Econ70

Household Cash Flow

01/05/2011

Every penny at the pumps drains $1.5 billion out of household cash flow. Gas prices at the pumps are $3.15/gallon, but back in September it was closer to $2.70/gallon. This is nothing more than a $60 billion annualized drag on…

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The Biggest Myth

01/04/2011

The biggest myth being promulgated today is that the economy must be doing better because state & local government revenues are on the rise. Dude! That’s not the economy! It’s called tax increases. In fact, 23 states have boosted taxes…

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Happy New Year!

12/31/2010

I want to take the opportunity and wish you all the best for 2011. To health, happiness and prosperity — especially in risk adjusted terms.

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Down Jones Industrials

12/28/2010

10 From a historical standpoint, the yield on the S&P 500 (2%) is very low. This smacks of a market top and underscores the point that the market is too optimistic; investors are willing to forgo yield because they assume…

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Gross Deficit Product

12/22/2010

Our annual deficit is 10% of GDP. A deficit of 3% is sustainable (trust me) and 2% of the deficit will melt away as the economy revives; leaving a deficit of 5%. Had the Bush tax cuts been repealed that…

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Budget Brawl Makes no Cents

12/20/2010

There will probably a nasty spending fight in ’11 complicated by the need to raise the federal debt limit to avoid a default; a vote many new Republican have indicated they would not make. Republicans say the debt limit vote…

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Farming for Funds

12/17/2010

If there is a positive theme that transcends the weak U.S. economy it’s ag! Farm incomes are way up & indications suggest more increases in ’11. This is due to increasing demand for food, especially proteins, from rising living standards…

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Bond Bites Man

12/16/2010

Yields on Greek & Spanish bonds (credit downgrade looms) are up; Irish bond yields are also up to 8.4%, which, in real terms is over 10%. Something is going to give because that is unsustainable when real GDP is CONTRACTING…

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Back to Basics

12/15/2010

2010 NOV U.S. retail sales up 0.8% but Autos down 0.8%, Furniture/appliances down 0.5%, Electronics down 0.6% & Building materials down 0.1%. What was up? Groceries 0.8% Gas 4.0% Drug stores 0.9% & Clothing 2.7% What we had was a…

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Money, meet Mentality

12/14/2010

There is tremendous econometric evidence strongly suggesting that only tax cuts that are perceived to be permanent contribute to spending — people do not alter their behavior based on temporary changes to their income, wealth or job. Temporary tax cuts,…

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