Investors 411 Blog

by Barr Jozwicki
July 15, 2012

Recession/Deficit Solutions

Author: Barr Jozwicki - Categories: Market Update - Tags: , , , , , , , , , , , ,

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The Greatest Economists of the 20th Century

Agreed that you Stimulate Your way Out of a

Recession

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Solutions to The Deficit

Stimulus or Austerity

(Part 1)

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The  Outstanding Success of

The Obama Stimulus

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Why Stimulus Works

&

Austerity Doesn’t

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The Obama Stimulus cost $787 billion.

Our national debt is @ $15 trillion.

A 5.2% one time addition to our debt.

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Under Obama & his Stimulus

Job growth went from -800,000 to +300,000

GDP went from -8.9% to +3.9%. = +12.8%

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Millions of jobs

created millions of taxpayers

& the GDP expanded.

Taxes paid by those with jobs

REDUCE the deficit

year after year after year…

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Everything was working until

*The Stimulus ran out

*The Austerity/Banksta Republicans

won the House of Representatives

&

*Obama, himself, put more focus on

austerity instead of stimulus

.

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Republican blocked virtually every

stimulus/jobs growth plan.

&

Had to be dragged kicking and screaming

for even a payroll tax cut

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Let’s see what happens to

the deficit

when Banksta/austerity

gain even more control.

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Examples – Austerity as a Solution

The European countries in economic trouble.

Portugal, Ireland, Italy, Greece, & Spain

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Ireland’s “free market” economy was

the goal of every Banksta in America.

The Baking Industry had “captured government”

Regulators were no where to be found.

Then Something Hit the Fan

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Ireland was the first country to impose

The Austerity Solution

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The Deficit

Exploded Higher

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Ireland Government Debt To GDP

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Ireland’s unemployment rate exploded

from 4.6% in 2008 to 14.3% today

..

IRELAND with Austerity

A 311% INCREASE in Unemployment

A 433% INCREASE in Debt to GDP

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In Hard Economic Times

Austerity = More Debt

..

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More Examples

The Other 4 Troubled European Countries

who have adopted the austerity solution.

All have

Debt to GDP ratios that are still exploding higher

All  have unemployment still exploding higher

For data on these countries see this LINK

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Next Blog – Common Sense works, Regulated Banking works, When Austerity works, Those plutocrats that don’t give a damn, but say they do – More Solutions.

FINIS


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July 9, 2009

Market Update – “That Giant Sucking Sound”

Author: Barr Jozwicki - Categories: Market Update - Tags: , , , , , , , , , , ,

Investors411 record – 4 1/2 years of beating benchmark S&P 500

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"That Big Sucking Sound"

Ross Perot

Some of you might not be old enough to remember Ross Perot’s famous line about globalization (in this specific case it was about a treaty called NAFTA) "That big sucking sound " was jobs getting sucked outside the USA.

Globalization is a multi edged sword. For more on the good, bad and ugly of globalization see Investors411 here Globalization helps developing countries (think China, India , etc.) explode in job growth, but it sucks jobs out of the USA at all but the very top levels of American business.

One of the biggest economic lies you are constantly overwhelmed with is – Cut taxes on private business and this will mean more jobsThis is a pure Bulls__t . The jobs go overseas . Everything is outsourced and practically all that remains is the tip top upper management.

It’s "Shocking" just how little jobs growth in the USA was created by the private sector over the last decade. Michael Mandel , the Chief economist for BusinessWeek chronicles private sector jobs growth over the last 10 years here

Some rough quotes

Private sector job growth rose by 1.1% in the last decade…the worst decade for private job growth since the Great Depression…a lost decade for the American economy…big job growth in health care (mainly government funded) , education, and government…this growth was funded by growing trade and government deficits…Its just horrible, just horrible… private industry is just not a jobs creator… and manufacturing is in free fall… an unalloyed bad.

Needed to be done according to Mandel – Innovate, help keep manufacturing jobs, take a step back and look at what  globalization means to us.

Take a look at a country like Germany that protects and builds it’s manufacturing/export sector. Germany is seeing the light at the end of the recession tunnel here.

  • I nvestors411 can’t emphasize enough what a bad investment the USA is relative to counties like China and India because of globalization. This mega trend will continue until the dynamic of globalization change.
  • This economic meltdown is not going to significantly recover in the USA until there are some dramatic changes in both financial institutions (see past Investors411) and how we look at globalization.

Many thanks to one of you who spent 30 minutes going over this with me yesterday

STOCKS

AS ALWAYS, DO YOUR OWN RESEARCH BEFORE INVESTING

Index Percentage % Volume
Dow +0.18% flat
NASDQ +0.06 % up
S&P500 -0.17% flat
Russell2000 -0.94% -

Investors411 record – 4 1/2 years of beating benchmark S&P 500

(see results for last 1/2 year – click  6/25 & scroll down)

Technicals and Fundamentals

Finally above average volume.  A major battle yesterday between bulls and bears . We hit the 875 support level of the benchmark S&P 500 and there was blood (volume) everywhere .  For a while the bears crashed through the barricade, but the bulls fought their way back and the index closed above 875 .

As predicted at the beginning of the week we are already challenging the major support level.

We did briefly establish a lower low, but the bulls held.  This is significant because of the volume.

Reading of the tea leaves – The longer we stay above 875 the better a chance of a rally has of getting started.

Huge bullish factor – No matter how you think this impacts the USA in the future. The Obama administration is NOT going to let any big banks fail. Also, they keep kicking the can down the road on any major fix of the problems that created the economic meltdown.

Earnings season around the corner.

Significant forecasting tools/Indexes for stock markets

Note - Repeated statements in brown.

The BDI has become the best of these three forecasting tools .

BDI The Baltic Dry Index measures the flow of goods (world trade) . BDI fell for the 6th day in a row. However the rate of decline decreased slightly. After a 5 month rally the last six weeks have seen a decline where the BDI,technically, has had lower highs and lower lows.   We are currently establishing a lower low for price. WARNING The breakdown in trade is very significant to any worldwide recovery . BEARS RULE

The BDI is now the first chart I look at each day. – Globalization has greatly added to the interconnectedness of the world’s economies. It’s a worldwide recession, and if trade prices break down so will individual economies.

$USD - The Dollar was flat yesterday -0.07% The strong inverse correlation between the dollar and stocks has existed for many moons. Dollar up = markets down. Dollar closed at $80.66 and has been trading for  a month between @$81+yesterday= and $79+. So the dollar nearing the top of its consolidation range. Long term Bearish pattern for Dollar ( bullish for stocks ) We bounced off the lows in early June and are now in a consolidation pattern .

WTIC Oil dropped a huge -4.43% yesterday, and 15% over last week+. (see chart) The 6 day fall has been significant and has NOT been accompanied by a significant rise in the dollar. (dollar works inversely to oil prices) What oil markets seem to be saying is demand is weak out there and the world’s economic picture is less bright than traders thought. The entire move higher for oil prices may have been manipulated. (see above WSJ article)

Therefore, Oil prices are no longer accurately acting as a decent tool in forecasting stock prices. Investors411 will keep an eye oil prices, but no longer use it as a forecasting tool for stocks. In fact, right now falling oil/gasoline prices are good for the overall economy, but bad for related companies (energy & alternative energy)

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Our Positions (For more see Positions section of Investors 411-scroll down)

I plan to buy back all recommended foreign ETF’s – just hopefully at a lower level. Perhaps when  S&P dips to support level @875. Perhaps lower. Wait on Brazil EWZ – too tied to oil prices

Long Term Outlook = CAUTIOUSLY BEARISH

See Changes in STRATEGY, POSITIONS, & OVERVIEW sections of blog

AS ALWAYS DO YOUR OWN RESEARCH BEFORE INVESTING

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