Commentary
« Previous EntriesDebt for Equity
Sunday, January 29th, 2012The world is awash in debt. Much of that debt, including sovereign debt, cannot be paid. Default is anticipated, with dire consequences as contagion engulfs the planet. As a business consultant, what would I advise? In the case of a private business, I would advise reorganization under bankruptcy laws. That would allow recognization of reality, [...]
2012 Outlook
Monday, January 2nd, 2012First, I would like to evaluate my 2011 outlook, which I posted on January 1, 2011. I think my “Most Likely Scenario” was very close to what actually occurred during 2011 in the U.S. economy. My forecast for GDP growth, inflation, unemployment and interest rates were close. However, my expectation that interest rates would be [...]
I Give Up
Wednesday, November 9th, 2011OK, I give up. If you have followed my posts for a while you know I have been very critical of government policies that support consumption at the expense of production – that I have been very critical of stimulus policies – that I have been very critical of government spending, borrowing, taxing, regulating….. Well, [...]
Flight to Quality
Sunday, November 6th, 2011During periods of financial uncertainty, such as we are experiencing today, investors seek to minimize risk by shifting their investments to low-risk securities. In recent decades, that means U.S. Government debt instruments. As market turmoil increases, the dollar rises relative to other currencies and U.S. Treasury yields decrease, as the prices of debt instruments increase. [...]
Debt
Thursday, June 16th, 2011Greeks are rioting. Banks, nations, governments at all levels are in trouble. Debt is stifling economic growth and threatening to plunge the world economy into chaos. In my book, I advocate the judicial use of debt. If debt can be used safely to leverage reliable returns, debt can be beneficial to the investor. But that [...]
Are You an Accidental Lender?
Friday, May 13th, 2011Markets have been in turmoil recently. Turmoil creates confusion as to where one should be invested. Let’s take a step back and try to see the forest for the trees. We know the Federal Reserve has announced they will discontinue QE2 at the end of June. Different opinions have been expressed regarding the implication for [...]
Be Prepared
Monday, May 2nd, 2011With the recent buzz regarding the Bernanke press conference and now the killing of Osama Bin Laden, we are witnessing an upbeat mood in U.S. financial markets. However, it is important to recognize that underlying fundamentals have not changed. The following remain in place: 1) The U.S. Government is committed to massive deficit spending. Even [...]
Land Valuation II
Friday, April 22nd, 2011I received an interesting call regarding land valuation recently. It went something like this: Eight acres of multi-family development land had been assessed for tax purposes based upon its imminent development potential. Annual taxes are $11,000. The land was foreclosed on by the lender, and the property is now owned by the FDIC. The FDIC [...]
Global Starvation
Tuesday, January 25th, 2011A panel of distinguished scholars recently completed a comprehensive study of global food supplies and hunger. This unique assemblage of the academic elite concluded that a global plan encompassing such issues as global warming, soil conservation, transportation, as well as crop production be prepared to address this problem. Accompanying the article about this study was [...]
2011 Outlook
Saturday, January 1st, 2011The future is too complex to predict with certainty. However, given the precarious state of the U.S. economy, I am compelled to attach probabilities to likely outcomes for the coming year. Most Likely Scenario I would apply a 70% to 80% probability that the following occurs in 2011: GDP: 2-3% reported rate of growth, though [...]
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