From Bloomberg.com:
"How Paulson Gave Hedge Funds Advance Word"
(Bush Administration) Treasury Secretary Henry Paulson stepped off the elevator into the Third Avenue offices of hedge fund Eton Park Capital Management LP in Manhattan. It was July 21, 2008, and market fears were mounting. Four months earlier, Bear Stearns had sold itself for just $10 a share to JPMorgan.
Now, amid tumbling home prices and near-record foreclosures, attention was focused on a new source of contagion: Fannie Mae and Freddie Mac, which together had more than $5 trillion in mortgage-backed securities and other debt outstanding, Bloomberg Markets reports in its January issue....
Paulson had spoken to New York Times reporters and editors, according to his Treasury Department schedule. A Times article the next day said the Federal Reserve and the Office of the Comptroller of the Currency were inspecting Fannie and Freddie’s books and cited Paulson as saying he expected their examination would give a signal of confidence to the markets.
At the Eton Park meeting, he sent a different message, according to a fund manager who attended. Over sandwiches and pasta salad, he delivered that information to a group of men capable of profiting from any disclosure.
Around the conference room table were a dozen or so hedge- fund managers and other Wall Street executives -- at least five of them alumni of Goldman Sachs Group Inc., of which Paulson was chief executive officer and chairman from 1999 to 2006....
After a perfunctory discussion of the market turmoil, the fund manager says, the discussion turned to Fannie Mae and Freddie Mac. Paulson said he had erred by not punishing Bear Stearns shareholders more severely. The secretary, then 62, went on to describe a possible scenario for placing Fannie and Freddie into “conservatorship” -- a government seizure designed to allow the firms to continue operations despite heavy losses in the mortgage markets.
Paulson explained that under this scenario, the common stock of the two government-sponsored enterprises, or GSEs, would be effectively wiped out. So too would the various classes of preferred stock, he said.
The fund manager says he was shocked that Paulson would furnish such specific information -- to his mind, leaving little doubt that the Treasury Department would carry out the plan. The managers attending the meeting were thus given a choice opportunity to trade on that information....
---------
Link: http://www.bloomberg.com/news/2011-11-29/how-henry-paulson-gave-hedge-funds-advance-word-of-2008-fannie-mae-rescue.html
Tuesday, November 29, 2011
Sunday, November 27, 2011
Where Greeks Hide Their Savings
From the Globalpost.com:
-------------------------------
Athens, Greece: Hardware-store owner Dimitris Andreadakis is brutally honest with customers who inquire about buying safes where they can stash euros.
“I tell them, ‘Don’t do it. It’s dangerous,’” he said, noting that burglaries are rising. “People can come with a gun to your head.”
The risk is worth it to many Greeks. “Most of the people still do it,” he said. Sales have risen 40 percent at his store in the past year.
They’re motivated by what they regard as a more ominous scenario: watching the value of their savings evaporate, in the unlikely but still anxiety-inducing prospect that debt-ridden Greece abandons the euro and returns to the drachma. If that happens, a greatly devalued drachma could put imported goods like food, fuel and electronics out of reach.
To protect their savings, Greeks are pulling their euros out of the bank at an alarming rate. Over the past 21 months, they’ve been sending money to Swiss bank accounts, stuffing safe-deposit boxes, and installing home safes to horde euros.....
From the start of 2010 through this September, $75 billion in deposits was withdrawn, according to Bank of Greece statistics. That represents a 23 percent drop in assets — increasing the pressure on already beleaguered banks....
The financial exodus represents households and corporations, although households account for about 80 percent of the withdrawals....
...not every euro withdrawn from Greek banks is going...under the mattress.
Greeks have been tapping their savings for survival purposes. Unemployment has reached 18.4 percent, according to the latest monthly figures. And a new property tax is due soon. It’s being collected through electric bills, with the threat of power shutoffs for delinquents.
“It seems like every month there’s a new tax,” said Savvas Dimitriou, who helps operate his parents’ kiosk after being laid off nine months ago.
Dimitriou noted that customers of all ages are increasingly paying for items with small coins. Inside his kiosk near a north Athens metro station, he collects the 1 cent, 2 cent, and 5 cent coins in small plastic drinking cups. They add up to about $20 per week.
“I haven’t seen that in years,” he said of the reliance on small coins. “Now, we see it every day.”
--------------
Link: http://www.globalpost.com/dispatch/news/regions/europe/111122/where-greeks-hide-their-savings
-------------------------------
Athens, Greece: Hardware-store owner Dimitris Andreadakis is brutally honest with customers who inquire about buying safes where they can stash euros.
“I tell them, ‘Don’t do it. It’s dangerous,’” he said, noting that burglaries are rising. “People can come with a gun to your head.”
The risk is worth it to many Greeks. “Most of the people still do it,” he said. Sales have risen 40 percent at his store in the past year.
They’re motivated by what they regard as a more ominous scenario: watching the value of their savings evaporate, in the unlikely but still anxiety-inducing prospect that debt-ridden Greece abandons the euro and returns to the drachma. If that happens, a greatly devalued drachma could put imported goods like food, fuel and electronics out of reach.
To protect their savings, Greeks are pulling their euros out of the bank at an alarming rate. Over the past 21 months, they’ve been sending money to Swiss bank accounts, stuffing safe-deposit boxes, and installing home safes to horde euros.....
From the start of 2010 through this September, $75 billion in deposits was withdrawn, according to Bank of Greece statistics. That represents a 23 percent drop in assets — increasing the pressure on already beleaguered banks....
The financial exodus represents households and corporations, although households account for about 80 percent of the withdrawals....
...not every euro withdrawn from Greek banks is going...under the mattress.
Greeks have been tapping their savings for survival purposes. Unemployment has reached 18.4 percent, according to the latest monthly figures. And a new property tax is due soon. It’s being collected through electric bills, with the threat of power shutoffs for delinquents.
“It seems like every month there’s a new tax,” said Savvas Dimitriou, who helps operate his parents’ kiosk after being laid off nine months ago.
Dimitriou noted that customers of all ages are increasingly paying for items with small coins. Inside his kiosk near a north Athens metro station, he collects the 1 cent, 2 cent, and 5 cent coins in small plastic drinking cups. They add up to about $20 per week.
“I haven’t seen that in years,” he said of the reliance on small coins. “Now, we see it every day.”
--------------
Link: http://www.globalpost.com/dispatch/news/regions/europe/111122/where-greeks-hide-their-savings
Wednesday, November 23, 2011
$$$ Wall Street & Washington & Insider Whispers: Big Money Love Affair keeps on going and giving
From today's Wall Street Journal online:
"Hours after an Aug. 15 meeting with Federal Reserve Chairman Ben Bernanke in his office, Nancy Lazar made a hasty call to investor clients: The Fed was dusting off an obscure 1960s-era strategy known as Operation Twist.
The news pointed to a boom in long-term bonds. It was a good call. Over the next five weeks, prices on 10-year Treasury bonds soared, offering double-digit returns in an otherwise dismal year.
By the time the Fed announced its $400 billion Operation Twist on Sept. 21, the window for quick profits had all but slammed shut. Ms. Lazar is among a group of well-connected investors and analysts with access to top Federal Reserve officials....
The access is part of a push by hedge funds and other traders to get more information about the inner workings of government. Developments in Washington have become more important after the financial crisis in 2008...
New York Federal Reserve Bank President William Dudley also meets regularly with investors, both in his office with individuals and in committee groups. The New York Fed [...] has the strongest ties to investors because it conducts the Fed's bond-market transactions...
Over the past two-and-a-half years, Mr. Dudley has had dozens of private meetings, according to his calendar, which lists SAC Capital Advisors, Citadel Investment Group, Duquesne Capital Management, and Tudor Investments [All Hedge Funds], among others. Lloyd Blankfein, chief of Goldman Sachs, and Mr. Fink, of BlackRock, also had private meetings, according to Mr. Dudley's calendar...
Worries about Fed access surfaced a year ago. On Aug. 18, 2010, former Fed governor Laurence Meyer, who runs a research service predicting and analyzing Fed actions, told clients in a note the central bank's "bazooka is loaded" to buy bonds to stimulate the economy.
The note described how the Fed's "doves," members inclined to ease monetary policy, had said the Fed couldn't "sit on its hands,"... An Aug. 20 note included some specific information about the Fed's balance sheet.
A week later, Mr. Bernanke said during a speech in Jackson Hole, Wyo., that "policy options are available to provide additional stimulus" to the economy. Stocks rose on the news, which by then had given Mr. Meyer's clients plenty of time to profit."
----------------
Link: http://online.wsj.com/article/SB10001424052970204554204577025922155198762.html
"Hours after an Aug. 15 meeting with Federal Reserve Chairman Ben Bernanke in his office, Nancy Lazar made a hasty call to investor clients: The Fed was dusting off an obscure 1960s-era strategy known as Operation Twist.
The news pointed to a boom in long-term bonds. It was a good call. Over the next five weeks, prices on 10-year Treasury bonds soared, offering double-digit returns in an otherwise dismal year.
By the time the Fed announced its $400 billion Operation Twist on Sept. 21, the window for quick profits had all but slammed shut. Ms. Lazar is among a group of well-connected investors and analysts with access to top Federal Reserve officials....
The access is part of a push by hedge funds and other traders to get more information about the inner workings of government. Developments in Washington have become more important after the financial crisis in 2008...
New York Federal Reserve Bank President William Dudley also meets regularly with investors, both in his office with individuals and in committee groups. The New York Fed [...] has the strongest ties to investors because it conducts the Fed's bond-market transactions...
Over the past two-and-a-half years, Mr. Dudley has had dozens of private meetings, according to his calendar, which lists SAC Capital Advisors, Citadel Investment Group, Duquesne Capital Management, and Tudor Investments [All Hedge Funds], among others. Lloyd Blankfein, chief of Goldman Sachs, and Mr. Fink, of BlackRock, also had private meetings, according to Mr. Dudley's calendar...
Worries about Fed access surfaced a year ago. On Aug. 18, 2010, former Fed governor Laurence Meyer, who runs a research service predicting and analyzing Fed actions, told clients in a note the central bank's "bazooka is loaded" to buy bonds to stimulate the economy.
The note described how the Fed's "doves," members inclined to ease monetary policy, had said the Fed couldn't "sit on its hands,"... An Aug. 20 note included some specific information about the Fed's balance sheet.
A week later, Mr. Bernanke said during a speech in Jackson Hole, Wyo., that "policy options are available to provide additional stimulus" to the economy. Stocks rose on the news, which by then had given Mr. Meyer's clients plenty of time to profit."
----------------
Link: http://online.wsj.com/article/SB10001424052970204554204577025922155198762.html
How Government Props Up Big Finance
From RealClearMarkets.com:
While there is no objective size the financial industry should be, it is fair to say it would never have become this large without the crony capitalist system that has masqueraded as a free market.
In the process, the financial industry has absorbed resources that could better be used elsewhere while imposing large, systemic risks on the economy...
Big finance has achieved its present girth on the back of numerous policy decisions - some going back centuries. Many of these policies had the intention of protecting the general public, but often had the unintended consequence of enriching bankers beyond the product of their labor.
... protections and hidden subsidies have enabled the financial industry to achieve enormous size and profitability, while placing the overall economy at great risk.
Usually, these protections were accompanied by regulations such as capital requirements or size restrictions. These regulations usually failed to achieve their intended results - especially over the long term - because financial institutions are able to wear down the restrictions by lobbying and by hiring away key regulators.
------------------
Link: http://www.realclearmarkets.com/articles/2011/11/22/how_government_props_up_big_finance_99381.html
While there is no objective size the financial industry should be, it is fair to say it would never have become this large without the crony capitalist system that has masqueraded as a free market.
In the process, the financial industry has absorbed resources that could better be used elsewhere while imposing large, systemic risks on the economy...
Big finance has achieved its present girth on the back of numerous policy decisions - some going back centuries. Many of these policies had the intention of protecting the general public, but often had the unintended consequence of enriching bankers beyond the product of their labor.
... protections and hidden subsidies have enabled the financial industry to achieve enormous size and profitability, while placing the overall economy at great risk.
Usually, these protections were accompanied by regulations such as capital requirements or size restrictions. These regulations usually failed to achieve their intended results - especially over the long term - because financial institutions are able to wear down the restrictions by lobbying and by hiring away key regulators.
------------------
Link: http://www.realclearmarkets.com/articles/2011/11/22/how_government_props_up_big_finance_99381.html
Friday, November 18, 2011
The economy has a job creation problem
From James Sherk, senior policy analyst in labor economics at the Heritage Foundation:
----------------
-----------
The Bureau of Labor Statistics (BLS) announced ... that job losses in the first quarter of 2011 hit a record low. In the first quarter, employers eliminated the fewest jobs since the BLS began keeping track two decades ago. Job losses are now one-sixth below their pre-recession levels. Workers with jobs are less likely to lose them now than before the recession began.
This sounds absurd. At the start of the recession, the news was filled with stories of companies going bankrupt. The unemployment rate stands at 9 percent. Record-low job losses seem impossible.
They are not. Unemployment remains high because of another record announced today: Hiring at new businesses also hit a new low. Only 660,000 workers were hired at new business establishments — 27 percent fewer than when the recession began. Overall job creation, both at existing firms and at startups, has similarly fallen one-sixth since the recession began.
The economy has a job-creation problem.
Entrepreneurs and investors are starting or expanding fewer businesses. Consequently, they need fewer new workers, making it very difficult for the unemployed to find work. If job creation had returned to normal at the recession’s end, unemployment would have returned to normal levels by now.
America needs more risk-taking and entrepreneurship. We need a climate that favors investment and business growth. Unfortunately, with Congress talking tax increases and the administration increasing regulation, this does not seem terribly likely.
-------------------------
Link: http://www.nationalreview.com/corner/283461/job-losses-and-business-startups-hit-record-lows-james-sherk
Also see: http://www.heritage.org/research/reports/2010/03/the-cause-of-high-unemployment-still-due-to-dwindling-job-creation
----------------
-----------
The Bureau of Labor Statistics (BLS) announced ... that job losses in the first quarter of 2011 hit a record low. In the first quarter, employers eliminated the fewest jobs since the BLS began keeping track two decades ago. Job losses are now one-sixth below their pre-recession levels. Workers with jobs are less likely to lose them now than before the recession began.
This sounds absurd. At the start of the recession, the news was filled with stories of companies going bankrupt. The unemployment rate stands at 9 percent. Record-low job losses seem impossible.
They are not. Unemployment remains high because of another record announced today: Hiring at new businesses also hit a new low. Only 660,000 workers were hired at new business establishments — 27 percent fewer than when the recession began. Overall job creation, both at existing firms and at startups, has similarly fallen one-sixth since the recession began.
The economy has a job-creation problem.
Entrepreneurs and investors are starting or expanding fewer businesses. Consequently, they need fewer new workers, making it very difficult for the unemployed to find work. If job creation had returned to normal at the recession’s end, unemployment would have returned to normal levels by now.
America needs more risk-taking and entrepreneurship. We need a climate that favors investment and business growth. Unfortunately, with Congress talking tax increases and the administration increasing regulation, this does not seem terribly likely.
-------------------------
Link: http://www.nationalreview.com/corner/283461/job-losses-and-business-startups-hit-record-lows-james-sherk
Also see: http://www.heritage.org/research/reports/2010/03/the-cause-of-high-unemployment-still-due-to-dwindling-job-creation
Tuesday, November 15, 2011
Why take the of risk of owning individual stocks?
Consider this excerpt from a story in the Detroit News about General Motors' stock: GM. Then look at the graphic that shows how the stock has performed over the past year compared to the index: the Dow Jones Industrial Average (DJIA)
The DJIA Index has a history dating back more than 100 years. You can own the DJIA Index instead as an ETF. The ticker symbol is DIA. It is purchased like a stock, but this type of mutual fund has very low expenses and diversifies your holdings across 30 stocks.
No one can fool you or take advantage of you if you buy and keep it for life.
You will always know what you own. It is the most widely reported market index. And your cost savings make a gigantic difference over time.
Why buy individual stocks with all the risks that are involved?
Patrick Broderick
_____________________________________________
From the Detroit News online:
"1 year after going public, GM has lost 1/3 of its value"
"One year after its much-heralded IPO, which raised a record $23.1 billion, General Motors Co.'s stock has swooned 30 percent from its initial offering price.
... post-bankruptcy GM made its triumphant comeback to Wall Street as a new, slimmer company with fewer workers, less debt and a lower cost structure.
The IPO — the world's largest ever — raised $23.1 billion. GM shares quickly jumped above the $33 initial offering price and soon rocketed to near $40...
But the ascent was short-lived. GM's share price plummeted to a low of $19.05 in early October. Despite seven consecutive quarters in the black and profits of $7.4 billion so far this year, investors have largely withdrawn to the sidelines. Morgan Stanley last week dropped GM from its list of recommended stocks."
_________________________________________________
More from Patrick Broderick:
The lower graph on the chart shows the performance of the DJIA, or Dow Jones Industrial Average. You can easily purchase a low expense Exchange Traded Fund (ETF) that will closely mirror the returns of the DJIA Index. The ticker symbol DIA can be owned in any account and bought anywhere you buy stocks.
It's gross annual expense ratio is 0.18%, which is 80% to 90% less expensive than the annual costs of most stock mutual funds.
You can easily substitute lowest cost ETFs for most of the investments you already own. We've guided hundreds of investors how to cut costs and save a fortune. Let us know if we can do the same for you. There is a great deal of money you can keep in your pockets for the rest of your investing life. Send us an email at BroderickETF@gmail.com
Here is a list of the current 30 Holdings in the DIA:
International Business Machines
Chevron Corp
Caterpillar Inc
Mcdonalds Corp
3M Co
United Technologies Corp
Exxon Mobil Corp
Coca Cola Co
Boeing Co
Johnson & Johnson
Procter & Gamble Co
Wal Mart Stores Inc
Travelers Companies Inc
American Express Co
Du Pont E I De Nemours & Co
Home Depot Inc
Verizon Communications Inc
Disney Walt Co
Merck & Co Inc New
Kraft Foods Inc
JP Morgan Chase & Co
At&T Inc
Hewlett Packard Co
Microsoft Corp
Intel Corp
Pfizer Inc
Cisco Sys Inc
General Electric Co
Alcoa Inc
Bank Of America Corp
Find more information on the SPDR Dow Jones Industrial Average ETF (DIA) click on SPDRS under the LINKS shown on the upper left column of this page.
The DJIA Index has a history dating back more than 100 years. You can own the DJIA Index instead as an ETF. The ticker symbol is DIA. It is purchased like a stock, but this type of mutual fund has very low expenses and diversifies your holdings across 30 stocks.
No one can fool you or take advantage of you if you buy and keep it for life.
You will always know what you own. It is the most widely reported market index. And your cost savings make a gigantic difference over time.
Why buy individual stocks with all the risks that are involved?
Patrick Broderick
_____________________________________________
From the Detroit News online:
"1 year after going public, GM has lost 1/3 of its value"
"One year after its much-heralded IPO, which raised a record $23.1 billion, General Motors Co.'s stock has swooned 30 percent from its initial offering price.
... post-bankruptcy GM made its triumphant comeback to Wall Street as a new, slimmer company with fewer workers, less debt and a lower cost structure.
The IPO — the world's largest ever — raised $23.1 billion. GM shares quickly jumped above the $33 initial offering price and soon rocketed to near $40...
But the ascent was short-lived. GM's share price plummeted to a low of $19.05 in early October. Despite seven consecutive quarters in the black and profits of $7.4 billion so far this year, investors have largely withdrawn to the sidelines. Morgan Stanley last week dropped GM from its list of recommended stocks."
_________________________________________________
Link: http://www.detnews.com/article/20111115/AUTO01/111150369/1148/A-year-after-going-public--GM%E2%80%99s-stock-has-lost-third-of-its-value
____________________________________________________________
More from Patrick Broderick:
The lower graph on the chart shows the performance of the DJIA, or Dow Jones Industrial Average. You can easily purchase a low expense Exchange Traded Fund (ETF) that will closely mirror the returns of the DJIA Index. The ticker symbol DIA can be owned in any account and bought anywhere you buy stocks.
It's gross annual expense ratio is 0.18%, which is 80% to 90% less expensive than the annual costs of most stock mutual funds.
You can easily substitute lowest cost ETFs for most of the investments you already own. We've guided hundreds of investors how to cut costs and save a fortune. Let us know if we can do the same for you. There is a great deal of money you can keep in your pockets for the rest of your investing life. Send us an email at BroderickETF@gmail.com
Here is a list of the current 30 Holdings in the DIA:
International Business Machines
Chevron Corp
Caterpillar Inc
Mcdonalds Corp
3M Co
United Technologies Corp
Exxon Mobil Corp
Coca Cola Co
Boeing Co
Johnson & Johnson
Procter & Gamble Co
Wal Mart Stores Inc
Travelers Companies Inc
American Express Co
Du Pont E I De Nemours & Co
Home Depot Inc
Verizon Communications Inc
Disney Walt Co
Merck & Co Inc New
Kraft Foods Inc
JP Morgan Chase & Co
At&T Inc
Hewlett Packard Co
Microsoft Corp
Intel Corp
Pfizer Inc
Cisco Sys Inc
General Electric Co
Alcoa Inc
Bank Of America Corp
Find more information on the SPDR Dow Jones Industrial Average ETF (DIA) click on SPDRS under the LINKS shown on the upper left column of this page.
Monday, November 14, 2011
Book: "Throw Them All Out!"
________________________
From author Peter Schweizer on his website:
"Why did I write this book?
First let me tell you why I didn’t. This is not a book about corrupt political leaders.
It is instead about a compromised political system....
...were anyone else in America to engage in these sort of trading patterns, they would likely receive scrutiny from the Securities and Exchange Commission (SEC). Indeed, private citizens might very likely go to jail were they to do this as it relates to their own jobs.
The real scandal is that in our current system of government, these trades are perfectly legal. We wouldn’t tolerate professional athletes betting on their games. So why do we let our leaders do it on something far more important?"
-----------------------------
http://throwthemalloutbook.com
From author Peter Schweizer on his website:
"Why did I write this book?
First let me tell you why I didn’t. This is not a book about corrupt political leaders.
It is instead about a compromised political system....
...were anyone else in America to engage in these sort of trading patterns, they would likely receive scrutiny from the Securities and Exchange Commission (SEC). Indeed, private citizens might very likely go to jail were they to do this as it relates to their own jobs.
The real scandal is that in our current system of government, these trades are perfectly legal. We wouldn’t tolerate professional athletes betting on their games. So why do we let our leaders do it on something far more important?"
-----------------------------
http://throwthemalloutbook.com
Tuesday, November 8, 2011
Investors Can Save Tens of Billions of Dollars Every Year in Cost Savings
___________________________________________
Refinance Your Investments® with the lowest cost ETFs.
___________________________________________
Our Life Keepers™ approach is the most cost effective way to invest.
* Buy the best ETFs, pay the lowest costs, keep them for life.
* Never pay more than 0.2% in total annual costs.
* Own them anywhere you buy stocks and bonds.
We teach. You invest. And, you keep all the cost savings. That's our method. (Click on the blue shaded links above about 2 inches from the top like "Real Examples" to get more information on what we do.)
We have demonstrated to investors how to save from hundreds of dollars up to tens of thousands of dollars in the first year alone. When those savings stay locked in and repeated every year, the total amounts saved can add extra hundreds of thousands of dollars to your individual accounts.
No matter how the markets perform - up, down, sideways - your cost savings will remain with you. In effect, you can stop others from skimming your wealth with fees that are no longer necessary to pay. From brokerage accounts to mutual funds, what you own can be replaced with the lowest cost ETFs from the best, largest asset managers like Vanguard.
Our experience over twenty five years tells us most investors don't know how much money they waste on costs. That is why most products, like mutual funds, bury their costs inside the products. You never see what you pay in actual dollar amounts.
We expose your costs. We put a dollar figure on the total. And show you what happens to the growth of your money when you keep the savings in your accounts.
Advice? Trust? We don't question your advisers; we explain how much they really cost you. The industry basically sells the value of the "relationships" that are promoted. We focus on the relationship between costs and the effect it has on your money. Learn our simple, effective alternative.
You can save large, meaningful amounts of money. That should be motivation enough. Together with a million or so other investors - average folks with whatever they have managed to save and invest - the total savings nationwide can reach tens of billions of dollars every year.
Stop focusing on what the industry, the marketers, and the media want you to follow. Instead, go inside what you own, put a dollar figure on the actual loss to costs that happens with your money, and consider a simpler way to invest that keeps large savings in your accounts.
Investments like the lowest cost ETFs from Vanguard are so good you can buy them and keep them for life. We know how more expensive products and services are justified and sold to you. But you don't need them. There is a better way that can be measured in real dollars.
Ask us to present our Life Keepers approach to your group of friends, fellow employees, or fellow retirees.
Patrick Broderick
Contact me at BroderickETF@gmail.com
Refinance Your Investments® with the lowest cost ETFs.
___________________________________________
Our Life Keepers™ approach is the most cost effective way to invest.
* Buy the best ETFs, pay the lowest costs, keep them for life.
* Never pay more than 0.2% in total annual costs.
* Own them anywhere you buy stocks and bonds.
We teach. You invest. And, you keep all the cost savings. That's our method. (Click on the blue shaded links above about 2 inches from the top like "Real Examples" to get more information on what we do.)
We have demonstrated to investors how to save from hundreds of dollars up to tens of thousands of dollars in the first year alone. When those savings stay locked in and repeated every year, the total amounts saved can add extra hundreds of thousands of dollars to your individual accounts.
No matter how the markets perform - up, down, sideways - your cost savings will remain with you. In effect, you can stop others from skimming your wealth with fees that are no longer necessary to pay. From brokerage accounts to mutual funds, what you own can be replaced with the lowest cost ETFs from the best, largest asset managers like Vanguard.
Our experience over twenty five years tells us most investors don't know how much money they waste on costs. That is why most products, like mutual funds, bury their costs inside the products. You never see what you pay in actual dollar amounts.
We expose your costs. We put a dollar figure on the total. And show you what happens to the growth of your money when you keep the savings in your accounts.
Advice? Trust? We don't question your advisers; we explain how much they really cost you. The industry basically sells the value of the "relationships" that are promoted. We focus on the relationship between costs and the effect it has on your money. Learn our simple, effective alternative.
You can save large, meaningful amounts of money. That should be motivation enough. Together with a million or so other investors - average folks with whatever they have managed to save and invest - the total savings nationwide can reach tens of billions of dollars every year.
Stop focusing on what the industry, the marketers, and the media want you to follow. Instead, go inside what you own, put a dollar figure on the actual loss to costs that happens with your money, and consider a simpler way to invest that keeps large savings in your accounts.
Investments like the lowest cost ETFs from Vanguard are so good you can buy them and keep them for life. We know how more expensive products and services are justified and sold to you. But you don't need them. There is a better way that can be measured in real dollars.
Ask us to present our Life Keepers approach to your group of friends, fellow employees, or fellow retirees.
Patrick Broderick
Contact me at BroderickETF@gmail.com
Monday, November 7, 2011
Do No Evil! says Google. But does Google really pay its Fair Share of taxes?
_____________________
From Businessweek.com:
"The Tax Haven That's Saving Google Billions"
Google uses a complicated structure to send most of its overseas profits to tax havens, keeping its corporate rate at a super-low 2.4 percent.
The heart of Google's international operations is an office building in central Dublin... credited with 88 percent of the search juggernaut's $12.5 billion in sales outside the U.S. Most of the profits, however, went to the tax haven of Bermuda.
To reduce its overseas tax bill, Google uses a complicated legal structure that has saved it $3.1 billion since 2007 and boosted last year's overall earnings by 26 percent. While many multinationals use similar structures, Google has managed to lower its overseas tax rate more than its peers in the technology sector....
In Bermuda there's no corporate income tax at all. Google's profits travel to the island's white sands via a convoluted route known to tax lawyers as the "Double Irish" and the "Dutch Sandwich." In Google's case, it generally works like this: When a company in Europe, the Middle East, or Africa purchases a search ad through Google, it sends the money to Google Ireland. The Irish government taxes corporate profits at 12.5 percent, but Google mostly escapes that tax because its earnings don't stay in the Dublin office, which reported a pretax profit of less than 1 percent of revenues in 2008.
Irish law makes it difficult for Google to send the money directly to Bermuda without incurring a large tax hit, so the payment makes a brief detour through the Netherlands, since Ireland doesn't tax certain payments to companies in other European Union states. Once the money is in the Netherlands, Google can take advantage of generous Dutch tax laws. Its subsidiary there, Google Netherlands Holdings, is just a shell (it has no employees) and passes on about 99.8 percent of what it collects to Bermuda. (The subsidiary managed in Bermuda is technically an Irish company, hence the "Double Irish" nickname....
The setup lowers Google's overseas tax bill, but it also affects U.S. tax revenues as the government struggles to close a projected $1.4 trillion budget gap. Google Ireland licenses its search and advertising technology from Google headquarters in Mountain View, Calif. The licensing agreement allows Google to attribute its overseas profits to its Irish operations instead of the U.S., where most of the technology was developed.
Even if the tax avoidance structures are legal, not everyone considers them ethical. Google is "flying a banner of doing no evil, and then they're perpetrating evil under our noses," says Abraham J. Briloff, a professor emeritus of accounting at Baruch College who has examined Google's tax disclosures. "Who is it that paid for the underlying concept on which they built these billions of dollars of revenues? It was paid for by the United States citizenry," Briloff says, referring to the fact that Google's initial technology was based in part on research done at Stanford University and funded by the National Science Foundation.
Profit-shifting arrangements such as Google's cost the U.S. government as much as $60 billion in annual revenue, according to Kimberly A. Clausing, an economics professor at Reed College in Portland, Ore.
__________________
Link: http://www.businessweek.com/magazine/content/10_44/b4201043146825.htm
____________________________
Patrick Broderick
From Businessweek.com:
"The Tax Haven That's Saving Google Billions"
Google uses a complicated structure to send most of its overseas profits to tax havens, keeping its corporate rate at a super-low 2.4 percent.
The heart of Google's international operations is an office building in central Dublin... credited with 88 percent of the search juggernaut's $12.5 billion in sales outside the U.S. Most of the profits, however, went to the tax haven of Bermuda.
To reduce its overseas tax bill, Google uses a complicated legal structure that has saved it $3.1 billion since 2007 and boosted last year's overall earnings by 26 percent. While many multinationals use similar structures, Google has managed to lower its overseas tax rate more than its peers in the technology sector....
In Bermuda there's no corporate income tax at all. Google's profits travel to the island's white sands via a convoluted route known to tax lawyers as the "Double Irish" and the "Dutch Sandwich." In Google's case, it generally works like this: When a company in Europe, the Middle East, or Africa purchases a search ad through Google, it sends the money to Google Ireland. The Irish government taxes corporate profits at 12.5 percent, but Google mostly escapes that tax because its earnings don't stay in the Dublin office, which reported a pretax profit of less than 1 percent of revenues in 2008.
Irish law makes it difficult for Google to send the money directly to Bermuda without incurring a large tax hit, so the payment makes a brief detour through the Netherlands, since Ireland doesn't tax certain payments to companies in other European Union states. Once the money is in the Netherlands, Google can take advantage of generous Dutch tax laws. Its subsidiary there, Google Netherlands Holdings, is just a shell (it has no employees) and passes on about 99.8 percent of what it collects to Bermuda. (The subsidiary managed in Bermuda is technically an Irish company, hence the "Double Irish" nickname....
The setup lowers Google's overseas tax bill, but it also affects U.S. tax revenues as the government struggles to close a projected $1.4 trillion budget gap. Google Ireland licenses its search and advertising technology from Google headquarters in Mountain View, Calif. The licensing agreement allows Google to attribute its overseas profits to its Irish operations instead of the U.S., where most of the technology was developed.
Even if the tax avoidance structures are legal, not everyone considers them ethical. Google is "flying a banner of doing no evil, and then they're perpetrating evil under our noses," says Abraham J. Briloff, a professor emeritus of accounting at Baruch College who has examined Google's tax disclosures. "Who is it that paid for the underlying concept on which they built these billions of dollars of revenues? It was paid for by the United States citizenry," Briloff says, referring to the fact that Google's initial technology was based in part on research done at Stanford University and funded by the National Science Foundation.
Profit-shifting arrangements such as Google's cost the U.S. government as much as $60 billion in annual revenue, according to Kimberly A. Clausing, an economics professor at Reed College in Portland, Ore.
__________________
Link: http://www.businessweek.com/magazine/content/10_44/b4201043146825.htm
____________________________
You likely can't google your taxes away like the search engine giant does. But guess what? You can permanently cut your investment costs and save serious amounts of money over the rest of your life.
We teach investors how and why they should cut their costs and keep that money in their own accounts. It is easy, effective, and long lasting! Contact us. We will be happy to teach you and your friends.
Sunday, November 6, 2011
Good CEOs plan ahead
----------------------------------------------
From KeithHennessy.com:
"Here is the President speaking ... in Cincinnati:
Now, that should not be too much to ask. And by the way, it wouldn’t kick in until 2013. So when you hear folks say, oh, we shouldn’t be raising taxes right now — nobody is talking about raising taxes right now. We’re talking about cutting taxes right now. But it does mean that there’s a long-term plan, and part of it involves everybody doing their fair share.
The problem with the President’s argument is that good CEOs plan ahead. When they think about whether to hire a new worker, buy a new piece of equipment, or build a new factory, they plan over a horizon that’s longer than just the next 15 months.
A tax increase enacted into law now, to take effect in 2013, is only slightly less discouraging to economic growth than a tax increase that takes effect immediately. A CEO who knows her firm’s taxes will increase in 2013 will be discouraged from hiring, investing, and building now.
The President is right when he says that “there’s a long-term plan.” Unfortunately, that long-term plan involves higher taxes, and firm managers know that.
Their horizon is not limited to the next election.
______________
Link: http://keithhennessey.com/2011/09/22/good-ceos-plan-ahead/
From KeithHennessy.com:
THE PRESIDENT: We already cut a trillion dollars in spending. [My plan] makes an additional hundreds of billions of dollars in cuts in spending, but it also asks the wealthiest Americans and the biggest corporations to pay their fair share of taxes.
Now, that should not be too much to ask. And by the way, it wouldn’t kick in until 2013. So when you hear folks say, oh, we shouldn’t be raising taxes right now — nobody is talking about raising taxes right now. We’re talking about cutting taxes right now. But it does mean that there’s a long-term plan, and part of it involves everybody doing their fair share.
The problem with the President’s argument is that good CEOs plan ahead. When they think about whether to hire a new worker, buy a new piece of equipment, or build a new factory, they plan over a horizon that’s longer than just the next 15 months.
A tax increase enacted into law now, to take effect in 2013, is only slightly less discouraging to economic growth than a tax increase that takes effect immediately. A CEO who knows her firm’s taxes will increase in 2013 will be discouraged from hiring, investing, and building now.
The President is right when he says that “there’s a long-term plan.” Unfortunately, that long-term plan involves higher taxes, and firm managers know that.
Their horizon is not limited to the next election.
______________
Link: http://keithhennessey.com/2011/09/22/good-ceos-plan-ahead/
Saturday, November 5, 2011
Yes, unemployment is still a crisis
__________
From the Washington Post online:
Another month, another dreary jobs report from the Labor Department. The U.S. economy added just 80,000 jobs in October, which isn’t enough to keep up with population growth, let alone get us back to full employment.
Indeed, this marks the seventh straight month that the jobless rate hasn’t nudged below 9 percent (it was at 9.1 percent last month). While there are a few bright spots in the report — the numbers for August and September were revised upward by 200,000 jobs — that still leaves vast battalions of unemployed workers sitting out there.
And for a reminder of why this is so alarming, the Hamilton Project has released a study looking, once more, at the heavy long-term toll that unemployment is taking on American workers.
The numbers are grim: Two years after losing his or her job, the average worker will earn 48 percent less than previously. Even workers who do find new jobs end up making about 17 percent less, and based on history, those lower wages will likely persist for years to come...
________________
Link: http://www.washingtonpost.com/blogs/ezra-klein/post/unemployment-takes-a-long-term-toll-on-workers/2011/11/04/gIQAE97olM_blog.html
From the Washington Post online:
Another month, another dreary jobs report from the Labor Department. The U.S. economy added just 80,000 jobs in October, which isn’t enough to keep up with population growth, let alone get us back to full employment.
Indeed, this marks the seventh straight month that the jobless rate hasn’t nudged below 9 percent (it was at 9.1 percent last month). While there are a few bright spots in the report — the numbers for August and September were revised upward by 200,000 jobs — that still leaves vast battalions of unemployed workers sitting out there.
And for a reminder of why this is so alarming, the Hamilton Project has released a study looking, once more, at the heavy long-term toll that unemployment is taking on American workers.
The numbers are grim: Two years after losing his or her job, the average worker will earn 48 percent less than previously. Even workers who do find new jobs end up making about 17 percent less, and based on history, those lower wages will likely persist for years to come...
________________
Link: http://www.washingtonpost.com/blogs/ezra-klein/post/unemployment-takes-a-long-term-toll-on-workers/2011/11/04/gIQAE97olM_blog.html
At this rate, full employment is 12 years away
________________
From MarketWatch:
WASHINGTON (MarketWatch) — The U.S. economy is creating jobs, but it’s doing it so slowly that, at the current pace of hiring, the unemployment rate would stay stuck at 9% for five more years...
Where are the jobs?
The pace of hiring is so weak, in fact, that the economy wouldn’t get back to full employment (around 6%) until 2023, or mid-way through Kim Kardashian’s second term in the White House...
--------------
Link: http://www.marketwatch.com/story/at-this-rate-full-employment-is-12-years-away-2011-11-03?link=home_carousel
From MarketWatch:
WASHINGTON (MarketWatch) — The U.S. economy is creating jobs, but it’s doing it so slowly that, at the current pace of hiring, the unemployment rate would stay stuck at 9% for five more years...
Where are the jobs?
The pace of hiring is so weak, in fact, that the economy wouldn’t get back to full employment (around 6%) until 2023, or mid-way through Kim Kardashian’s second term in the White House...
Link: http://www.marketwatch.com/story/at-this-rate-full-employment-is-12-years-away-2011-11-03?link=home_carousel
Friday, November 4, 2011
October: Jobs and 9% Unemployment
______________
New York Times:
Report Shows a Mere 80,000 Jobs Added in U.S. in October
The United States had another month of mediocre job growth in October, the Labor Department reported Friday.
___________
CNN/Money
October jobs report: Unemployment rate dips
October's hiring was also weaker than expected, as economists surveyed by CNNMoney had predicted a gain of 98,000 jobs in the month. Typically, it takes at least 150,000 jobs per month just to keep up with population growth.
The unemployment rate improved slightly, falling to 9.0%...
________________
Wall Street Journal
Private Sector Adds Jobs, but Unemployment Stubborn
U.S. companies kept adding workers to their payrolls in October, and data for the previous two months were revised higher, but the gains made only a small dent in the high unemployment rate.
_______________
Links:
CNN: http://money.cnn.com/2011/11/04/news/economy/jobs_report_unemployment/index.htm
WSJ: http://online.wsj.com/article/SB10001424052970203804204577017573707549462.html
NYT: http://www.nytimes.com/2011/11/05/business/economy/us-added-80000-jobs-in-october.html
New York Times:
Report Shows a Mere 80,000 Jobs Added in U.S. in October
The United States had another month of mediocre job growth in October, the Labor Department reported Friday.
___________
CNN/Money
October jobs report: Unemployment rate dips
October's hiring was also weaker than expected, as economists surveyed by CNNMoney had predicted a gain of 98,000 jobs in the month. Typically, it takes at least 150,000 jobs per month just to keep up with population growth.
The unemployment rate improved slightly, falling to 9.0%...
________________
Wall Street Journal
Private Sector Adds Jobs, but Unemployment Stubborn
U.S. companies kept adding workers to their payrolls in October, and data for the previous two months were revised higher, but the gains made only a small dent in the high unemployment rate.
_______________
Links:
CNN: http://money.cnn.com/2011/11/04/news/economy/jobs_report_unemployment/index.htm
WSJ: http://online.wsj.com/article/SB10001424052970203804204577017573707549462.html
NYT: http://www.nytimes.com/2011/11/05/business/economy/us-added-80000-jobs-in-october.html
Wednesday, November 2, 2011
The economics of polarization
By David P. Goldman at the Asia Times online:
America is engaged in class war, but not of the sort one reads about in the mainstream press. The truly indigent - young African-American men, for example, most of whom are now unemployed - have little to do in this war. Large corporations for the most part are bystanders as well; they will make their peace with the victor. This is a war of survival between the productive middle class on one hand, and the dependents of the state on the other.
The Tea Party's aversion to government spending is as pure an expression of rational self-interest as we have seen in American history. Like any new movement, it attracts more than its fair share of oddballs. The fact that a movement led by amateurs continues to wield so much power proves that it has good reason to be there.
The Tea Party is a middle-class movement, older, better educated and wealthier than average, but it is not a party of the very wealthy, who are conspicuously absent among its activists.
They know from personal or family experience that taxation is destroying the American middle class. They are approaching retirement, and most of their wealth is in the family home, as it is for the great majority of Americans:
The average homebuyer today, the chart shows, will pay almost as much in property taxes as in mortgage interest. (Mortgage interest is calculated on the basis of the current mortgage rate, reflecting the costs to prospective homebuyers rather than existing homeowners).
That is an astonishing outcome; in the past, mortgage interest typically was two or three times the property tax bill. Put another way, the combined cost of mortgage interest and property taxes is close to a trillion dollars a year today, about the same as at the peak of the housing bubble. Rising property taxes have just about wiped out the impact of lower interest rates and lower home prices on households. The property tax data include commercial as well as residential taxes, to be sure, but more than two-thirds of total property tax collections are from households....
State and local governments, though, have exhausted their tax base, and the continuous rise in property taxes through the crash in property prices has kept the real estate market more depressed than economic conditions otherwise might indicate. A further increase in tax rates would yield less revenue. In effect, the government would have to proceed from taxing private capital to expropriating it, de facto or de jure - for example, nationalizing banks and directing them to make loans to politically-favored projects, after the fashion of Latin American banana republics.
The alternative is to renegotiate pension and health benefits already promised to public sector unions....
----------------
Link: http://www.atimes.com/atimes/Global_Economy/MK01Dj04.html
America is engaged in class war, but not of the sort one reads about in the mainstream press. The truly indigent - young African-American men, for example, most of whom are now unemployed - have little to do in this war. Large corporations for the most part are bystanders as well; they will make their peace with the victor. This is a war of survival between the productive middle class on one hand, and the dependents of the state on the other.
The Tea Party's aversion to government spending is as pure an expression of rational self-interest as we have seen in American history. Like any new movement, it attracts more than its fair share of oddballs. The fact that a movement led by amateurs continues to wield so much power proves that it has good reason to be there.
The Tea Party is a middle-class movement, older, better educated and wealthier than average, but it is not a party of the very wealthy, who are conspicuously absent among its activists.
They know from personal or family experience that taxation is destroying the American middle class. They are approaching retirement, and most of their wealth is in the family home, as it is for the great majority of Americans:
The average homebuyer today, the chart shows, will pay almost as much in property taxes as in mortgage interest. (Mortgage interest is calculated on the basis of the current mortgage rate, reflecting the costs to prospective homebuyers rather than existing homeowners).
That is an astonishing outcome; in the past, mortgage interest typically was two or three times the property tax bill. Put another way, the combined cost of mortgage interest and property taxes is close to a trillion dollars a year today, about the same as at the peak of the housing bubble. Rising property taxes have just about wiped out the impact of lower interest rates and lower home prices on households. The property tax data include commercial as well as residential taxes, to be sure, but more than two-thirds of total property tax collections are from households....
State and local governments, though, have exhausted their tax base, and the continuous rise in property taxes through the crash in property prices has kept the real estate market more depressed than economic conditions otherwise might indicate. A further increase in tax rates would yield less revenue. In effect, the government would have to proceed from taxing private capital to expropriating it, de facto or de jure - for example, nationalizing banks and directing them to make loans to politically-favored projects, after the fashion of Latin American banana republics.
The alternative is to renegotiate pension and health benefits already promised to public sector unions....
----------------
Link: http://www.atimes.com/atimes/Global_Economy/MK01Dj04.html
Tuesday, November 1, 2011
Perspective from PIMCO's Bill Gross:
_______________
"Growth is the elixir that seems to make every ache, pain or serious ailment go away. Sovereign debt too high? Just grow your way out of it. Unemployment rates hitting historical peaks? Growth produces jobs. Stock markets depressed? Nothing a lot of growth wouldn’t cure.
But growth is the commodity that the world is short of at the moment... No country has enough of it – not even China – and many of the developed countries (specifically in Euroland) seem to be shrinking into recession....
The situation, of course, is compounded now by high debt levels and government spending that always used to restart capitalism’s private engine. However, as economists Rogoff & Reinhart have shown in their historic text, This Time Is Different, sovereign debt at 80-90% of GDP acts as a barrier to growth. Because debt service and interest rate spreads start to rise at these debt levels, a greater and greater percentage of a nation’s output must necessarily be diverted to creditors who in turn become leery of reinvesting in a slowing economy.
The virtuous circle becomes vicious in its reflexive counter reaction, spiraling into a debt/liquidity trap á la Japan’s lost decades if not stopped in time.
Halting the downward maelstrom is what current monetary policy is attempting to accomplish...
Link: http://www.pimco.com/EN/Insights/Pages/Pennies-from-Heaven.aspx
"Growth is the elixir that seems to make every ache, pain or serious ailment go away. Sovereign debt too high? Just grow your way out of it. Unemployment rates hitting historical peaks? Growth produces jobs. Stock markets depressed? Nothing a lot of growth wouldn’t cure.
But growth is the commodity that the world is short of at the moment... No country has enough of it – not even China – and many of the developed countries (specifically in Euroland) seem to be shrinking into recession....
The situation, of course, is compounded now by high debt levels and government spending that always used to restart capitalism’s private engine. However, as economists Rogoff & Reinhart have shown in their historic text, This Time Is Different, sovereign debt at 80-90% of GDP acts as a barrier to growth. Because debt service and interest rate spreads start to rise at these debt levels, a greater and greater percentage of a nation’s output must necessarily be diverted to creditors who in turn become leery of reinvesting in a slowing economy.
The virtuous circle becomes vicious in its reflexive counter reaction, spiraling into a debt/liquidity trap á la Japan’s lost decades if not stopped in time.
Halting the downward maelstrom is what current monetary policy is attempting to accomplish...
- If (1) globalization is precluding the hiring of domestic labor due to cheaper alternatives in developing countries, then rock-bottom yields can do little to change the minds of corporate decision makers.
- If (2) technological innovation is destroying retail book and record stores, as well as theaters and retail shopping centers nationwide due to online retailers, then what do low cap rates matter to Macy’s or Walmart in terms of future store expansion?
- If (3) U.S. and Euroland boomers are beginning to retire or at least plan more seriously for retirement, why will lower interest rates cause them to spend more? As a matter of fact, savers will have to save more just to replicate their expected retirement income from bank CDs or Treasuries that used to yield 5% and now offer something close to nothing.
Link: http://www.pimco.com/EN/Insights/Pages/Pennies-from-Heaven.aspx
Perspective from Comstock Partners:
________________
More Important than Historical Statistics--Private Debt Decline
We believe the private debt decline that has already started will continue, and be led by the consumers who are reigning in their spending habits, saving more, and paying off (or defaulting on) their enormous debt. Although it might seem that deleveraging would be beneficial for our economy, almost certainly any decline from present debt levels will not be "orderly" and consumer demand will contract sharply...
Now that the credit binge has ended, we expect consumer demand to continue declining. As the consumer continues to retrench, we expect the household debt to decline below $10 tn. from $13.3 tn. now. With the deprivation of this consumption power which has been the backbone of the U.S. economy for the past 75 years, the economy can be expected to enter a double dip recession.
Link: http://www.comstockfunds.com/default.aspx/act/newsletter.aspx/category/MarketCommentary/MenuGroup/Home/NewsLetterID/1613/startrow/3.htm
--------------------------
Another Bear Market Trap
The sharp rally off the October 4th intraday low of the S&P 500 is a result of the assumed prospect of a real plan to save the Euro Zone and the European banks that have large holdings of sovereign debt, and slightly improved U.S. economic numbers indicating that the U.S. may not be in a recession right now...
As we have pointed out numerous times in previous comments and special reports, the economy has a good reason to be weak. Household debt relative to GDP has exploded over the last couple of decades and consumers are now in the lengthy process of paying it down. That's why consumers are not spending and that's why businesses are not hiring. The demand for goods and services is just not there.
---------------
Link: http://www.comstockfunds.com/default.aspx?act=Newsletter.aspx&category=MarketCommentary&newsletterid=1615&menugroup=Home&AspxAutoDetectCookieSupport=1
More Important than Historical Statistics--Private Debt Decline
We believe the private debt decline that has already started will continue, and be led by the consumers who are reigning in their spending habits, saving more, and paying off (or defaulting on) their enormous debt. Although it might seem that deleveraging would be beneficial for our economy, almost certainly any decline from present debt levels will not be "orderly" and consumer demand will contract sharply...
Now that the credit binge has ended, we expect consumer demand to continue declining. As the consumer continues to retrench, we expect the household debt to decline below $10 tn. from $13.3 tn. now. With the deprivation of this consumption power which has been the backbone of the U.S. economy for the past 75 years, the economy can be expected to enter a double dip recession.
Link: http://www.comstockfunds.com/default.aspx/act/newsletter.aspx/category/MarketCommentary/MenuGroup/Home/NewsLetterID/1613/startrow/3.htm
--------------------------
Another Bear Market Trap
The sharp rally off the October 4th intraday low of the S&P 500 is a result of the assumed prospect of a real plan to save the Euro Zone and the European banks that have large holdings of sovereign debt, and slightly improved U.S. economic numbers indicating that the U.S. may not be in a recession right now...
As we have pointed out numerous times in previous comments and special reports, the economy has a good reason to be weak. Household debt relative to GDP has exploded over the last couple of decades and consumers are now in the lengthy process of paying it down. That's why consumers are not spending and that's why businesses are not hiring. The demand for goods and services is just not there.
---------------
Link: http://www.comstockfunds.com/default.aspx?act=Newsletter.aspx&category=MarketCommentary&newsletterid=1615&menugroup=Home&AspxAutoDetectCookieSupport=1
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