Sunday, October 31, 2010

Financial News Bloomberg Business Week Nov 1-7 Bullish Loans Stocks Bonds Up

Tags: Economy Up or Down Depends on Who Wins the House Positive and Negative Facts

Projected 4th Quarter Growth GDP + 3.0%, GDP Earnings Growth +43%, S&P Growth since 1/2/2009 +27%.

Corporate performance fueled by increased productivity and exports bodes well for 2011.

Higher airline traffic, rail loadings, and cargo freight miles all positive helps CSX, Ford, GE.

Retail sales going up at 0.7% in August and 0.6% in September. Wal Mart expects a positive 4th quarter. UPS raised its annual profit estimates in October after posting an 80 percent gain last quarter on higher international shipments.

The bad news is that the Republicans, if they win the House, will counteract the stimulus bill which helped by cutting taxes for 95% of Americans by reducing monthly tax bills of up to $800 for families and $400 for singles. Our economy may slump in 2011.

Also bad news for Americans is that a Republican win will stop needed infrastructure spending to keep the economy from tanking and will causes misery and possible deaths from bridge collapsing, sewers breaking down, electrical grid failures, and weakens our ability to deal with disasters because a Republican House will control spending on these projects.

Corporations who are similar to psychopaths who lack human emotions so will do anything, even commit crimes, to increase their bottom line. Psychopaths as we have seen in the worst type of serial killers can behave normally until they go in for the kill.

In this month’s psychologists interviewed serial killers in prison and were shocked at how normal they seem! The CIA chooses spies who either don’t have emotions or can control them extremely well. So they can kill without any psychological problems in many ways similar to corporations.

Harvard University’s Kenneth Rogoff said that one of the consequences of uncontrolled globalization is that it has had a terrible consequence on American workers whose pay and salaries of professionals and blue collar workers alike has gone down taking into account inflation. It brought us the Financial Crisis and exacerbated income inequality. As Harvard’s economist during the 1980s said, Reagan is trying to cause a Great Depression with his policies favoring just the rich.

A large disparity in income incurred during the 1920s is considered the major factor causing the Great Depression if we forget Ideology in our analysis. If the bottom 80 percent has no money to spend and no longer cannot get easy credit unless they are willing to carry 29% interest on their credit card. The increasingly poorer Middleclass can no longer afford to do this and keep our economy going with 70 percent of our economy dependent on just this factor alone. What we need is another Mr. Ford who tripled the income of his workers so they could afford the model A and T freshly coming off the assembly line.

One of my favorite financial reporter, Steven Pearlstein at the Washington Post said in the Bloomberg article that:

“As more and more of the income gets concentrated in the top, people at the top might use some of that money to essentially buy the political process, to buy politicians, to buy lawyers, to frustrate regulatory efforts, and essentially turn government into an instrument in which they can get yet more. … The reason (in the Progressive Era) they wanted to bust up the (monopolistic) Trusts was because the trusts would use their money to essentially use government as a club against everyone else.”

According to Mike Vitner, a senior economist at Wells Fargo, “We are likely to see bank lending increase, but at a very modest pace … The recovery will be very slow. We have a long road back.”

Finally my philosophy in investing:

Back in 2005, I was urging everyone who would listen to not buy a home but consider selling your home or condo. I did not like the heated market which I knew would collapse in several years or so. The Democrats tried to get the Republicans and Greenspan to pass a bill to control what is happening to the mortgage market but failed. I did not anticipate how bad it was going to get.

I would stay only in short term bonds, corporate dividend stocks, and be weary of investing a lot in Emerging markets which too many people are doing. If you want to stay in, be conservative. Popular trends may not stop quickly, but they will go down and more sharply if they keep going up. Lemmings follow the crowd over the cliff.

Obama early in 2007 as Senator tried to get the Republicans to act. They did not.

Bernanke tried to get the Bush administration to act early in 2008, but again they did not.

So why are the Democrats getting the blame? We have too many voters who call themselves Independents, but I would rather call them Dependents on political commercials to let them know who to vote for! Sharon Begley of Newsweek recently said that the lying Republican commercials may get the Independent voters to the polls because they feel they know something. I am hoping they will change their minds and vote for their own economic interests.

Jim Kawakami, Oct 31, 2010,

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