Most Recent Recession Discussion:
EU Plan:
Manfred Andre wrote:
1. The Euro outperformed the Dollar by about 52% in the last 10 years (pretty impressive for a currency that is
allegedly collapsing)
2. Overall debt levels in Japan and the USA are twice as high as in Europe (USA debt per capita levels are higher
than in Greece before the haircut)
3. The USA runs an astronomic trade deficit (uncompetitive economy)
4. The USA political system did not even produce a plan to reduce the gigantic public deficit, and probably will
never be capable of doing so
5. The Fed in its efforts to print money to buy USA government debt to keep yields from exploding, now owns
more USA debt than China
6. ... the USA is bankrupt and will never be able to repay its debt, this is clear to everybody looking at the
situation, except the three major rating agencies (domiciled in the USA and owned by the Wall Street clique) ...
Nicky Temple wrote:
Here is an article that shows that Europe's central bank is caught between a rock and a hard place when it comes
to bailing out Eurozone debtor nations: http://viableopposition.blogspot.com/2011/12/ecb-caught-between-rock-
and-hard-place.html
If the ECB loosens and increases the money supply, inflation, which is already above their comfort zone, is
likely to rise further. If they continue on their present course of keeping M3 growth at very low levels, the
economy is likely to end up in recession. As well, their recent announcement that they will now accept "single
A" securities as collateral against loans, could add more toxic European paper to their rapidly growing balance
sheet.
Ray Lowe wrote:
When discussing the debt 'crises' both in EU and in US and elsewhere, it often comes to mind that much of this
so called debt is to loan sharks at best, criminal enterprise at worst e.g., many banks that made shady deals and
then held the nation or world hostage to a taxpayer funded bailout. Another way to look at it is how much of this
'debt' if paid off would improve the plight of the common man rather than oligarchs and their ilk - isn't that what
great nations do for their citizens? I suspect a small fraction of this debt had moral, honest lenders behind it from
the outset. Would be very interesting to get a real insight.
Investment:
Personalwm.com wrote:
The examples show that an investor's optimal target asset allocation must reflect his unique investment
objectives and personal constraints. I always recommend that investors complete a written Investment Policy
Statement (IPS). http://personalwm.com/2011/01/07/investment-policy-statement-overview/#more-5403
Do not be fixated on the ages of the investors in the examples. Age is just one component in the equation. I
prefer thinking about the phase in the life cycle rather than age.
An IPS should reflect the investor's current circumstances, life cycle phase, short/medium/long term investment
objectives, constraints, risk tolerance, etc.
As interest rates are low and there is the strong threat of official inflation, maintaining short term bonds is
prudent. However, in normal circumstances it may be preferable to use bond ladders. That way you spread out
the risk of changing interest rates by having a percentage of debt maturing each year to roll over.
To the question on "alternative" investments, I suspect the examples refer primarily to real estate in the form of
REITs. Unless possessing significant investment expertise, I suggest staying away from more exotic asset classes.
For additional wealth management commentary, please visit www.personalwm.com.
The Dealer wrote:
Whatever you do remember the main way you make money in the market is to take it from someone else. You
might should consider also, that’s how they make money too!
OldIndie wrote:
What are 'alternative' investments? Generally very specific items that are either impossible for a small investor to
buy, or very high in fees and low in performance.
There are many 'alternative' ETFs, all that I have seen have tanked in the past year, and provided no
diversification, except that they went down when the market went up.
If you feel you need 'alternatives' then you probably can pay the entry fee for a hedge that buys farmland,
timber, water rights, etc. If you really NEED to worry about alternatives, then you probably do not read these
boards anyway....you money manager handles all this.
For the rest of us, consider Asset Allocation funds from PIMCO and others that will give you a diversified
portfolio with little work on your part.
Trying to pick stocks and bonds, or even funds is a lot of work. And, you will probably not outperform a good
asset allocation fund.
Obama, Boehner Duel Over Payroll-Tax Cut:
BRIAN LIPPE wrote:
The thing I never hear explained is how much we actually pay. If you think of the benefits an employer provides
(i.e. vacation time, 401K matching or health insurance etc) than you should also think of the employer half of
Social Security and Medicare as a "benefit". Like the self-employed the total bill is 15.3% up to $110,100 for
SSN and unlimited for Medicare. So if you agree with that assumption, then everyone is paying taxes! Labeling
them income or payroll taxes is just semantics. As someone said there is no money in the trust fund so
everything goes into the same pot. Anyway, add the income tax and state income tax on top of the 15.3% and
you get the real nominal tax rate you are paying. Never mind property taxes, sales taxes etc.... So people at the
low end are paying a pretty steep tax. My bottom line is the Government should quit spending so much money
and IF you're going to have a government run retirement and/or healthcare system - fund it properly and stop
reallocating the funds for other things.
When I hear politicians state that not all working people are paying taxes they ignore the facts.
G BINCT replied:
There are thousands of inequities within the tax code. The more you look, the more you find. This is one of the
reasons I believe simplification of the tax code should be a top priority. By eliminating the variances, it would
create a more equal playing field with which people can compete. It would also alllow for lower rates, which
would spur growth within the economy. The sad thing is that politicos on both sides use the loopholes to garner
votes.
To your other comment on paying taxes on SS, which is income (FICA) already taxed, you are correct. The
government, however, does not recognize that FICA tax withheld equates to SS paid out. They do not make that
connection, which is why it is not challenged as dual taxation. Again, the more you look, the more problems you
find.
One last note. One must remember that these laws are legislated, which does not mean they have to be fair, or
even follow common sense.
Asia's economy:
Bob Templor wrote:
Capitalism is a good social system. There have been several good social systems in human history. Nevertheless,
social systems changes over the course of history. Some argue that capitalism would have around 300 years in
human history too. I believe it.
With US being the symbol of capitalism, US has 50-60 year to complete its capitalism and enter into another
social system. Year 2012 is a crucial year, not only of social changes but also global natural disasters. The
combined challenge of social and natural effects would truly make everyone feel the impact of the decline of
capitalism on the global scale.
China, with its special social system of social-capital, and with its unique of challenges of high density of
population, scare natural resources, and over-optimal running of its society, is facing a much larger challenge than
any other countries on earth.
I personally believe China's problem is not solvable of economic growth. Actually, I would argue that China's
problems are consequence of fast economic growth. Seeking a steady and slow economic growth is to the best
interest of citizens although not to the best interest of politicians or leaders.
Today, everyone thinks economic growth is the best thing without any side effect. The side effect of economic
growth is make our society less stable and plan seeds for social changes down the road.
Roger Brown replied:
Your slow growth solution may not satisfy millions of Chinese who know from observation that faster economic
growth would benefit them.
Punty Smythes wrote:
Japan's economic problems are more of their own making. But a mistake they had made was to strengthen the
Yen, and consequently, they are financing others' insatible deficit spending. The Japanese are now slaved to other
countries's unstoppable deficits. But the plain truth is: No if they do, and no if they do not.
EU Plan:
Manfred Andre wrote:
1. The Euro outperformed the Dollar by about 52% in the last 10 years (pretty impressive for a currency that is
allegedly collapsing)
2. Overall debt levels in Japan and the USA are twice as high as in Europe (USA debt per capita levels are higher
than in Greece before the haircut)
3. The USA runs an astronomic trade deficit (uncompetitive economy)
4. The USA political system did not even produce a plan to reduce the gigantic public deficit, and probably will
never be capable of doing so
5. The Fed in its efforts to print money to buy USA government debt to keep yields from exploding, now owns
more USA debt than China
6. ... the USA is bankrupt and will never be able to repay its debt, this is clear to everybody looking at the
situation, except the three major rating agencies (domiciled in the USA and owned by the Wall Street clique) ...
Nicky Temple wrote:
Here is an article that shows that Europe's central bank is caught between a rock and a hard place when it comes
to bailing out Eurozone debtor nations: http://viableopposition.blogspot.com/2011/12/ecb-caught-between-rock-
and-hard-place.html
If the ECB loosens and increases the money supply, inflation, which is already above their comfort zone, is
likely to rise further. If they continue on their present course of keeping M3 growth at very low levels, the
economy is likely to end up in recession. As well, their recent announcement that they will now accept "single
A" securities as collateral against loans, could add more toxic European paper to their rapidly growing balance
sheet.
Ray Lowe wrote:
When discussing the debt 'crises' both in EU and in US and elsewhere, it often comes to mind that much of this
so called debt is to loan sharks at best, criminal enterprise at worst e.g., many banks that made shady deals and
then held the nation or world hostage to a taxpayer funded bailout. Another way to look at it is how much of this
'debt' if paid off would improve the plight of the common man rather than oligarchs and their ilk - isn't that what
great nations do for their citizens? I suspect a small fraction of this debt had moral, honest lenders behind it from
the outset. Would be very interesting to get a real insight.
Investment:
Personalwm.com wrote:
The examples show that an investor's optimal target asset allocation must reflect his unique investment
objectives and personal constraints. I always recommend that investors complete a written Investment Policy
Statement (IPS). http://personalwm.com/2011/01/07/investment-policy-statement-overview/#more-5403
Do not be fixated on the ages of the investors in the examples. Age is just one component in the equation. I
prefer thinking about the phase in the life cycle rather than age.
An IPS should reflect the investor's current circumstances, life cycle phase, short/medium/long term investment
objectives, constraints, risk tolerance, etc.
As interest rates are low and there is the strong threat of official inflation, maintaining short term bonds is
prudent. However, in normal circumstances it may be preferable to use bond ladders. That way you spread out
the risk of changing interest rates by having a percentage of debt maturing each year to roll over.
To the question on "alternative" investments, I suspect the examples refer primarily to real estate in the form of
REITs. Unless possessing significant investment expertise, I suggest staying away from more exotic asset classes.
For additional wealth management commentary, please visit www.personalwm.com.
The Dealer wrote:
Whatever you do remember the main way you make money in the market is to take it from someone else. You
might should consider also, that’s how they make money too!
OldIndie wrote:
What are 'alternative' investments? Generally very specific items that are either impossible for a small investor to
buy, or very high in fees and low in performance.
There are many 'alternative' ETFs, all that I have seen have tanked in the past year, and provided no
diversification, except that they went down when the market went up.
If you feel you need 'alternatives' then you probably can pay the entry fee for a hedge that buys farmland,
timber, water rights, etc. If you really NEED to worry about alternatives, then you probably do not read these
boards anyway....you money manager handles all this.
For the rest of us, consider Asset Allocation funds from PIMCO and others that will give you a diversified
portfolio with little work on your part.
Trying to pick stocks and bonds, or even funds is a lot of work. And, you will probably not outperform a good
asset allocation fund.
Obama, Boehner Duel Over Payroll-Tax Cut:
BRIAN LIPPE wrote:
The thing I never hear explained is how much we actually pay. If you think of the benefits an employer provides
(i.e. vacation time, 401K matching or health insurance etc) than you should also think of the employer half of
Social Security and Medicare as a "benefit". Like the self-employed the total bill is 15.3% up to $110,100 for
SSN and unlimited for Medicare. So if you agree with that assumption, then everyone is paying taxes! Labeling
them income or payroll taxes is just semantics. As someone said there is no money in the trust fund so
everything goes into the same pot. Anyway, add the income tax and state income tax on top of the 15.3% and
you get the real nominal tax rate you are paying. Never mind property taxes, sales taxes etc.... So people at the
low end are paying a pretty steep tax. My bottom line is the Government should quit spending so much money
and IF you're going to have a government run retirement and/or healthcare system - fund it properly and stop
reallocating the funds for other things.
When I hear politicians state that not all working people are paying taxes they ignore the facts.
G BINCT replied:
There are thousands of inequities within the tax code. The more you look, the more you find. This is one of the
reasons I believe simplification of the tax code should be a top priority. By eliminating the variances, it would
create a more equal playing field with which people can compete. It would also alllow for lower rates, which
would spur growth within the economy. The sad thing is that politicos on both sides use the loopholes to garner
votes.
To your other comment on paying taxes on SS, which is income (FICA) already taxed, you are correct. The
government, however, does not recognize that FICA tax withheld equates to SS paid out. They do not make that
connection, which is why it is not challenged as dual taxation. Again, the more you look, the more problems you
find.
One last note. One must remember that these laws are legislated, which does not mean they have to be fair, or
even follow common sense.
Asia's economy:
Bob Templor wrote:
Capitalism is a good social system. There have been several good social systems in human history. Nevertheless,
social systems changes over the course of history. Some argue that capitalism would have around 300 years in
human history too. I believe it.
With US being the symbol of capitalism, US has 50-60 year to complete its capitalism and enter into another
social system. Year 2012 is a crucial year, not only of social changes but also global natural disasters. The
combined challenge of social and natural effects would truly make everyone feel the impact of the decline of
capitalism on the global scale.
China, with its special social system of social-capital, and with its unique of challenges of high density of
population, scare natural resources, and over-optimal running of its society, is facing a much larger challenge than
any other countries on earth.
I personally believe China's problem is not solvable of economic growth. Actually, I would argue that China's
problems are consequence of fast economic growth. Seeking a steady and slow economic growth is to the best
interest of citizens although not to the best interest of politicians or leaders.
Today, everyone thinks economic growth is the best thing without any side effect. The side effect of economic
growth is make our society less stable and plan seeds for social changes down the road.
Roger Brown replied:
Your slow growth solution may not satisfy millions of Chinese who know from observation that faster economic
growth would benefit them.
Punty Smythes wrote:
Japan's economic problems are more of their own making. But a mistake they had made was to strengthen the
Yen, and consequently, they are financing others' insatible deficit spending. The Japanese are now slaved to other
countries's unstoppable deficits. But the plain truth is: No if they do, and no if they do not.
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