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Marc Faber believes bonds are currently a bad investment. “I disagree with the bond bulls that are basing their case on a deflationary environment. In such an outcome tax revenues would collapse and stocks would fall heavily.” Should stocks fall the Fed would initiate more quantitative easing. Faber says people shouldn’t be buying bonds with yields trading Continue reading Dollar will Drop so Don’t Invest in Dollar Assets – Marc Faber A financial crisis initiates a sudden flight to safety among bondholders – widening interest-rate spreads, diminishing the private sector’s desire to sell bonds to raise capital and encouraging individuals to save more and consume less as they, too, hunker down. Thus bond prices rise, and interest rates drop. As rates fall, firms see that they Continue reading A Liquidity Trap – Monetary Policy Unable to Stimulate the Economy The attempt by households and governments to reduce debt is showing that it is difficult to do. Today, U.S. consumers have more mortgage and credit-card debt than they did five years ago, and the U.S. budget deficit is worsening. The government and individuals alike are still heavily in debt. U.S. consumer debt has skyrocketed by 37% Continue reading Attempt to Reduce Debt is Difficult and Impacts Global Economy College Education – Finding Value in the High Cost and Student Debt in a Global Economy – Bill GrossBill Gross, PIMCO founder and co-chief investment officer, shares his insights on the value of a college education. Bill Gross: College was great as long as the jobs were there. Now, however, a growing number of skeptics wonder whether it’s worth the time or the cost. Peter Thiel, an early investor in Facebook and head of Clarium Continue reading College Education – Finding Value in the High Cost and Student Debt in a Global Economy – Bill Gross Andy Tobias, author of “The Only Investment Guide You’ll Ever Need”, believes that after a certain point, it doesn’t help to know more about investing. Andy Tobias: If you’re using more complex strategies, that implies active trading. Transactions have costs. There are brokerage commissions. You have the spread. And then you have taxes if the trade’s not Continue reading At Some Point It Doesn’t Pay to Learn More About Investing: Andy Tobias The U.S. government can choose one of two economic paths: Austerity or irrelevance. Our debt burden and money-happy efforts to avoid the difficult parts of an economic crisis have left an economy virtually immune to stimulus yet devoid of actual growth in jobs or GDP. On the other hand, clamping down on stimulus in a world Continue reading Our Economy: No-Growth and Immune to Stimulus New York University professor Nouriel Roubini said two days ago that in the U.S., a failure to address the budget deficit risks a bond market “revolt.” President Barack Obama’s administration has been negotiating with Republicans, who control the House of Representatives, over cutting the federal government’s long-term shortfall and raising the debt ceiling. “We’re still running Continue reading Debt a Threat to Global Economy – Roubini Even if Fed Chairman Ben S. Bernanke decides to not implement QE3 to provide more quantitative easing, it’s now clear that rates everywhere will stay unusually low for longer than many investors expected. And with the most developed economies barely growing, Asia will be getting an even bigger share of the loose cash careening around the Continue reading Asian Perspectives on U.S. Quantitative Easing The focus of families, statehouses and the White House is “balance sheets”. Reducing liabilities is what everyone is doing. Mohamed A. El-Erian of PIMCO tells us it is a global phenomenon: Balance sheets, both across and within economies, are still out of equilibrium in what remains an excessively asset-based global economy. This raises the question Continue reading Balance Sheets are the Focus in Age of Deleveraging |
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