Economists?, Global Imbalances/The U.S.$

Economists?, Global Imbalances/The U.S.$

Economists?

A recent article titled 'Economists React: Consumer Can't Drive Economy' is a compilation of statements from U.S. economists with respect to the U.S. Consumer and Retail Sales.  I can't figure out why many of these people whose job it is to make useful economic forecasts seem to be better at commenting on good and bad economic results and trends after the fact.  It may be as simple as the fact that no currently practicing economist has lived  as an adult through the turbulent times of the 1930's and 1940's , have simply read about those times and events in textbooks, and are 'milling around' in the current economy 'making it up as they go along' - all without any real hands-on business experience.  Nothing in the article seems to me to have been unpredictable.  It is a simple concept that if a populace has less to spend it will as a whole be less enthusiastic about spending and will spend less.

On a similar note, if you read my e-mails you know I think this 'failure to see what ought to be obvious' applies 'in spades' to the U.S. unemployment situation.  Were yesterday's unemployment claim statistics a surprise? - I don't think they ought to have been.   Should they have been as big as surprise as they seemed to be if you watched yesterday's U.S. stock market activity and last evening's ABC newscast? - on a 'week-specific' basis 'maybe', but as a prospective statistic, I think not.  Were they a big surprise to people I think ought to have 'seen it coming'? - well, they certainly got President Obama's immediate attention - so you decide.

You might consider reading the article to see if it says anything you hadn't already considered or didn't know - reading time 2 minutes.

Global Imbalances/The U.S.$

There was what I consider to be a particularly good article published this past Sunday titled 'Global Imbalances and the Impact on the U.S. Dollar' .  Written by Marvin Bolt of Alpha Plus Advisors the article investigates correlations between the U.S.$ and (1) net foreign direct investment; (2) the U.S. trade deficit; (3) crude oil prices; (4) the U.S. federal budget deficit; (5) the allocation of currency reserves by foreign central banks; (6) gold prices; (7) short-term interest rates; and (8) Dollar Index technical analysis.  I suggest you take the time to read the article, which is lengthy but I which I think is well worth reading - reading time 10 minutes.  On Sunday I commented twice on Mr. Bolt's article as follows:

First Comment:

Mr. Bolt obviously has spent at great deal of time and thought into this article - and should be seriously applauded for what I consider to be a 'serious piece of work'.  I read Mr. Bolt's article as being 'factual and well balanced' - which as I see it, much of what is written in the Press and in Internet articles is not.  Further from my perspective Mr. Bolt's conclusions (possible outcomes) broadly make sense.

All that said, as much as I want the U.S. to continue to reign as the world's most important economic power, pulling Canada (my 'home and native land') along with it in a continuation of the harmonious post-1812/14-war period Canada has enjoyed, I don't see that happening without at least three things happening simultaneously:  (1) the U.S. Federal Politicians abandoning what seems to me to be their generally parochial, politically polarized, and constituent driven way of behavior - all in aid of U.S. economic realism, budget balancing, and deficit and ultimately National Debt reductions; (2) the U.S. unemployed and in particular its youth being employed in meaningful, productive, and long term jobs (particularly 'manufacturing type' jobs) such that the 'real' U.S. unemployment rate can return to at or under 5%; and (3) most Americans being willing (with a smile on their respective faces) to accept a reduced 'standard of living' from the one they have experienced over the past few decades.  I don't know about you, but I don't see any of those three things happening, let alone all three happening simultaneously - and think this inevitably must lead to negative consequences for the U.S., Canada, and the other 'developed' countries.

I send an e-mail most trading days to the now over 10,000 opt-in Subscribers to www.StockResearchPorta..., a website focused on Resource Stock Research. On Monday I plan to draw this article (with a link) to the attention of that readership. Good work, Mr. Bolt.

Second Comment:

I have been reflecting further on Mr. Bolt's article, and think a better way to express my thoughts on the current behavior of the U.S. Federal Government is to simply say: 'The sooner the U.S. Federal Government addresses the fundamental causes instead of the 'effects' of the economic dilemma the U.S. finds itself in, the better will be America's chance of retaining some portion of its 'world dominant' economic position for longer than it otherwise will'.

Easily said - most people (and a Government is really nothing more than the ultimate 'Committee of People') don't see things from 10,000 feet, they see things myopically and in the short term on a 'personal' basis. Not a good thing from a 'strategic planning' point of view.

This is in my view a 'read and think for yourself' must-read article for all those investing in the equity markets.

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