I hope you read Mary O’Grady’s great piece in today’s Wall Street Journal Argentina Seizes the Central Bank. When you read it, think of the parallels with recent events in the U.S. I bet you feel a chill up your spine just like I did. Argentina’s nut-job President, Cristina Kirchner (wife of former president Nestor Kirchner) decided she didn’t want to use the tax money in the treasury to pay foreign debts but would simply seize the reserves of the banking system for the purpose. Martin Redrado, President of the central bank, refused to hand over the keys so she fired him last week. In his place, she appointed Mercedes Marco, a young Yale-trained economist, who thinks the idea that central banks should be independent... [Read more]
I just got a mass email from the Teamsters union urging everybody to vote for the jobs bill that will be voted on this week. That’s sufficient reason to vote against it. I have seen the legislation these guys have supported before (Obamacare, where they got a special exemption from having their insurance plan taxed like the rest of us.) We don’t need to pour any more money down the political rathole they call “stimulus.” Congress already has $1 trillion per year deficits over the next decade. We need to get spending back under control before the U.S. gets a banana republic credit rating. JR Share and Enjoy: These icons link to social bookmarking sites where readers can share and discover new web pages. Read More →
I don’t often write about government policies that I like. It’s not that I’m crabby; it’s because they are so scarce. But today I will make an exception. Today, the Fed and the Treasury, along with several other financial regulators, correctly identified the cause of the small business lending problem–themselves–and took steps to fix it. It’s about time. Today the financial regulators passed the grown man test by “manning up” to what we have known all along; banks have been effectively redlining loans to small businesses due to fears of regulatory reprisal. You can read the statement by clicking here. They have made a start at addressing the problem by instructing banks to look at the health... [Read more]
This week is jobs week. Not Steve Jobs–last week was his, with blowout Apple earnings and the announcement of the slick new iPad. Real jobs–remember those? Where people actually get to go to work and earn a paycheck. This week’s data include the ADP report, today’s initial unemployment claims number and Friday’s payroll employment report along with several other reports (ISM manufacturing, ISM non-manufacturing, and factory orders) that give further color on the subject. Add them all together and what do you get? Blah! Positive but crappy growth–not enough to meaningfully increase employment. That will still have to wait for the banks to start lending to small businesses. And no, they haven’t started... [Read more]
Interesting article today. More than 40 former lobbyists work in senior positions in the Obama administration, including three Cabinet secretaries and the CIA director. Yet in his State of the Union address, Obama claimed, “We’ve excluded lobbyists from policymaking jobs.” You can see a list of the hires and who they lobbied for by clicking on this link. The reporter asked the White House if he chose his words poorly, but the media affairs office defended the president’s statement: “As the President said,” a spokeswoman wrote in an e-mail, “we have turned away lobbyists for many, many positions.” So, the country may have heard, “we haven’t hired lobbyists to policymaking jobs,”... [Read more]
Cool chart from my friend Andy Roth at Sinology Contrary to Popular Belief, China's GDP is Mostly Home-Grown The National Bureau of Statistics has just released a detailed breakdown of China’s 2009 GDP growth. Overall GDP rose 8.7%, with 92.3% of growth (8 ppts) from gross capital formation; 52.5% of growth (4.6 ppts) from final consumption; and a negative 44.8% (-3.9 ppts) contribution from net exports. What does this mean? 1) China’s stimulus program last year–mainly spent on infrastructure and other investment projects–was much more effective than ours, which was mainly made up of handouts. 2) China does not need the U.S. to grow as much as many people think. Don’t expect their leaders to bend over when our politicians... [Read more]
Take a look at this chart from our friends at Cato showing federal government spending as a share of GDP. It breaks out defense (drops by half) and non-defense (doubles) spending trends. You can reach your own conclusions. Mine are simple. Spending is totally out of control. And the projected numbers we saw last week in Obama’s proposed budget are mind-numbing. JR Share and Enjoy: These icons link to social bookmarking sites where readers can share and discover new web pages. Read More →
We can’t afford this! The Obama 2011 budget proposal was released to the press at 9AM today and to the public at 10AM Available at GPO website at http://www.gpo.gov/fdsys/search/home.action Summary: -2450 pages including appendices. -weighs 10 pounds for all four books -2011 deficit is $1.6 trillion, biggest in history -That’s $160 billion/pound, or $10 billion/ounce. -That’s $653 million/page. Spending $3.8 billion. -That’s $380 billion/pound; or $32 billion/ounce. -That’s $1.5 billion/page. JR Share and Enjoy: These icons link to social bookmarking sites where readers can share and discover new web pages. Read More →
(2/1/10) U.S. stock prices have dropped like a stone over the past two weeks. Total market capitalization of U.S. stocks was $13.1 trillion at yesterday’s (1/31) close, down $885 billion from its $14.02 trillion peak on 1/19. Some analysts think it was China’s monetary tightening that caused the drop in stock prices. Some think it was Obama’s announcements of new taxes and new regulations on banks. Some think that investors have simply lost their nerve. It was Obama’s war on capital that caused the meltdown. The numbers below show total U.S. market capitalization–the total value of all stocks trading in all markets–at several key dates over the past 2 weeks. On 1/11/10, before any of these things happened,... [Read more]
Download a free PDF file of Chapter 2 explaining Weather Map Investing from John’s Book, Lessons from a Road Warrior! If you enjoy the chapter, you can buy John’s book on Amazon.com by clicking here, or you can purchase it from us directly by visiting the “John’s New Book” page on this site. Remember to sign up for updates from John’s blog by submitting your email address at the top of the right column and clicking “Subscribe Me”! You can also follow him on Twitter @johnrutledge. If you have any problems with the download link, you can copy and paste the following url for the file into your browser: http://rutledgecapital.com/weathermap/Chapter-2-Economics_and_Investing.pdf. Additionally,... [Read more]
Stand back, we are about to export my thermo-economics investment framework to India. There is a review of my book Lessons from a Road Warrior in the April issue of The Analyst, the finance journal of Icfai University Press in Hyderabad, India in which I have published several articles. The reviewer did a very careful job capturing both the substance and the flavor of the book and was more kind than an author deserves. You can read the review by clicking here. JR PS: We are working on a Chinese translation to be released in China later this year. Share and Enjoy: These icons link to social bookmarking sites where readers can share and discover new web pages. Read More →
