As the debt-ceiling storm intensifies, some reports indicate that the White House, and perhaps the global financial markets, are less concerned with paying bills after Aug. 2 than with credit-rating agencies imposing their first-ever U.S. government downgrade, from AAA to AA+.
Read moreWhy is Obama Opposed to a Short-Term Debt Deal? Politics
s the tortuous debt ceiling debate continues, with plot twists that even the most diehard political junkies are having a hard time keeping straight, one aspect continues to bedevil the process: the staunch refusal of both President Obama and Senate Majority Leader Harry Reid to accept a short-term deal.
Read moreThe Optimism Deficit
In the nearly 15 years that I’ve been writing about markets and managing money, there’s been a dramatic shift that has gotten only marginal notice. We’ve gone from having an optimism surplus to an optimism deficit. That may be a greater problem than the budget surplus becoming a deficit.
Read moreThe U.S. Will Not Default on August 2
The only thing that matters for global markets over the coming days is whether a deal can be struck in Washington over the debt ceiling. That said, there is one major misconception – fostered by politicians – about what the stakes actually are.
Read moreDebt-Limit Debate: Wall Street Might Freak Out Today
For the past few weeks, as the debt-ceiling crisis has intensified in Washington, financial markets have been acting on the assumption that a deal will be done. This weekend, that changed.
Read more"Jobs, Debt & China" - Hamptons Institute - Guild Hall on VVH-TV
"Jobs, Debt & China: America's Three Financial Challenges" - Hamptons Institute - Guild Hall in collaboration with the Roosevelt Institute on VVH-TV Byron Wien, Vice Chairman, Blackstone Advisory Partners in conversation with Jared Bernstein, Senior Fellow, Center for Budget and Policy Priorities and Zachary Karabell, President of River Twice
Read moreApple Does it Again: Why Companies Win While Economies Lose
As Washington continues to skate perilously close to the economic abyss, 3,000 miles away in Cupertino, California, this week Apple released its results for the second quarter. To no one’s surprise but to almost universal amazement, Apple managed to sell more iPads (9.3 million) and iPhones (20.3 million) than ever before. Quarterly revenues of $28 billion were up more than 80% from last year, and profits were up 125%.
Read moreOur Real Debt Problem
On Friday, I posted a piece on the U.S. debt and how we are creating a false crisis given current interest rates and our ability to manage that. Judging from the responses, you would have thought I was penning a piece in defense of eugenics. OK, the online world is not known for its sobriety, but the heated reaction to my post is typical of the current debate about debt.
Read moreThe U.S. Is Not Drowning In Debt
In case you haven’t noticed, Washington is currently consumed in an acrimonious debate over whether to raise the debt ceiling. There is no agreement about whether to do so or how, but both parties appear to accept the logic that the United States is suffering from an unacceptably high level of government debt and that further debt will doom the U.S. to generations of decline. Judging by polling data, large swaths of the country agree. Nonetheless, that consensus is wrong.
Read moreDefault Risk: Wall Street’s Shocking Debt Denial
"The United States is not going to default on any obligation. We are not a credit risk, believe me." Calm words, coming from the financial sage of Omaha, Warren Buffett, and words meant to keep the markets calm in the face of mounting hysteria in Washington over the debt ceiling and potential default of the U.S. government. This perception—that Washington may go to the wire on Aug. 2 but that in the end, sanity will prevail—is widely shared on Wall Street and on bourses throughout the world. That is almost as disturbing as the debt mania, because if Buffett and the financial community are wrong, they are wholly unprepared for the consequences.
Read moreThe Rebirth of the U.S. Auto Industry? Not So Fast
Over the past year, story after story has touted the rebirth of the U.S. auto industry. Ford Motors, which unlike General Motors and Chrysler survived the 2008-2009 crisis without taking bailout money from the federal government, has enjoyed a string of positive reviews, and its earnings and revenue are higher than at any point since the 1990s.
Read moreUnemployment Report: Why Jobs Won’t Be Coming Back Soon
So yesterday’s monthly employment report, which showed a net gain of merely 18,000 jobs, once again confounded the expectations of economists—and sorely disappointed those in Washington by showing precious little job creation in the United States.
Read moreEven in the Struggling U.S. Economy, It’s Still Only Money
Listening to an interview with an Iranian-American journalist about being detained in jails in Damascus and Tehran, I was struck by the contrast between the extremis of those experiences and the daily drumbeat of high emotions about money.
Read moreMessage to Businesses: Uncertainty is Here to Stay
The jobs report was bad enough. But it’s hardly the only indication of continuing trouble for the U.S. economy. Released at the end of June, U.S. Bancorp’s annual survey of nearly 3,000 small businesses confirmed what many people already know: the recession that began in 2008 never ended for vast swaths of the U.S.
Read moreWhat Would the Founding Fathers Say About the National Debt? Don’t Default
One of America’s favorite pastimes is to play the “what would the Founding Fathers say” game. Just pick an issue du jour, and ask the question. Given that today’s world (Google, Twitter, television) is probably way beyond even the imagination of the 18th-century designers of the Constitution, the game usually says more about today’s partisan fights than about the Founders.
Read moreHow a Weak Dollar is Boosting Domestic Travel
This week, I’ve been treated to a visceral experience of the upside of a downside. Driving with my family through the Tetons and Yellowstone National Park, I have sat behind endless lines of RVs and assorted SUVs depositing masses of people who are swarming the parks, descending on Old Faithful concession stands, and snapping endless digital photos to be sent over Androids, iPhones and even Blackberries.
Read moreThe Wishful Environmentalism of Cars 2
Cars 2 opened to lukewarm reviews and a smash box office, taking in $66 million domestically and another $42 million internationally during its opening weekend. The film’s ability to transcend unusually tepid reviews is clearly a testament to the power of the Pixar brand (another gift of Steve Jobs), which has generated a remarkable series of animated hits stemming from the Toy Story franchise that began in 1995 and continuing through gems like Wall-E and The Incredibles, as well as the first Cars. But this film also carries a loud and unmistakable message about alternative energy, automobiles and their shared future.
Read moreBernanke and the Fed: Reading Between the Lines
Today we were treated to the second installment of the Federal Reserve’s new policy of openness with Chairman Ben Bernanke’s press conference. That followed on the heels of the statement by the Fed Open Market Committee about interest rates and the economy.
Read moreBanks Are Hurting? It’s All Relative
The latest out of Wall Street-land is a warning by analysts at Citibank that profits at Goldman Sachs and Morgan Stanley (and to a lesser degree at other banks as well) will show a sharp contraction for the second quarter of 2011. Leaving aside the inside baseball nature of one Wall Street firm issuing a negative report on other firms, the decline in profitability stands in contrast to the widespread perception that banks and investment houses are booming while the rest of the economy is suffering. Or does it?
Read moreHard or Soft Landing for China? How About No Landing
The past few weeks in financial-land have been dominated by two combustible fears: 1.) that this time Greece really will default on its debts and plunge the Eurozone into chaos; and 2.) that this time China really will hit the brakes and bring much of global economic activity down with it. One of these fears alone would be enough to roil markets. Together they have been a potent and toxic mix.
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