A few brief comments on America’s fiscal choices

The private sector (particularly the household sector) is overly indebted. The level of debt households now carry cannot be supported by income at the present levels of consumption. The natural tendency, therefore, is toward more saving and less spending in the private sector (although asset price appreciation can attenuate this through the Wealth Effect). That

The Seven Immutable Laws of Investing

In my previous missive I concluded that investors should stay true to the principles that have always guided (and should always guide) sensible investment, but I left readers hanging as to what I believe those principles might actually be. So, now, for the moment of truth, I present a set of principles that together form what I call The Seven Immutable Laws of Investing.

They are as follows:

Always insist on a margin of safety
This time is never different
Be patient and wait for the fat pitch
Be contrarian
Risk is the permanent loss of capital, never a number
Be leery of leverage
Never invest in something you don’t understand

How to Look for a Job

Frederick Sheehan is the author of Panderer to Power: The Untold Story of How Alan Greenspan Enriched Wall Street and Left a Legacy of Recession (McGraw-Hill, 2009). Unemployment is stuck in a rut. One reason is the tendency to look backwards. Trillions of dollars have been spent (with no end in sight) to bail out

ECRI Weekly Index falls to a 56-week low of -6.9

This comes via the ECRI website: A measure of future U.S.economic growth rose slightly in the latest week, but its annualized growth rate continued to fall, indicating the economy is about to slow, a research group said on Friday.The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index rose

Hussman: Cliffhanger

The following is an excerpt from John Hussman’s latest Weekly Market Commentary. I noted last week that we are closing in on a syndrome of indications that has always and only appeared during or immediately prior to recessions. At present, however, we still do not have that evidence in hand. A recession forecast would be

Meredith Whitney Comments on Housing Double Dip

Meredith Whitney was a guest host on CNBC at 8AM ET talking about an anticipated housing double dip. The videos are below. A few comments first.  Whitney was late to the recovery party in 2009 in my view. But I found the recent Rip Van Whitney piece by banking insider Thomas Brown a bit patronizing.

Federal largesse was countered by state and local cutbacks

In looking back on the efficacy of stimulus in the United States, Ezra Klein has a few thoughts in the Washington Post’s "You’ve seen the stimulus. Now, meet the anti-stimulus." A multiple choice question for you: Did the stimulus a) work; b) fail; c) end up locked in an unexpected battle with the massive anti-stimulus

ECRI Weekly Leading Index falls further into negative territory

Growth in the ECRI weekly leading index fell further into negative territory. The growth rate for the week of June 11 weakened to -5.7%, down from -3.7% in the previous week, which had been the first negative reading in almost a year. "Despite the WLI’s rapid drop over the last six weeks, its downturn has

David Rosenberg on the Economy

David Rosenberg is out with a good post that takes on the double dip theme that everyone is talking about.  As you would expect, he has a bearish spin. To the degree you want counterfactuals, I really like what Morgan Stanley has to say in their research piece "Just Say No to the Double-Dip."  The

If the data are so good, why is everyone screaming double-dip?

This week’s review post is a bit late since I have been spending all my time watching the World Cup. Like last week, I will put the review in narrative form with links to last week’s posts embedded. The numbers were OK but… I think the last week’s data were pretty good. I know I’m

ECRI Leading Indicators Levels Now Flashing Red

We have been watching the change in the ECRI Leading indicators as a predictor of economic activity.  I have posted a few times on this, first in April, then again last month. All along the way, it has been the rate of change in the ECRI’s weekly  leading indicators, not the change of the index. 

Achuthan: Leading Indicators Point To Slowing Growth; Jobs Outlook Murky

Lakshman Achuthan is a Managing Director at the Economic Cycle Research Institute. ECRI studies recessions and recoveries, forecasting economic and inflation cycle turns for all major market economies using a rigorous and objective methodology. They correctly forecasted this recession and recovery. Recently, their Leading Economic Index has been hitting recovery lows, something that both Albert