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Posts Tagged ‘Obama’s budget’

Connecting the Dots: Our Dollar Continues Multi-Year Decline as Both Political Parties Are “On the Take”

Posted by Larry Doyle on February 15th, 2011 8:55 AM |

In the course of my regular early morning reading (thank you to the regular readers who feed me these resources), I came across some fabulous work.

1. The Dallas Federal Reserve puts forth an enlightening piece entitled Global Economic Conditions. The 43 page treatise covers a wealth of information but my attention was grabbed primarily by the graph highlighting the continued decline in the core rate of inflation on page 11, and the ~20% decline in the value of our U.S. dollar over the last decade versus other major currencies on page 38.

While skyrocketing food and energy costs globally will likely continue to foment civil unrest in selected nations, Fed chair Bernanke is assuredly singularly focused on that continued decline in the core rate of inflation. How will he respond? Many individuals whom I respect believe Bernanke will continue to flood our economy with more and more dollars via quantitative easing. What does that portend for the value of our greenback? It ain’t good. What do others think of our Federal Reserve and fiscal fiascos? Let’s navigate further. (more…)

Which Way Is the Wind Blowing?

Posted by Larry Doyle on April 25th, 2009 1:24 PM |

Barack Obama strikes me as an individual who views popularity as necessary while principles are convenient. I see this in his engagement with the American public, the international audience, and political constituencies. While the strong liberal Democratic leadership is not only setting policy and writing legislation, Obama and team are working to appease a large percentage of the audience at home and abroad.

If one is trying to be all things to many people, ultimately an individual risks being measured as lacking depth. I believe that Obama runs a very high risk of being painted as a lightweight for this very reason. Let’s touch upon a few examples of Obama’s waffling while simultaneously working on growing his popularity:

1. Stimulus Package: rammed through Congress by Pelosi and Reid without a fair and full reading of the bill. We are now paying for the shortcomings in the bill. Obama “sold” this package via his Town Hall “concerts.”

2. On the “torture” front, Obama initially declared he was moving forward without reviewing and potentially prosecuting Bush officials. In the face of massive pressure from a hard core liberal element of the Democratic Party, Obama quickly reversed course and indicated he may pursue investigations and prosecutions of Bush officials. Getting pushed around by “friends” does not exactly send a message of character and strength to the world.

3. Budget: Obama will run over a number of Blue Dog Democrats specifically on the health care front via a process known as reconciliation which disallows filibustering. The use of the reconciliation process has never been used for major legislation. The overall budget is a MASSIVE spending proposition which dramatically escalates the federal deficit.

4. Budget Deficit: under pressure from the same Blue Dog Democrats and after putting forth the largest budget ever, Obama is now recommending a “pay as you go” bill which would instill higher taxes or spending cuts after this budget.

Why do we need to wait? Why shouldn’t we impose this “pay as you go” before the budget? Very simply, Obama would not be able to hold to his promise of not raising taxes on the middle class.

Bloomberg provides insight on the pay-as-you-go approach, Obama Urges Congress to Pass Law Enforcing Fiscal Discipline.

The timing of Obama’s newly found fiscal discipline is very interesting. Why? Earlier this week, Obama came out with a “bold” approach to imposing real discipline within his cabinet. Bloomberg shed light on Obama’s boldness,

Obama was criticized as doing too little to confront the deficit when he ordered his Cabinet to cut $100 million out of the budget in the next 90 days, which would cut this year’s projected deficit by about 0.006 percent.

Yep, this newfound discipline is starting with an aggressive move of cutting 6 thousandths of 1 per cent from this year’s budget. Such a “draconian” (NOT) level of cuts hints at how large Obama’s budget is while seriously questioning his integrity and that of the Democratic leadership on this topic.

A President who has an agenda a mile long but six inches deep risks being exposed when the wind kicks up. Speaking of wind and Obama, which way is it blowing today?


The Fed Levers Up

Posted by Larry Doyle on March 18th, 2009 6:30 PM |

When the economy experiences a massive delevering process, the void in the economy needs to be filled. There has been and will continue to be ongoing debate about the effectiveness of the stimulus plan, Obama’s proposed budget, ongoing government bailouts of a variety of industries, and moves made by the Treasury and Federal Reserve. Has enough been done? Is too much being done? Are our global partners pulling their weight? Are protectionist measures likely to exacerbate our economic problems? The answers to these questions will not be known for years.

Today’s action, Fed’s New Steps Shake Up Markets, is a sign that as everybody is delevering (selling assets purchased with borrowed money), the Federal Reserve is levering up. The Fed has indicated they will purchase billions more than previously advertised in U.S Treasury securities, mortgages, and consumer related assets. Why? By making these purchases, the Fed will attempt to drive the rates for these products lower and reignite consumer and institutional demand for credit. The market responded in startling fashion as 10yr government rates dropped an unprecedented .50% !!  Equity markets responded by moving higher by 1-2%. (more…)

Sense on Cents “Central Station”

Posted by Larry Doyle on March 13th, 2009 6:30 PM |

central-station-promo-3-boldI am pleased to relaunch our weekly departure from “Central Station” on Saturday mornings.  This endeavor here at Sense on Cents is a few hours of written Q/A with your resident host.  I like to utilize the theme of a ride on the rails, so please allow me to expound. 

With so many cross currents at play in the markets, economy, and world of global finance, where can one go to develop a framework of understanding, enjoy the company of friends, and make sense of the madness? Welcome to Sense on Cents “Central Station.” Our ride departs Saturday morning at 9 a.m. with an expected return at 12 noon.  While we traverse the curves along our track, we can address a wide range of issues, including: Obama’s economic plans, Secretary Geithner’s outlook, the market performance this week, month, and year to date, developments overseas, the outlook for our financial regulatory structure, issues of personal finance, or anything else on your mind. 

Our ride is most productive with as many people participating as possible. Please bring not only your questions, but also your views. Invite friends, neighbors, and colleagues along for the ride as well. 

Your conductor is not a professional financial planner. I recommend that you consult with a licensed, qualified professional before making any investment decisions. I am merely a Wall Street veteran looking to help you navigate the economic landscape!!   

Come on back tomorrow morning at 9, submit your questions in the comments section, and away we go.. Aaaaaaaaaaaaaaaall Aboard!!


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