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What QE2 Has Done For You (So Far)
Tweet Share on Facebook December 10, 2010 Comment (2)If you've got an investment portfolio, you might want to send Ben Bernanke a thank-you note.
The Federal Reserve Chairman has been battered over his aggressive and unorthodox efforts to juice the economy, with criticism mounting every time he pulls another lever. The Fed's second quantitative easing program, which started in November, has particularly animated critics who fear it will unleash runaway inflation down the road, without a decisive impact on the economy that might justify such a risky move. By buying $600 billion of Treasury securities through mid-2011, the Fed is effectively printing money while encouraging investors to buy stocks, commodities, and other assets as they sell low-risk Treasuries to the Fed. Bernanke says the Fed can rein in its program if inflation becomes a problem, but critics from left, right, and center aren't so sure.
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How Republicans May Be Overplaying Their Hand
Tweet Share on Facebook December 9, 2010 CommentEmpowered Republicans are wasting no time flexing their muscles, with a new deal on taxes that has forced President Obama to capitulate to a core GOP demand and agree to tax cuts for the wealthiest Americans. Conservatives are giddy. Liberals are angry. Obama himself has the aura of a man glumly resigned to betraying his principles.
[See 12 ways to stop America's decline.]
The Republicans' big victory on taxes comes before the winners from the November midterms even sweep into Congress, where they will take control of the House of Representatives and strengthen their minority stance in the Senate. If the tax deal passes and becomes law, it will mark a startling shift in Obama's agenda. Since being elected in 2008, Obama has favored an extension of the Bush-era tax cuts for middle-class earners but not for the wealthy, yet he failed to get a Democrat-controlled Congress to pass his version of the tax extensions. The deal he finally got is like settling for a field goal after having a first down on the opponent's five-yard line.
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Why the Tax Deal Could Be Obama's Salvation
Tweet Share on Facebook December 8, 2010 Comment (7)The "tax compromise" reached by President Obama and Congressional Republicans has left liberal Democrats feeling gypped. But it could end up being a stealth consolation prize for the Democrats after the drubbing they took in the 2010 midterms—and might even pave the way for Obama's reelection in 2012.
[See 12 ways to stop America's decline.]
Many Democrats are outraged that Obama agreed to an extension of the Bush-era tax cuts for America's wealthiest earners, which is a top Republican priority. And opposition to the top-tier tax cut could still scuttle the deal in Congress, where lawmakers have to turn the broad framework into a set of laws able to get enough votes to pass the House and Senate. But by blinking on the tax cut, Obama got a long list of concessions from Republicans on other White House priorities, securing an economic "stimulus" program far bigger than most analysts thought possible in Washington's vitriolic climate.
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5 Foolish Fears About Taming the National Debt
Tweet Share on Facebook December 6, 2010 Comment (7)Americans don't like government the way it is, but apparently they don't want it to change much, either.
[See 12 ways to stop America's decline.]
With a credible plan for cutting government spending and reining in the national debt finally out in the open, we're now moving from easy rhetoric to ugly reality. Talking about shrinking government is easy. Doing it is a lot harder—and perhaps prohibitively hard—as the new report from President Obama's fiscal-responsibility commission makes clear. The panel, headed by Erskine Bowles and Alan Simpson, could have been named the National Commission to Alienate Everybody, since the spending cuts and tax increases outlined in their plan would hit nearly every American. But that's what it's likely to take to reduce the nation's deficits by $4 trillion over the next 10 years and get America back on sound financial footing.
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4 Reasons Jobs Remain So Scarce
Tweet Share on Facebook December 3, 2010 Comment (33)Retail sales are inching up, manufacturing is on the upswing, and corporate profits are strong. But companies still aren't hiring and the unemployment rate is going up. What gives?
[See 20 industries where jobs are coming back.]
Economists have seen a few glimmers of hope recently, with consumers sticking their heads out of their shells and other parts of the economy finally showing signs of life. But the job market is one big exception to the trend. In the latest report, job creation fell from 172,000 in October to just 39,000 in November, an extremely weak number that doesn't even keep up with ordinary population growth. The total number of unemployed people ticked up to 15.1 million, and the unemployment rate rose from 9.6 to 9.8 percent. Some economists think it could peak above 10 percent next year, before beginning to drift downward for good.
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Video: Where the Jobs Are, and Aren't
Tweet Share on Facebook December 2, 2010 Comment (1)I appeared recently on ABC News's Good Money program to discuss hot and cold spots in the job market. Here's the clip:
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How Europe's Debt Crisis Could Infect America
Tweet Share on Facebook December 2, 2010 Comment (1)Ireland finally has a bailout and a lean new federal budget that should help the country become solvent again. Portugal and Spain say they don't need help paying their debts. Leaders in Germany and France say they're determined to see Europe through any crisis. And Europe's central bank has left open a variety of lending programs for banks that need them.
So Europe's debt crisis is under control, right?
Not by a long shot.
[See 12 ways to stop America's decline.]
As with Greece earlier this year, aid measures for Ireland have temporarily calmed markets reacting to the risk of mushrooming bank runs and government defaults. But there's a good chance that the next phase of the crisis has merely been delayed, not forestalled. Europe's efforts to contain the problem so far have been ad hoc and reactive, and there's still no clear-cut set of rules for dealing with future problems. That has left global investors skeptical, if not downright worried, about Europe's ability to avert a bigger financial crisis.
