President Obama was re-elected yesterday, and we wish him well. But the news is already ancient, given the pressing demands of defusing the fiscal cliff threat–a deep round of tax hikes and spending cuts slated to start in January if politicians don’t intervene. Failure isn’t an option here, given the dire effects these cuts and tax hikes could inflict on the still-struggling economy. Unfortunately, that’s the likely scenario if politics as usual prevails in the weeks ahead. It’s hard to imagine anything else at the moment, given the rancorous, hyper-partisan atmosphere that’s defined the Beltway bunch for the past year.
Monthly Archives: November 2012
Strategic Briefing | 11.6.12 | The Election & The Economy
Economy Set for Better Times Whether Obama or Romney Wins
Bloomberg BusinessWeek | Nov 4
No matter who wins the election tomorrow, the economy is on course to enjoy faster growth in the next four years as the headwinds that have held it back turn into tailwinds. Consumers are spending more and saving less after reducing household debt to the lowest since 2003. Home prices are rebounding after falling more than 30 percent from their 2006 highs. And banks are increasing lending after boosting equity capital by more than $300 billion since 2009. “The die is cast for a much stronger recovery,” said Mark Zandi, chief economist in West Chester, Pennsylvania, for Moody’s Analytics Inc. He sees growth this year and next at about 2 percent before doubling to around 4 percent in both 2014 and 2015 as consumption, construction and hiring all pick up. The big proviso, according to Zandi and Yale University professor Ray Fair, is how the president-elect tackles the task of shrinking the $1.1 trillion federal-budget deficit.
ISM Services Index For October Points To Continued Growth
Today’s update of the ISM Non-Manufacturing (Services) Index for October corroborates the upbeat news from its manufacturing counterpart. In short, the economy continues to grow, or so these two widely watched indicators from the Institute for Supply Management suggest. The expansion is still well short of strong growth, but it’s hard to make the argument that the economy is in danger of shrinking any time soon.
Q4:2012 U.S. GDP Nowcast Update | 11.5.2012
Will the rebuilding in the Northeast in the wake of Hurricane Sandy’s destruction juice the economy’s modest growth trend? It’s too early to know, but the possibility can’t be dismissed. For now, it’s time to establish a baseline of nowcasts for Q4:2012 GDP. The official estimate is scheduled for release via the Bureau of Economic Analysis in late-February, and so there’s a long road ahead in terms of economic updates. The journey starts here: The current average of our five econometric-based nowcasts anticipates real annualized Q4 growth of 1.7%, or down slightly from Q3’s official 2.0% estimate.
A Decent Week For Economic News
It’s been a horrific week for weather for the eastern seaboard of the U.S., but the economic numbers remain encouraging. There’s still no sign that the economy is poised to break free of the slow-growth gravity field, but the numbers generally continue to support the view that a new recession isn’t an imminent threat.
Book Bits | 11.2.12
● How They Got Away with It: White Collar Criminals and the Financial Meltdown
Edited by Susan Will, Stephen Handelman, and David C. Brotherton
Summary via publisher, Columbia University Press
An international team of scholars with backgrounds in criminology, sociology, economics, business, government regulation, and law examine the historical, social, and cultural causes of the 2008 economic crisis. They also take stock of the long-term devastation done to governments, businesses, and individuals, and the ongoing, systemic issues that have so far allowed the perpetrators to get away with their crimes. Insightful essays probe the workings of the toxic subprime loan industry, the role of external auditors, the consequences of Wall Street deregulation, the manipulations of alpha hedge fund managers, and the “Ponzi-like” culture of contemporary capitalism. They unravel modern finance’s complex schematics and highlight their susceptibility to corruption, fraud, and outright racketeering. They examine the involvement of enablers, including accountants, lawyers, credit rating agencies, and regulatory workers, who failed to protect the public interest and enforce existing checks and balances. While the United States was “ground zero” of the meltdown, the financial crimes of other countries intensified the disaster. Internationally-focused essays consider bad practice in China and the European property markets, and they draw attention to the far-reaching consequences of transnational money laundering and tax evasion schemes.
Major Asset Classes | October 2012 | Performance Review
Electricity is still MIA for The Capital Spectator, and more of the same is expected for the next several days, courtesy of the ongoing fallout from Hurricane Sandy. But through the generosity of the local high school there’s a bit of light in this tunnel and the opportunity to update the returns for the major asset classes.
Sandy’s Wrath
Hurricane Sandy has taken a heavy toll on the East Coast of the U.S., and the destruction is particularly harsh in New Jersey. Unfortunately, that’s where The Capital Spectator resides. The lack of electricity is, of course, the 21st century equivalent of getting kicked in the head, and your editor remains dazed at this point. Internet access is spotty and today’s return to the digital world is a brief affair. I’m told that power won’t be restored until early next week, and that’s the optimistic forecast. In short, stuff happened and the usual routine at CapitalSpectator.com remains on hiatus. But not for long. Meantime, to all our East Coast readers, especially those in New Jersey: Be well, be safe.