn’t the only congressional panel eager to question Corzine.
The Senate Agriculture Committee on Tuesday voted unanimously to subpoena him for a Dec. 13 hearing, and the House Financial Services Subcommittee on Oversight and Investigations voted 15-0 Wednesday to subpoena him for a Dec. 15 hearing.
------------------------
Link: http://www.washingtonpost.com/business/economy/jon-corzine-to-tell-house-panel-he-doesnt-know-where-customers-money-went/2011/12/07/
“I simply do not know where the money is, or why the accounts have not been reconciled to date,” Corzine said, according to the testimony....
Jon S. Corzine, the former U.S. senator and governor who presided over the collapse of the commodities brokerage MF Global, told lawmakers Thursday that he never intended to authorize a transfer of customer funds to the firm’s accounts and that if he did “it was a misunderstanding.”
...Corzine served as chairman and chief executive of Goldman Sachs but, according to published accounts, was forced out.
He used the personal fortune he built at Goldman to fuel his ascent to the U.S. Senate, where he served on the Banking Committee. He later won the New Jersey governorship. In 2007, he was badly injured in a car crash.
He ran for reelection as governor of New Jersey in 2009 but was defeated by Republican Chris Christie...
At MF Global, Corzine was returning to his Wall Street roots. The job could have served as a step toward a political comeback. As recently as last spring, he hosted a fundraiser for President Obama.
Now, Corzine’s disastrous tenure at MF Global has left him in a harsh spotlight. The House Agriculture Committee isn’t the only congressional panel eager to question Corzine.
The Senate Agriculture Committee on Tuesday voted unanimously to subpoena him for a Dec. 13 hearing, and the House Financial Services Subcommittee on Oversight and Investigations voted 15-0 Wednesday to subpoena him for a Dec. 15 hearing.
------------------------
Link: http://www.washingtonpost.com/business/economy/jon-corzine-to-tell-house-panel-he-doesnt-know-where-customers-money-went/2011/12/07/
Sunday, December 4, 2011
More Cronyism: Secret Fed Loans; Hundreds of Billions in Hidden Bailout Money; Big Banks Benefit with Profits of $13 Billion from Special Deals
From Bloomberg.com:
The Federal Reserve and the big banks fought for more than two years to keep details of the largest bailout in U.S. history a secret. Now, the rest of the world can see what it was missing.
The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day. Bankers didn’t mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy. And no one calculated until now that banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates, Bloomberg Markets magazine reports in its January issue.
Saved by the bailout, bankers lobbied against government regulations, a job made easier by the Fed, which never disclosed the details of the rescue to lawmakers even as Congress doled out more money and debated new rules aimed at preventing the next collapse...
----------------
Link: http://www.bloomberg.com/news/2011-11-28/secret-fed-loans-undisclosed-to-congress-gave-banks-13-billion-in-income.html
The Federal Reserve and the big banks fought for more than two years to keep details of the largest bailout in U.S. history a secret. Now, the rest of the world can see what it was missing.
The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day. Bankers didn’t mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy. And no one calculated until now that banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates, Bloomberg Markets magazine reports in its January issue.
Saved by the bailout, bankers lobbied against government regulations, a job made easier by the Fed, which never disclosed the details of the rescue to lawmakers even as Congress doled out more money and debated new rules aimed at preventing the next collapse...
----------------
Link: http://www.bloomberg.com/news/2011-11-28/secret-fed-loans-undisclosed-to-congress-gave-banks-13-billion-in-income.html
"Economy Creates 120,000 Jobs, Unemployment Rate Drops to 8.6%"... yet something is not right
From CNBC.com:
Job creation remained weak in the U.S. during November, with just 120,000 new positions created, though the unemployment rate slid to 8.6 percent, a government report showed Friday.
The rate fell from the previous month's 9.0 percent, a move which in part reflected a drop in those looking for jobs. The participation rate dropped to 64 percent, from 64.2 percent in October, representing 315,000 fewer job-seekers....
The drop in participation rate is significant in that had the labor force remained steady, the jobless rate would have dropped to 8.8 percent, according to Citigroup calculations. If the labor force had followed trend growth, unemployment would be at 8.9 percent.
"Overall, the continued modest employment gains reflect an economy that plods along at an uninspiring pace," Kathy Bostjancic, director of macroeconomic analysis at The Conference Board, said in a statement. "These modest job gains are still not enough to propel economic growth to a sustainable 2 percent-plus growth path."
The measure some refer to as the "real" unemployment rate, which counts discouraged workers, also took a fall to 15.6 percent from 16.2 percent, its lowest level since March 2009.
-------------
Link: http://www.cnbc.com/id/45521793
Job creation remained weak in the U.S. during November, with just 120,000 new positions created, though the unemployment rate slid to 8.6 percent, a government report showed Friday.
The rate fell from the previous month's 9.0 percent, a move which in part reflected a drop in those looking for jobs. The participation rate dropped to 64 percent, from 64.2 percent in October, representing 315,000 fewer job-seekers....
The drop in participation rate is significant in that had the labor force remained steady, the jobless rate would have dropped to 8.8 percent, according to Citigroup calculations. If the labor force had followed trend growth, unemployment would be at 8.9 percent.
"Overall, the continued modest employment gains reflect an economy that plods along at an uninspiring pace," Kathy Bostjancic, director of macroeconomic analysis at The Conference Board, said in a statement. "These modest job gains are still not enough to propel economic growth to a sustainable 2 percent-plus growth path."
The measure some refer to as the "real" unemployment rate, which counts discouraged workers, also took a fall to 15.6 percent from 16.2 percent, its lowest level since March 2009.
-------------
Link: http://www.cnbc.com/id/45521793
Our Deeply Daunting Jobs Hole
From the New Republic online:
As the Bureau of Labor Statistics announced a fall in the unemployment rate from 9.0 to 8.6 percent, it noted that a contraction of the labor force accounted for more than half the reduction in the number of unemployed....
Three points are worthy of note.
First: Despite the growth of the working-age population over the past four years, the labor force (roughly, the sum of those employed plus job-seekers) has not expanded. For various reasons, more and more Americans have been dropping out of the labor force. If Americans of working age were participating in the labor force at the same rate as they were at the onset of the recession, the labor force would be nearly 5 million people larger, and unemployment would be significantly worse in both absolute and percentage terms.
Second: Despite the modest economic recovery since the recession ended in mid-2009, total employment remains more than 5.5 million below the level of 2007 and about 1.6 million below where it was when President Obama took office.
Third: To regain full employment (5 percent, which happens to be the same as the level when the recession began) with the pre-recessionary labor force participation rate, we would need 150.7 million jobs—10.1 million more than we have today. That’s a reasonable measure of the hole we’re still in, two and a half years since the official end of the recession.
The American people are unlikely to cheer up about the economy until we get appreciably closer to the top of the hole.
Bill Galston is a senior fellow at the Brookings Institution and a contributing editor for The New Republic.
-------------
Link: http://www.tnr.com/article/the-vital-center/98073/unemployment-contraction-labor-force-recovery
As the Bureau of Labor Statistics announced a fall in the unemployment rate from 9.0 to 8.6 percent, it noted that a contraction of the labor force accounted for more than half the reduction in the number of unemployed....
Three points are worthy of note.
First: Despite the growth of the working-age population over the past four years, the labor force (roughly, the sum of those employed plus job-seekers) has not expanded. For various reasons, more and more Americans have been dropping out of the labor force. If Americans of working age were participating in the labor force at the same rate as they were at the onset of the recession, the labor force would be nearly 5 million people larger, and unemployment would be significantly worse in both absolute and percentage terms.
Second: Despite the modest economic recovery since the recession ended in mid-2009, total employment remains more than 5.5 million below the level of 2007 and about 1.6 million below where it was when President Obama took office.
Third: To regain full employment (5 percent, which happens to be the same as the level when the recession began) with the pre-recessionary labor force participation rate, we would need 150.7 million jobs—10.1 million more than we have today. That’s a reasonable measure of the hole we’re still in, two and a half years since the official end of the recession.
The American people are unlikely to cheer up about the economy until we get appreciably closer to the top of the hole.
Bill Galston is a senior fellow at the Brookings Institution and a contributing editor for The New Republic.
-------------
Link: http://www.tnr.com/article/the-vital-center/98073/unemployment-contraction-labor-force-recovery
For Jobless, Little Hope of Restoring Better Days
From the New York Times online:
People across the working spectrum suffered job losses in recent years: bricklayers and bookkeepers as well as workers in manufacturing and marketing.
But only a select few workers have fully regained their footing during the slow recovery....
According to (a) study... by the John J. Heldrich Center for Workforce Development at Rutgers, just 7 percent of those who lost jobs after the financial crisis have returned to or exceeded their previous financial position and maintained their lifestyles.
The vast majority say they have diminished lifestyles, and about 15 percent say the reduction in their incomes has been drastic and will probably be permanent. ...
More than two years after the recovery officially began, American employers have reinstated less than a quarter of the jobs lost during the downturn, according to Labor Department figures. Of the 13.1 million people still searching for work, more than 42 percent have been unemployed for six months or longer. About 8.9 million more are working part time because they cannot find full-time work.
While health care and some energy-related jobs have boomed throughout in recent years, the other winners have mostly been in skilled professions like computer systems design, management consulting and accounting, where employers have added back as many or more jobs than were cut during the downturn....
Some are trying for slots even if they do not meet basic qualifications. PricewaterhouseCoopers received more than 250,000 applications through its Web site over the last year, but it has hired only 1 percent from that pool, said Holly Paul, its United States recruiting leader. She said a house painter with no qualifications beyond high school had applied for 10 different openings that required college degrees and accounting certification.
“It’s definitely an eye-opener for me because it gives you an idea of what unfortunately is happening in the economy,” said Ms. Paul.
-----------
Link: http://www.nytimes.com/2011/12/02/business/for-jobless-little-hope-of-full-recovery-study-says.html
People across the working spectrum suffered job losses in recent years: bricklayers and bookkeepers as well as workers in manufacturing and marketing.
But only a select few workers have fully regained their footing during the slow recovery....
According to (a) study... by the John J. Heldrich Center for Workforce Development at Rutgers, just 7 percent of those who lost jobs after the financial crisis have returned to or exceeded their previous financial position and maintained their lifestyles.
The vast majority say they have diminished lifestyles, and about 15 percent say the reduction in their incomes has been drastic and will probably be permanent. ...
More than two years after the recovery officially began, American employers have reinstated less than a quarter of the jobs lost during the downturn, according to Labor Department figures. Of the 13.1 million people still searching for work, more than 42 percent have been unemployed for six months or longer. About 8.9 million more are working part time because they cannot find full-time work.
While health care and some energy-related jobs have boomed throughout in recent years, the other winners have mostly been in skilled professions like computer systems design, management consulting and accounting, where employers have added back as many or more jobs than were cut during the downturn....
Some are trying for slots even if they do not meet basic qualifications. PricewaterhouseCoopers received more than 250,000 applications through its Web site over the last year, but it has hired only 1 percent from that pool, said Holly Paul, its United States recruiting leader. She said a house painter with no qualifications beyond high school had applied for 10 different openings that required college degrees and accounting certification.
“It’s definitely an eye-opener for me because it gives you an idea of what unfortunately is happening in the economy,” said Ms. Paul.
-----------
Link: http://www.nytimes.com/2011/12/02/business/for-jobless-little-hope-of-full-recovery-study-says.html
A Trusted Market Predictor Falters
From the New York Times online:
ONE of the most reliable guides to investing in the American stock market — to buy during the third year of a presidential term — is in danger of failing for the first time since the Great Depression.
...The last negative return during the third year of a presidential term was in 1939, when the loss was a barely noticeable 0.1 percent. That loss came as storm clouds gathered in Europe with the beginning of World War II. It is hard to think of any year since the war when Europe’s problems have loomed as large to investors as they have this year.
As can be seen from the accompanying charts, an investor who put money into American stocks at the beginning of each third year, and then got out of the market for the next three years, would have done far better than one who chose any other year of the presidential cycle to invest in.
...A $100 investment in 1947, allowed to grow only in third years, would be worth more than $2,000 now. Similar investments in the first, second or fourth years would have grown to less than $400.
It has long been suspected that the fact that third years were the best was far from a coincidence, as presidents sought to stimulate the economy and corporate profits heading into a year when they would seek re-election or, if they were completing a second term, try to keep the White House in the hands of the same party.
This year, the economic outlook has been anything but clear, with encouraging signs of growth early in the year replaced by fears of a double-dip recession in the summer as the European credit crisis intensified. Since August, the market has gyrated wildly as European prospects have seemed to change almost daily....
------------
Link: http://www.nytimes.com/2011/12/03/business/as-a-market-predictor-a-trusty-guide-falters.html
ONE of the most reliable guides to investing in the American stock market — to buy during the third year of a presidential term — is in danger of failing for the first time since the Great Depression.
...The last negative return during the third year of a presidential term was in 1939, when the loss was a barely noticeable 0.1 percent. That loss came as storm clouds gathered in Europe with the beginning of World War II. It is hard to think of any year since the war when Europe’s problems have loomed as large to investors as they have this year.
As can be seen from the accompanying charts, an investor who put money into American stocks at the beginning of each third year, and then got out of the market for the next three years, would have done far better than one who chose any other year of the presidential cycle to invest in.
...A $100 investment in 1947, allowed to grow only in third years, would be worth more than $2,000 now. Similar investments in the first, second or fourth years would have grown to less than $400.
It has long been suspected that the fact that third years were the best was far from a coincidence, as presidents sought to stimulate the economy and corporate profits heading into a year when they would seek re-election or, if they were completing a second term, try to keep the White House in the hands of the same party.
This year, the economic outlook has been anything but clear, with encouraging signs of growth early in the year replaced by fears of a double-dip recession in the summer as the European credit crisis intensified. Since August, the market has gyrated wildly as European prospects have seemed to change almost daily....
------------
Link: http://www.nytimes.com/2011/12/03/business/as-a-market-predictor-a-trusty-guide-falters.html
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