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  • The Last Half

    There are a number of economic forces in play in today's world, not all of them working in the same direction, which makes choosing policies particularly difficult. Today we finish what we started last week, the last half of the last chapter I have to write to get a rough draft of my forthcoming book, The End Game. (Right now, though, it appears this will actually be the third chapter.) We will start with a few paragraphs to help you remember where we were (or you can go to www.investorsinsight.com to read the first part of the chapter).

    But first, I recorded two Conversations yesterday, with the CEOs of two biotech firms that are working on some of the most exciting new technologies I have come across. I found them very informative, and we will post them as soon as we get them transcribed.

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  • Are We There Yet?

    Those of us who have taken young children on long road trips to somewhere they wanted to go are familiar with the plaintive question 'Are We There Yet?' As a nation and indeed the developed world, it is not unreasonable to be asking 'Are We There Yet?' about the road to recovery. The NBER, those self-appointed economists who are the official keepers of the score sheet of recessions and recoveries, have yet to tell us we are out of recession. Yet the economy is growing. Kind of. Today we look at the most recent data on second-quarter US GDP (which came out this morning), and even though it is backward-looking data, we'll see what we can discern that might help us chart the direction of the future. And then, if there is time, I'll highlight what is a very serious and growing problem for our state and local governments. There is a lot to cover and so, with no 'but firsts,' let's dive in.

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  • Six Impossible Things

    Economists and policy makers seem to want to believe impossible things in regards to the current debt crisis percolating throughout the world. And believing in them, they are adopting policies that will result in, well, tragedy. Today we address what passes for wisdom among the political crowd and see where we are headed, especially in Europe....
  • Is This a Recovery?

    Last week I wrote a letter to my kids trying to explain what Greece meant to them. Reader Ken V wrote: 'Great letter, John. Now you should write one for the adults who are retired and don't have the long future your kids do. If the US becomes Greece, things won't recover in time for much of the rest of my life to be more than one grim, dreary period. What is your investment advice for those with roughly a 10 year horizon, not 30-40-50 years?'

    A very good question Ken, and one that was asked more than a few times. So today, I will touch on that thorny issue, as well as look at the employment numbers for what we see about the potential for an actual recovery.

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  • The Glide Path Option

    The present contains all possible futures. But not all futures are good ones. Some can be quite cruel. The one we actually get is dictated by the choices we make. For the last few months I have been addressing the choices in front of us, economically speaking. Today I am going to summarize them, and maybe we can look for some signposts that will tell us which way we are headed as we walk down the path. For those who are new readers and who would like a more in depth analysis, you can go to the archives and search for terms I am writing about. And I will start out briefly touching on today’s ugly unemployment numbers with data you did not get in the mainstream media.

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  • Killing the Goose

    Peggy Noonan, maybe the most gifted essayist of our time, wrote a few weeks ago about the vague concern that many of us have that the current path we are on has the potential (my interpretation) for not just plucking a few feathers from the goose that lays the golden egg (the US free market economy), or taking a few more of the valuable eggs but of actually killing the goose. Today we look at the possibility that the fiscal path of the enormous US government deficits we are on could indeed kill the goose, or harm it so that it will make the lost decades that Japan has suffered seem like a walk in the park.

    And while I do not think we will get to that point (although I can’t deny the possibility) , for reasons I will go into, there is the very real prospect that the upheavals created by not dealing proactively with the problems (or denying they exist) will be as bad as or worse than the credit crisis we have gone through. This is not going to be something that happens overnight, and the seeming return to normalcy that so many predict has the rather alarming aspect of creating a sense of complacency that will only serve to 'kick the can' down the road.

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  • The Statistical Recovery

    A lot of bullish commentators are talking about a recovery being in the works, and they may very well be right. But it is not going to look like any recovery worthy of the name. This week we look at what I will call The Statistical Recovery. But first, we take a look at what China is doing, as we continue our look at the rest of the world and ponder if it is time to brace ourselves for an extended bout of the Muddle Through Economy*. (And yes, there is an asterisk.)

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  • Europe on the Brink

    We have avoided Armageddon, at least for now. The cost to the US taxpayer has been a few trillion. Some in the media are loudly announcing the end of the recession. But we are not out of the woods yet. There are a few more bumps in the road. Actually, some of them are quite steep hills. As big as the subprime problem? Maybe.

    When asked a few weeks ago what was my biggest short-term concern, I quickly replied, 'European banks have the potential to create significant risk for the entire worldwide system.' This week we will glance "over the pond" to see what gives me cause for concern. Then we briefly look at a few of the bumps I mentioned, which are likely to stretch out any recovery, and maybe even dip us back into recession.

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  • The New, New Normal

    We are coming to a critical inflection point, perhaps the most critical point that we have had in 70 years for the US and to a great extent the global economy. The choices we make (or that Congress and the Fed make for us) will affect not just our investment portfolios but business and our jobs for a very long time. Last week I talked about the three paths we face as a nation. I want to go back to that theme and expand upon it. You need to clearly understand what the risks are so that you can interpret the actions and data that will be coming at us in the next few quarters. I am feeling a little tired today, so I am going to take the liberty to reproduce Bill Gross's latest comments as well, which are somewhat in line with my own....
  • This Way There Be Dragons

    In fantasy novels the intrepid heroes come across a sign saying 'This Way Be Dragons.' Of course, they venture on, facing calamity and death, but such is the nature of fantasy novels. We live in a very real world, and if we don't turn around there will be some very nasty dragons in our future. This week we look at three possible paths we can lead the world down. We then review a number of charts and data on the housing market.

    If you just read the headlines on this week's data, you could be forgiven for assuming the worst is over -- not. And then finally we look at some rather stark comparative data on the health-care systems of the US, Canada, and Great Britain. Everyone knows the US pays way more in terms of GDP than the latter two countries. Are we getting our money's worth? There is a lot to cover, and I hope to finish this on a flight to Naples, so let's jump right in....