Blogs

On Tuesday the OECD General Secretary Eric Piermont said that the 17-country EU was in danger of falling into a “severe recession” and that the global economy could be dragged down with it.  It was quite a headline, and it certainly caught my attention.  It seemed to me that Mr. Peirmont found and mashed the panic button as he called for governments and the ECB to come quickly and bail them out with a “what-ever-it-takes” attitude.

It seems to me that most people would agree with the following statement: “Small businesses are the job growth engine in this country.” You’ve probably heard it in the office, at the ballpark, or on the nightly news broadcast. It’s accepted as common wisdom; and in today’s mindset, that means government intervention will only bring further growth and improvement.

Most people who have heard me speak at a company or association meeting know I am not a fan of the Consumer Sentiment Index, a gauge of what consumers are expecting in the near and long term. Staffers conduct the monthly survey by calling at least 500 consumers who are asked about 50 core questions.  The questions include their assessments of their personal financial situation, their buying attitudes, and their view of overall economic conditions.

March saw consumers add $21.4 billion to the liability side of personal balance sheets.  The amount of the increase is large; in fact, it is the largest jump in a decade.  The total owed through March stands at $2.54 trillion.  That is a lot of money any way you look at it.  However, is the increase a bad sign? 

Are India and China acting in self-interest or are they just selfish?  

I was finishing a talk last week and enjoying some Q&A with the folks who stayed behind when a youngish man approached me and asked me what I thought of the HPI or Happy Planet Index.  He was surprised when I mentioned that I knew nothing about it. So I told him that I would look into it and put my findings into today’s blog.

I was listening to someone give a presentation on economic trends recently, and he mentioned that it is a VUCA world and the forecasts he was presenting should be understood in that context.  I never heard of VUCA and assume that many others may not be familiar with the term.  It stands for Volatility, Uncertainty, Complexity, and Ambiguity.  The presenter then went on to give examples of VUCA such as Europe, oil, Iran, and political issues in numerous countries. 

A look at the headlines in Europe shows that there is a strong ant-incumbent and anti-austerity movement afoot.  The Netherlands have seen an early break up to the ruling coalition.  France’s President Sarkozy lost the first round in his re-election bid to a socialist who would like to end austerity programs and undo the budget plans brokered by Germany’s Chancellor Merkel.  In Greece, Antonis Samarras, head of the New Democratic Party, promised to lower taxes and end the pension and wage cuts needed to bring spending in line with anticipated revenues.  He said he could

Saving for retirement could get more expensive for most Americans because of the budget deficit. Lawmakers are looking into reducing specific tax breaks as they begin to grapple with the US tax code while wrestling with an ever-larger pile of US debt. The push by some Republican lawmakers to reduce the top tax rate from 35% to 25% has brought the subject of “loopholes” to the forefront. Some Democrats are asking how the reduction in federal revenue will be paid for if most of the 200 credits currently allowed are not eliminated.

We talked a week ago about taxes in the blog entitled “A Matter of Fairness.” I commented at the time that there were reasonable solutions to our Federal, State, County, and Local Government deficit problems. The One Percent Solution is a simple, effective plan. It is a powerful yet practical answer to our financial malady. It has a distinct advantage over aggressive slash and cut programs in that it is not likely to trigger a recession, such as we are seeing in Greece, Spain, and Italy.