As Supercommittee Fails, Investors Will Pay the Price

Nov 20, 2011, 9:16 pm EDT
As Supercommittee Fails, Investors Will Pay the Price

How broken is government in Washington? So broken that Democrats and Republicans don’t even need to wait until the last minute to announce their failures. After all, it’s clearly a foregone conclusion — so why fake it?

The 12 members of the bipartisan congressional supercommittee given the task of finding spending cuts of $1.2 trillion admitted on Sunday night that they are heading for failure. As a result, the U.S. government and financial markets are wrapped in turmoil and uncertainty — again.

This shouldn’t be a surprise to anyone. I wrote last week why the supercommittee would fail, and how the market would sell off sharply as a result. I was hardly the first to say that, and it’s hardly news to anyone watching these so-called “negotiations” on Capitol Hill. Read 

Debt Supercommitee: Doomed From the Start

Nov 17, 2011, 2:27 pm EDT

When the congressional supercomittee tasked with finding more than $1 trillion in deficit reductions over 10 years first met in August, Senate Majority Leader Mitch McConnell (D-Kent.) declared that “failure is not an option” for the dozen-member bipartisan group. He couldn’t have been more wrong.

Failure, as anyone with common sense will tell you, is always an “option.” That’s especially the case in Washington, where partisan gridlock this summer nearly caused the U.S. to default on its obligations and triggered an unprecedented downgrade of the debt of the world’s largest economy.  The supercommittee process was designed to find $1.2 trillion in deficit reduction over the next decade or else $1.2 trillion in mandatory spending cuts — $500 billion in defense spending alone — would be triggered. That, of course, is an option that neither Democrats nor Republicans want, which should — in theory — encourage them to compromise.

Sadly, that has not happened. Read 

Why the EU Debt Crisis Matters to Us

Nov 17, 2011, 11:58 am EDT
Why the EU Debt Crisis Matters to Us

If you look at the crisis in Europe, the key questions to ask are clear: Will this crisis continue to spread? And will the United States get singed by the fallout?

In both cases, the answer is a very clear “Yes.”

Whereas traders once were content to play around the edges by trashing Greece, Ireland and Portugal, now they’re going for Europe’s jugular vein. What I mean is that traders are now dumping the debt associated with so-called “core” European Union nations. Read 

It’s Time to Privatize the Postal Service

Nov 17, 2011, 7:30 am EDT
It’s Time to Privatize the Postal Service

The U.S. Postal Service’s future is bleak. With mail volumes having dropped more than 20% over just the past five years, radical change is coming to the USPS.

Like many other giant companies that confront a rapidly shrinking market, the USPS is “discussing restructuring options with potential advisers,” according to Bloomberg News. Among those advisers are Moelis & Co., Rothschild and Perella Weinberg Partners. But USPS, which could run out of money on Sept. 30, 2012, is already in the midst of a major overhaul: It has announced plans to slash 220,000 jobs by 2015 and shutter as many as 3,700 post offices. Clearly, there’s more to come.

For the year ended Sept. 30, the USPS reported a $5.1 billion net loss. The only reason the loss wasn’t even more massive was that the Postal Service delayed a $5.5 billion retiree health care payment until 2012. Read 

Mitt Romney: Dull, Cerebral and a Shoo-In as GOP Nominee

Nov 16, 2011, 8:00 am EDT

There has been a lot of kerfuffle in the last few weeks about problems plaguing Republican presidential hopefuls. Sexual harassment allegations plague Herman Cain. Ricky Perry royally botched last week’s GOP primary debate. As a result, new frontrunners are bubbling up among the slew of Republicans vying for the White House.

But while the scandals and soundbites make for good TV, the fact of the matter is that we have a long year between now and Election Day 2012 — and no matter what distractions pop up, the economy and government spending are still going to be the biggest issues at the ballot box.

For that reason, former Massachusetts Gov. Mitt Romney is a shoo-in as the Republican nominee. Read 

Jobs Numbers Show Obamanomics at ‘Work’

Nov 16, 2011, 5:45 am EDT

Wow, what a stinker! I am referring to the November jobs report, on which the White House, along with the media lackeys, is attempting to put on a positive spin.

Here is the sad reality: The initial November jobs report lists a gain for non-farm employment of 80,000 jobs. This miserly gain is more than 35% below the 125,000 average monthly gain of the past 12 months. Since President Barack Obama took over, America has lost nearly 3 million jobs. At year-end 2008, non-farm payrolls totaled 134,383,000 jobs. The most recent report showed 131,516,000 non-farm payroll jobs, along with a startling 9% unemployment rate.

Yup, nearly 14 million Americans are on the well-understated unemployment roster. The unemployment rate for blacks is 15.1%, for Hispanics 11.4% and for Asians 7.3%. At the feeble 80,000 jobs gain rate logged in October, it would take 37 months, or more than three years, for non-farm payrolls to get back to the level witnessed when Obama first moved into the White House. Read 

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