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Darn the torpedoes – Full speed ahead!
That was the message coming out of key Federal Reserve officials at the just-completed confab in Jackson Hole, Wyoming. From Fed Vice Chairman Stanley Fischer on down, policymakers generally signaled they’re on track to raise short-term interest rates this year despite market turmoil and Chinese economic concerns.
Fischer said in his keynote speech that “there is good reason to believe inflation will move higher as the forces holding inflation down – oil prices and import prices, particularly – dissipate further.” One Fed-watcher said to Bloomberg in response: “It sounds to be as though in his heart of hearts, he would like to tighten in September.”
Meanwhile, extreme “doves” like Minneapolis Fed President Narayana Kocherlakota appear to be getting more marginalized. More Fed officials appear to be adopting the view of Cleveland Fed President Loretta Mester, who just said recent volatility “hasn’t so far changed my basic outlook that the U.S. economy is solid and it could support an increase in interest rates.”
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| Stanley Fischer: “There is good reason to believe inflation will move higher.” |
Even foreign central bankers such as Bank of England Governor Mark Carney sounded sanguine about potential turmoil. Per the Wall Street Journal, he just said: “The dog that hasn’t barked in the wake of recent market turbulence has been any hint of distress at a major financial institution.”
The next Fed policy meeting is just over two weeks away, on Sept. 16-17. While many on Wall Street have been hoping the Fed will stay its hand, the recent comments out of Wyoming suggest an increase is very much on the table.
There are only two more meetings in 2015 after it, on Oct. 27-28 and Dec. 15-16. So if policymakers truly want to move this year, they’re running out of time.
My best advice is to not get overly hung up on exactly when the Fed will move. Instead, understand that the long, long, LONG period of massive QE, zero-interest-rate policy and “autopilot” behavior in markets is over. We’re entering a whole new policy regime, one that will usher in more uncertainty, more volatility, and more market instability.
That’s why I’ve been recommending you pare down exposure by cutting losers and grabbing gains more aggressively. It’s also why I believe the extreme swings we saw last week may be just a taste of what’s to come this fall and beyond. So buckle up!
What do you think? Is a September rate hike truly on the table? Or do you think we won’t get a move until December … or later? What are the implications for stocks, bonds, and currencies? Are you rejiggering your portfolio to account for a new interest rate regime? Hit up the Money and Markets website and weigh in when you get a minute.
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Buy stocks? Sell stocks? Have a bunker ready in case the worst hits? Or just stop worrying? Several of you shared your opinions in recent days on which of these strategies makes sense in light of increasing market volatility.
Reader H.C.B. said: “I never fully accepted this ‘recovery’ to be authentic — to be a true bull market in its own right, as was the case from 1981-2000. This obviously is not a new bull market. So, I never went ‘all in.’
“The FED cannot force me to consume things I don’t need or want or invest at high valuations, no matter what. Only I decide what is best for me. So, I never fully accepted this as a real bull market as such, even in light of so much cheer-leading by the financial media and most stockbrokers.”
Reader John E. added: “I am done with individual stocks for the short term. A little gain is not worth the downside risk. I am in negative territory for the year. I have sold off 80% of my mutual funds and it is now in cash.
“The economy is sick and the market is volatile. Only an idiot or someone on the inside would be in right now.”
Lastly, Reader Jane W. said: “Our economy isn’t moving forward because there are so, so, so many regulations that companies, farmers, etc. have to meet that they feel going forward isn’t worth the time or money. Also there are no pipelines being placed, no coal mines working, limits on the amount of carbon that can be released into the air…. it just goes on and on.”
But Reader Mike S. took a more sanguine view, saying: “For all the wailing and gnashing of teeth, I’m long, long term and have been since March 9, 2007. Where the SPY is before the close on the first trading day of September will decide whether or not I go to Money Markets and inverse funds long term.”
Reader Hans also said: “Investors are overreacting. People still need paper products, gas, insurance, food, etc., which is produced by companies that are fundamentally strong, that is as simple as that. Keeping things in perspective seems to be hard to do these days.”
And finally, Reader Tom said: “Of course you shouldn’t sell stocks. Do you think Warren Buffett is panicked? No, he’s buying up stocks (and holding them for the long run). When the Dow hovers between 19,000 and 20,000 by year’s end, you’ll be sorry if you sell stocks.”
So as you can see, it’s a pretty even split on the website between bulls and bears. That seems to be the general split on Wall Street as well, given the very sharp break and the quick, decisive bounce that followed.
Me? I’m not complacent or encouraged by this action at all. This kind of tremendous volatility and these types of sizable technical breaks often occur at major market turning points.
So I’m carefully analyzing every bit of incoming data to see if we are, in fact, seeing a return to bear market territory. And in the meantime, I’ve been taking several steps for months to prepare my Safe Money Report subscribers for today’s much more challenging market.
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The U.S. Federal Reserve isn’t the only central bank whose policies have failed to spark a vigorous economic recovery and higher inflation. The European Central Bank has been failing as well, with consumer price growth lagging behind the ECB’s 2% target for two years.
Prices rose just 0.2% in August, and is on track to rise by only 0.3% for the full year. That’s leading to speculation the ECB could boost or accelerate its QE program before long; its next meeting is this Thursday.
Oil refiners have been one of the few bright spots in the energy sector, and Warren Buffett is taking notice. The billionaire investor’s Berkshire Hathaway has snapped up roughly 58 million shares of Phillips 66 (PSX) – a stake valued at around $4.5 billion.
Don’t criticize stocks in China – you might go to jail. That’s because China is detaining and harassing “malicious” rumor-mongerers for daring to say the stock market is dangerous. Almost 200 people were rounded up in a crackdown by Chinese officials tied to the recent market meltdown.
If you’re the kind of person who appreciates a good horror movie, then you’re probably mourning the news out of California that Wes Craven has died at the age of 76. The director is best known for the “A Nightmare on Elm Street” films, as well as for the “Scream” series of movies that poked fun at horror film conventions.
So what do you think of Buffett’s most recent move? Or the Chinese crackdown on stocks? And are you expecting central bankers to succeed or fail at boosting inflation? Let me know at the website.
Until next time,
Mike Larson
Mike Larson graduated from Boston University with a B.S. degree in Journalism and a B.A. degree in English in 1998, and went to work for Bankrate.com. There, he learned the mortgage and interest rates markets inside and out. Mike then joined Weiss Research in 2001. He is the editor of Safe Money Report. He is often quoted by the Washington Post, Reuters, Dow Jones Newswires, Orlando Sentinel, Palm Beach Post and Sun-Sentinel, and he has appeared on CNN, Bloomberg Television and CNBC.
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Did “Bloody Wednesday” leave Beijing Central on the Larry Edelson express? How ’bout them Chinese railroad plays, Larry? Nice timing on that one! I get better results from my daily horoscope than you two guys, Mike.
I thought I was going to beat Warren in buying PSX but he beat me which made the stock surge upwards and away from my buy price.
Earlier he had dumped both PSX and NOV – now I assume it was to get in at a lower price. Or I suppose even Buffet can change his mind.
What is more confusing is when I hear that there is a bounce in the DOW, after an 1800 PIP drop, and the ‘bounce’ is 600 PIPs. Then, one is saying the market is a buy, back up to the drop point, and will take off to 20,000 by DEC. 1015. Yet another version, this is a dead cat bounce, the DOW will drop another 1700 PIPs into a full fledged 1929 crash. WOW! What exactly makes these views so opposing? Are investors REALLY this far removed? Seems there could be a common opinion with a clear view forward, or not? It is really comical, at least at this point, to hear and read so opposing opinion. Perhaps why a lot of investors are sitting on the fence? Perhaps?
Well Mike,
It looks like you will have to change the date, yet again, on your “Bloody Wednesday” prediction.
I do not worry about Mr. Buffet I do my own trades this is a new rigged market that buy and hold is pure Bull just buy good companies that PAY DIVIDENDS and be ready for the BIGGEST CRASH coming around the corner as you might know or noticed Evil Greedy Wicked CROOKS has taken over our country , government, the good guys are “checked out” before their times please ask your friends and family to PRAY for the USA and ask GOD to give us CHRISTIAN leaders we need to spread the world and more praying we need thanks
I’m interested in your view on the yuan as a reserve curancy. I feel the US & IMF made a deal to put china off till next year instead of Oct 15. That angered China so they devalued and lowered the loan to the US from 1.4 Tri to 1.2 Tri. I feel if not approved they will devalue another 5 to 10% and drop loans to US signaficantfully. I SOLD EVERYTHING in July on that announcement.
I keep asking, “How can anyone expect the Yuan which is not free floating to suddenly become a part of a basket of free floating currencies?” The SDR has always consisted of, and must continue to consist of, free floating currencies only. The International Monetary Fund (IMF), World Bank (WB) and the Asian Development Bank (ADB), among others, make loans in SDRs and tie their loan repayment amounts to the SDR to give more stable amounts for loan repayment based on an average of major currency floats, than would be possible if just one currency was used. In short, the SDR is a basket of specified weighted currency floats; and the Yuan is not free to float as required to be a part of the basket. Personally, I am skeptical of the Chinese Government being willing to lose control of the exchange rate of their currency. It is not in the nature of their platform.
The Fed raising rates is a good thing not a bad one. The Fed’s mandate has nothing to do with the market only employment and inflation. They have failed on both with their current policies (the published unemployment rate is a farce) and they need to re-load their bullets if they will ever be able to help in the even of another recession. A Fed rate of .75% by year’s end should be their target and 1.5% by June and then they should re-assess the situation. The market can stand a correction but this Fed’s legacy can’t be “fiddle while Rome burns” which can easily happen if they do nothing.
The Fed also has a mandate for “stable prices”, which means they are changed with inflation in addition to what you have noted above.
BUT keep in mind the Fed is a gov’t agency that also has to respond to the President of the US and (indirectly, since the Fed is a part of the executive branch of gov’t) to Congress. And the Fed does not set spending (or fiscal) policy. If they are told to print money to pay for spending – they’re getting orders from over their head and they have to do it.
Mike, you seem about as uncertain about the market direction as I am The Fed seems to be inclined to push rates up a touch, anyway, while hoping that won’t cause a panic.I’m watching Larry’s charts, though, and if they seem to be turning out right, I’m holding back a few bucks to feed in when his big correction seems to be ending. And it IS a correction – and overdue, at that, which may make it pretty scary. Perhaps we need a scare.
“there is good reason to believe inflation will move higher as the forces holding inflation down – oil prices and import prices, particularly – dissipate further.â€
REALLY?? This is an unbelievable statement from the Vice Chair of the Fed. Here we are in a world awash in DEFLATION and they are still talking inflation. I am reminded of the old Soviet Union and their central planning groups that developed 5 year plans. That is about all this group is worth.
The Fed and 99% of the economists in academia totally missed the market crash of 2008…..and they will totally miss the soon-to-come debacle.
Deflation in the USA is a myth – we are sitting on a deep supply of drivers of inflation. We are also still dealing with stagnation in the economy – but prices across the board are going up and could go up a lot more. The directors of the Fed know this – and they are correct.
I know that Larry has come out with statements about deflation but he is wrong. He’s come to his conclusion based on what he “observes” rather than by utilizing well established theory to help shape the problem. In addition he does not live in the US and he does not have the “benefit” of paying his bills in US dollars every week the way Weiss subscribers in the US have. (I realize there are a lot of non-US subscribes, but trust me – American’s paycheck is going less and less far every year)
Anyone who thinks there is no inflation hasn’t been to the grocery store lately. I think your analysis is dead on. Jim
Three cheers for the Chinese! The American solution: Put hedge fund managers in jail if they sell more than 1% of their holdings per year, raise the interest rate to 6% and legally suspend dividend payments and require corporations to only conduct buybacks. Permit individuals to only be able to sell 10% or less of their holdings per year. To stimulate consumer spending, eliminate sales taxes for 10yrs and make interest payments on credit card debt deductable. And I did not need a phony ivy league PHD to develop this proactive results driven solution. P.S. cancel Bernanke’s government retirement benefits. He works for hedge funds now, so he does not need the tax payer’s sweat and blood.
I don’t need a PHD to wonder what planet you are from! Jim
Larsens’s energy call is looking better. Long term I think he us on target. Seventy per cent of production and ninety per cent of reserves are owned by governments. Are governments the purveyors of truth or professional liars? The stated reserves of a country determine its quota, creditworthiness, and perceived military strength. They have EVERY reason to lie. Most producers have reported “finding” reserves almost doubling their reserves in recent years. There is every possibility that the worlds oil reserves are grossly overstated. Also, the entry of Turkey into the Middle Eastern fray is a significant development. Most of the Middle East,North Africa, and “Stans” of Central Asia are former provinces of the Ottoman Empire or culturally related Muslim Turkiks. Would they rather be dominated by other Muslims instead of the West? Wouldn’t the West rather see someone who hates us a little in charge over someone who hates us a lot (ISIS )? We determine what’s right by majority rule, they believe right and wrong are determined by God. We will never change their minds. The possible resurrection of the Ottoman Empire implies that the war there is only just beginning. The future of oil is not set. Jim
Looking at the technicals….we should be set for a nice rebound…if not now then soon.
But once that has played out….it should be back down again to a bottom around $8-10/bbl or so. Oil was at $9-10/bbl in the late 90s. Looks to be headed there again after this next rebound.
If it does,say goodbye to “energy independence”. Higher prices made America the number one producer in the world, $10 oil will crush the domestic industry. But, isn’t that OPECs intention? If that happens they will have us in a stranglehold for decades to come. Jim
The FED has consistently gotten it wrong since their inception. Planned economies are doomed to fail due to many flaws in those systems. Political pressure, corruption, and the complicated nature of a huge economy are only a few reasons why they fail to affect positive policies. Who but corrupt politicians and banksters believe it is prudent to empower a private banking cartel with creating debt and money and manipulating interest rates?
The Fed does not plan the US economy. Nobody does (in the US). And while I agree with your sentiments, you really need to go back re-learn how our country works. No we are not free of corruption and problems of gov’t interference, but compared to just about any other country in the world – we in the US remain the best example (or one of the best) of a free enterprise economy.
The Regulators plan the economy in the USA.
If you haven’t been to the grocery store recently you don’t know that inflation is doing just fine. What I bought a few months ago for 2.99 is now 4.99 and rising. And rising prices force me to buy far less than I used to, which is only last year. My salary and income don’t know what the word inflation means. Inflation needs a living wage to expand. And don’t forget that profits are being sopped up by the billionaires and then hidden to avoid taxes. I help make the super rich richer. I’m making the product and selling it for them while I get no share of the profits for my efforts. This will soon lead to riots and civil unrest.
Try pet food. It has gone up at least twice in the past year. Bread has also jumped. my favorite cookies just bumped a half buck to 4.49 for ten. ‘Would be healthier to give them up – I’m thinking, as Groucho said.
Root: “And rising prices force me to buy far less than I used to…” How convenient, isn’t it, that since we’re buying less, they’ve made all the containers AND the grocery bags too MUCH smaller than they used to be?! …supposed to make us think we’re still getting the same thing….haha
Haven’t we had enough of “easy money” Zero-Interest rate policy? What’s the point of having a so-called “Free Market” if marginal bets are NOT free to FAI?L as well as SUCCEED in the market? As a saver, and longer term investor, this past 10 years has certainly been a nightmare!! I was NOT free to invest my hard-earned capital in enterprises I thought worthy, to earn an above average return because old line competitors might be hanging around thanks to cheap subsidized rates! So, I invested my money elsewhere in the world – you LOSE U.S.A. Want to be an equal player, then get your head out of your butt and compete! You may, or may NOT win! By not trying you will most certainly lose! Pay down your DEBT, raise your taxes, erect tariffs where others compete unfairly, and play the game fair, but play to WIN!!
What a surprise about Warren Buffet & his stake in Phillips 66 ( How many Billions ? ) ,I just read today that oil has gone up more in the last 3 trading days , than it has since 1990 ( that’s 25 years folks ) must be close to heating oil season in the northern half of the United States ( how many millions of homes are we talking about ?
I’m not sure why he got into that because oil refineries have really suffered from lack or pricing power in recent years. I was surprised to see this because you’d think that companies who can convert crude oil into usable product would have the upper hand in dictating prices in the marketplace. It’s not easy to set up and run a refinery, and they can’t be put in place quickly or easily. But the facts have not born out that refiners have pricing power. Refinening businesses were getting slaughtered awhile back and it became painfully clear that they had to take what they could get for prices in doing their work – or go without. The absence of this quality – Pricing Power (or the ability to raise prices to increase profits without losing your customers) is a very important part of what makes a company strong. And Warren Buffett himself has pointed out how important pricing power is for a business. So I have no idea why he made this purchase.
No doubt the price was right, and no doubt oil refiners are doing much better today than they were 8-10 years ago -but those changes do not change the fact that they are price takers, not price dictators in the marketplace (as you would rather be). And with Saudi Arabia building a lot of new refining capacity at this time and a refining price war brewing between the Saudi’s and Asian refiners this would not seem to me to be a good time to take a big position in an oil refinery company. I have a feeling that Warren may regret this one in ten year’s time.
John
Refineries don’t make or lose money based on the price of crude oil. They are a service business that converts the crude to usable products That has to be done no matter what. And a refiner can just change the companies that own the oil to refine it – bypassing the question of how much it does or does not cost. The reason refiners were struggling in the recent past is there was not enough work for them to do (over supply). If it were not for that they could just make the owners of the oil pay whatever they changed to convert it.
John
Historically you couldn’t be more right. You hear about how few refineries have been built in recent years, not because of the EPA, but because it’s a lousy business requiring huge capital investment and featuring pitifully low margins. Their profit opportunities are usually short and sweet. Buffet surprised me as well. This isn’t Coke or Gillette. Maybe he knows something we don’t . Jim
They’ve got to have some reason to jack up gas prices for the upcoming Labor Day weekend!
In the past, when there was NO other excuse, they blamed it on the Iranians….we average Jo and Jane Public Americans don’t know any difference…in this case now, the Iranians are only a small part of the excuses……..
….AND, Warren Buffet always seems to buy into something early so that no one can accuse him of “timing” the market nor “price-fixing.”
I think more lows in oil are yet to come…after the holiday.
Fischer, the Fed and Inflation: Stanley Fisher has one of the most outstanding economic minds in the world today. It’s too bad it takes his insight into the economy to come out with the statement that inflation is a threat. We all KNOW inflation is a threat for the following reasons:
a) Anyone who pays the bills for his/her family knows that prices have been going up in the last five years or more. Just because it doesn’t show up well in the gov’ts “official” numbers doesn’t mean we are not paying more for a lot of things that cost money in life. Everything from food to college tuition is rising. While it’s true that lower energy prices due to changes in global supply and demand are offsetting price increased in other areas that just makes it better than it really is.
b) Years of QE (aka – printing money) from the gov’t have increased the money supply. With more money around means it’s less “rare” and therefore not worth as much when compared to tangible assets which can’t be “multiplied” by the wave of a magic wand. This is fundamental economics as proven by Milton Friedman (and for which he was awarded the Nobel Prize). The more dollars there are kicking around the less each one of them has to be worth.
c) Inflation has ALWAYS been a threat. This is not new news – the gov’t has always printed money to fund spending and that has always fueled inflation making out dollars worth less when we go to buy anything. In the 1950’s a hamburger at McDonalds cost 15 cents. Try seeing what you can buy at McDonalds today with 15 cents (… a napkin, perhaps). So pretending that inflation isn’t working its “magic” to devalue the money you old is naive. It has always done so and that is not going to change. Since the gov’t can’t stop printing money it is just about guaranteed that we will have inflation in our future.
Managing inflation (keeping it in check) is one of the core objectives of the Federal Reserve’s mission. Since the financial crash in 2008-09 the tightness of money for discretionary spending, the lack of (good) credit, and cutbacks in spending from all quarters has held prices down somewhat in recent years. After all if a business wants to raise its prices it also has to find customers willing to pay those higher prices or it won’t make sales. But as the economy slowly recovers more and more upward pressure on prices will be felt. Inflation takes time to work into the economy – and Fischer recognizes the passage of time and the obvious need to address the side effect of money creation by the Fed.
If the Fed begins to move interest rates up they will no doubt do so in small increments. And a rate increase of 25 basis points (1/4 of 1%) would not be a great change in the wholesale rate of money. And it won’t have as great impact on the economy as a lot of people thing because it’s such a small amount. (This is especially true since the banks don’t pass that discounted rate on to borrowers anyway) However raising interest rates is a text book use of the tools at the Fed’s disposal to combat inflation. And any rate increase will “send a message” as well as get the ball rolling (slowly) towards a more normal interest rate environment. It’s been talked about for years, and Fischer knows it about time to get on with it.
John
After all these years of near zero interest, 25 basis points would be scary, and cause panic. The Fed will probably settle for 15 or so points, to let people get used to the idea, then add more later on. Like the cannibals with the missionaries in the pot, raise the temperature gradually, and pretty soon we’re boiled without knowing it.
It is interesting how Ben Carson is catching up to Boobus Americanus. Just heard they are even in Ohio polls, and both are well ahead of the professional politicians. Maybe people are starting to catch on to what the professionals have done to them. Let the amateurs have a crack at things. Ha-Ha.
The FED can fool some of the people some of the time, but they can not fool all of the people all of the time. Surely their time is at hand when they fool themselves.
The Fed is tired of buying US Treasuries, they’ve been 71 percent purchasers of US Debt as Russia, China, and other countries have been reducing their holdings this year. In order to get overseas buyers of US debt, rates must rise. The US is the biggest debtor Nation in history, and with the US Dollar losing its reserve status I think rates will go much higher before the Fed is off the hook on QE purchases. I also expect a pretty bad recession with this rate cycle increase as the economy is nowhere near as strong as it was with other rate increase cycles. Expecting the market to confirm bear status soon also as heavy margin players unwind. We could easily be looking at Dow 5000 by 2017.
Wow………,so many of your listeners are missing the point. As for the Fed raising interest rates?? You almost get the feeling the are trying to help this deflationary storm grow stronger by the day. (Hidden Agenda??). Look, the bottom line is we now have a PERFECT STORM forming of growing deflation, massive toxic debt, crashing commodities, particularly oil/gas, a crashing Chinese economy and stock market, major technical and cyclical warning signs, and major geo-political problems ALL occurring simultaneously! Larry Edelson gets it, and I am afraid he is still too optimistic on the turnaround for equities after this capital markets storm hits…
I’m frankly tired of hearing about Warren Buffett. Warren is 85 years old and worth $67,000,000,000
Imagine having 67,000 $1 Million dollar bills…. Obscene!!!
The IMF will be announcing the end of the $ as the worlds reserve currency in November.
The world will all be operating on SDR’s, phasing in over a 3 year period, starting Sept. 2016
I believe there is a Sinister plan to deploy a second Tsunami within the next 12 months, to justify the IMF controlling ALL currencies.
Control the currencies, control the world….
Games Over, very soon!!!!
The SDR is a basket of free floating currencies used by the IMF, WB, ADB and some other agencies to flatten out currency fluctuations for development loan repayments that could result if a single currency were used for these loans; and thus minimize the long term impact of loan repayments tied to a single currency. If the IMF were to try to control all of the currencies in the SDR basket it would make every country to the SDR like Greece is to the Euro. If anything the EU and everyone else should have learned this by now. Ain’t gonna happen.
When economies slow isn’t that Recession, or to the extreme Depression? When prices go up isn’t that Inflation? Can we ignore recession (or possible depression) with all the regulations and debt imposed during the last decade? I don’t think so. Can we ignore inflation in consideration of all the money put into the system during the last decade alone? I don’t think so. But aren’t Recession and Inflation the two ingrediants for Stagflation? Are people too afraid to raise the word “Stagflation”? I think so.
If markets do not like “uncertainty” why would anyone invest in this market? Since an interest rate hike is going to happen don’t you think the big boys already have it priced in?
Definitely it is ore or less priced in
The big boys have just left Jacksonhole for Jack Ass Hole.
Will, I guess you mean they’re headed back to Washington DC, or maybe Nu Yawk Sitty? (<:
Mike: first of all, “rumor-mongerers” is redundant; it should just be “rumor-mongers”!
Secondly, we cannot believe ANY government’s “inflation” figures, especially our own! The numbers have been manipulated, massaged, twisted, etc. for about 25 years. The truth is that we have inflation, but the government is hiding the truth from the “sheeple”. Even the news media quotes the government figures as truth. What a crock!
Of course in the future the Anti – Christ Controls the world one world currency. In the mean time the Federal Reserve controls some things which they are like a god in control of things to cause up in downs see saw lives . Anyway Federal Reserve makes its Move 28th of October 2015 .. 1/4 percent. In a few short years the euro will crash in 2020.
I think they will BOOST inflation.
Mike: I do not think that the Fed will raise rates this year. AS you have stated on more than one occasion, there is a complete disconnect between the stock market and the real economy. As we all know, what is driving this market is cheap money. QE is nothing more than a back door bailout of Wall street and the Federal government. The working poor and middle class have lost 2.5 trillion dollars in interest payments on their passbook savings, CD’S and money market funds. We the working poor and middle class are the forgotten people! We have also lost 27% of our purchasing power with regard to the dollar!
The problems in our economy are structural in nature, which must be resolved by Congress and the President. Unfortunately it is not happening. We need to back to the gold standard, implement a flat tax, find the right balance between our need for fair regulations and our need to grow the economy! We also need to reform our tort system. In 2008, we spent 200 billion dollars suing each other. None of our competitors comes close! Businesses have left because we are no longer a business friendly country! Please publish this. Thank you for all you do. Regards, Robert Calabro.
The right wing is maniacal about regulations. That is NOT what is holding the economy back. It is the velocity of money. 90% of all the income gains are being concentrated into too few hands who are not spending. The largest group of new spenders (college grads) are weighted down by debt. So the incomes of the existing working population is stagnant and the spending capacity of the new economy entrants is severely hampered by debt payments so you have a contraction in the velocity of money which means stagnant demand for business and conversely a slowdown. This is all the right wings fault. But the working class keeps sending them back to power so there you go! We get the government we deserve.