Deficit terrorism has not let up
Posted by WARREN MOSLER on December 11th, 2009
No telling which way the Obama administration will go.
Probably the middle path which will mean muddling through with high, repressive output gaps
that do the most damage to their own constituency.
It’s not a bad environment for stocks, the near term risk remaing a strong dollar that reduces translations of foreign earnings and
softens exports, while reduced personal income (including a large drop in net interest income) keeps consumption relatively low.
7 deadly innocent frauds updated draft:
Link
Gov’t Spending Is Like Tiger’s Dating
By Jim Rogers
Dec. 11 (CNBC) — The U.S. government’s plan to increase spending as a way to kick-start the economy will leave the country with no way to help its way out of the next crisis, Jim Rogers, chairman of Jim Rogers Holdings, told CNBC Thursday.
The Treasury Department “has been putting out all of this stimulus and now they’re talking about extending the (Troubled Asset Relief Program),” Rogers said.
On Thursday Treasury Secretary Timothy Geithner announced TARP would be extended into next year in part to free up public money for job creation, but also as insurance against another crisis.
Geithner “is a very smart person,” but “he’s been wrong about everything for the last 15 years,” Rogers said.
“Why are we listening to any of those guys down there? They’re making our situation worse,” he said. “They said in writing yesterday the solution to our problem is to spend more money … that’s what got us into this problem: too much debt.”
“That’s like saying to Tiger Woods, ‘you get another girlfriend and it will solve your problems’ or ‘five more girlfriends and you will solve your problems,’” he said.
“We’re all going to pay the price for this in, one, two, three years,” Rogers added. “The next time that we have problems in the economy, which will not be too long, we don’t have any bullets left. We’ve shot everything we had to solve our problems.”
“What are they going to do, quadruple the debt again? Print more money? We don’t have any trees left. We’re running out of trees.”
Long the Dollar, but Likely to Lose Money
Looking to his investment positions, Rogers said he is betting on the dollar more than he has been in two to three months, but that his short-term trades rarely work out.
“I am sure I’m going to lose money because whenever I try to short-term trade I almost always nearly lose money, so I am sure I deserve to lose money for trying it again,” he said.
The reason he thinks there might be rally in the greenback is that everybody — including himself — is pessimistic on the currency, Rogers said.
Rogers also predicted a currency crisis or semi-crisis.
“You already see Vietnam devalued. Last week Brazil put on the special taxes for currencies,” he said. “You’re seeing what’s happening in Dubai. Greece is in trouble. Ukraine, Argentina; there are plenty of people who we could put on the list. Spain. Ireland.”
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December 11th, 2009 at 10:17 am
Didn’t Japan take the middle path of stop and start stimulus? You say “not a bad environment for stocks”, but how does that reconcile with Japan’s poor stock market outcome, unless you assume it’s all due to worse demographics and corporate structure?
Also, you’ve probably seen this, but in case not, the evidence seems to be that Obama Gets It (at least partially)… but of course he has to navigate politically, so the middle path seems likely.
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December 11th, 2009 at 12:25 pm
Agree it’s been a good environment for stocks. Weakness in labor means profits to corporations. Ultimately though, end demand matters too.
After their 60%+ rise this year, what do you think is going to happen in 2010?
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December 11th, 2009 at 10:29 pm
Not clear to me. If this is a gold bubble bursting rather than a gold bull market correction that and a strong dollar and falling core ‘inflation’ can be highly depressing for those taking comfort in the Fed’s presumed ability to inflate.
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zanon Reply:
December 14th, 2009 at 3:21 am
Yes. There may be a deflation surprise in 2010. Again, not sure what that means for US equities.
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December 13th, 2009 at 9:20 pm
A logical way to accelerate the TARP repayments, and help big businesses specifically banks, funds, etc would be a 1 year freeze in Federal Taxes on CDOs specifically relating to MBAs. This would also help big banks balance sheets and ultimately the price of their stock.
Sunday’s WSJ Opinion Section mentioned Obama’s proposal to help small businesses:
‘We’re proposing a complete elimination of capital gains taxes on small business investment along with an extension of write-offs to encourage small businesses to expand in the coming year.’
Why not help big business while they are at it?
From an operations standpoint it requires a simple adjustment to the tax code.
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December 13th, 2009 at 9:32 pm
The median voter at work.
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December 14th, 2009 at 11:55 am
what they all need is a backlog of orders
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