Fee-Only Financial Planning in North Carolina

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Monthly Archives: October 2009

Two drunks walk into a bar…

There is a problematic symbiotic relationship between the Federal Reserve (drunk #1) and large US banks (drunk #2). • The Fed keeps interest rates at historically low levels. • Low interest rates are paid by banks to consumers. Banks then loan at higher rates and make a profit on the interest spread. • Leverage it up 10X, rinse, and repeat. You’ve got a cash […] Read the rest of this entry »

The “You Can’t Handle the Truth” Economy

Jack Nicholson’s character in “ A Few Good Men “ had one of the coolest lines in a movie. It is also strangely apropos in describing our current economy. We have become accustomed to our economy rolling along at 3-4% GDP growth for a seemingly endless time-span. Then reality hit. To wit, it turns out you can’t: • allow banks to re-package dog-poop and […] Read the rest of this entry »

Federal Government Policy not helpful

I don’t know if this is just poor policy or political gamesmanship (why not both?), but the White House tried to get $13B allocated to go to Seniors as a cost of living (COLA) adjustment to Social Security. From a (responsible) public policy perspective, this is a poor idea. If consumer prices declined this year (deflation), then we should be reducing payments to seniors […] Read the rest of this entry »

China update

We have written fairly extensively on China over the past few years. Perhaps more important than other reasons, we pay a lot of attention to China because: – We are likely to make more money there than the US in the next few years. – China is likely to show large market moves ahead of the US. – We owe them a lot of […] Read the rest of this entry »

Post-Clunker World

Now that cash for clunkers is over, let’s examine what reality looks like. August (the cash for clunkers program time period) experienced an annual new car sales rate of 14.1M vehicles. September is seeing new car sales at an annual rate of 7 – 8M — a 28-year low. For some perspective, here are previous year US new car sales: 2008 – 13.2M, 2007 […] Read the rest of this entry »

US Banking System Getting Worse

I have written repeatedly over the past year (and longer than that) that the US banking system is very weak – more specifically, that it is weaker than the Fed, Treasury and financial press would have us know.  Here is an update, and a summary of what it means to how we are investing… The Economist magazine states that western (N America, Europe) bank […] Read the rest of this entry »

US – China bun fight

Every US President since Jimmy Carter has instituted international anti-trade policy at some point in their administration. George W Bush got into a mild trade war with China in 2002 over steel prices. Barack Obama can now add his name to the list, but the scale of the trade war is closer to bun-fight. The Obama administration has decided to charge a 35% import […] Read the rest of this entry »