les pensées insouciantes

The single strongest explanation for stocks’ “renaissance” of the past six years has been easy money from the world’s central banks, Michael Hartnett, an investment strategist at Bank of America Merrill Lynch, told clients on Thursday.

“Over the past six years there have been 503 global rate cuts, $11.6 trillion of new central-bank liquidity and irrational exuberance in bond markets blessed by policy makers,” he said. How much longer will stocks rise “will depend on whether European and Chinese growth expectations recover before reflation in the U.S. and Japan” forces authorities to slow the flow of easy money and kill the rally.

So far, annual inflation has been benign enough that policy makers have largely ignored it, but U.S. consumer prices nevertheless are up 13% since 2007. Stock indexes only recently have moved above their levels of that period, meaning they remain far from records after adjusting for inflation.

Because so much of the recovery has depended on the Fed, investors continue to worry that the stock recovery will dry up once the Fed stops pumping money into financial markets.

Any questions?

Those students could skip college and go right to their jobs as waiters and receptionists. They would be better off because they would not incur the crushing debt loads that they would never be able to pay back. Or their parents could hold onto the money they would have spent on tuition and save it for their retirement. Moreover, lenders would lower the rate of student loan defaults.

…

One thing is clear — academia’s effort to preserve its special exemption from the laws of economics is becoming too burdensome for many students, parents, and lenders to bear.

Much more in the full article. Read the whole thing here.

Thoughts?

Merry Christmas!

Hope Santa brings you a new pair of underwear.

You’ll need it after reading this…

(#44. Oy.)

Thinking this is about the best thing you can do for the Iraqis right now.

Not registered with Kiva.org? Sign up via my invite link here.

About GPICT

The U.S. House of Representatives this week passed a variety of measures intended to make it easier for small businesses to raise money. The most notable of the bills, which have had wide bipartisan support, would create an SEC exemption for crowdfunding.

The crowdfunding bill, called the Entrepreneur Access to Capital Act, would allow companies to give out equity stakes in exchange for investments of up to $2 million.

The stakes wouldn’t count against the SEC’s famous 500-shareholder rule. And individual investors would be capped at putting in $10,000 or 10 percent of their annual income.

This is very exciting.

The bill, sponsored by Rep. Patrick McHenry [R-NC10], passed 407-17, with 9 not voting.

You can view the bill here.

Just For Reference™, the 17 Naye votes, all Democrats, were:

Georgia:

GA-5  Lewis, John [D]

Illinois:

IL-9  Schakowsky, Janice [D]

Maryland:

MD-4 Edwards, Donna [D]

MD-7 Cummings, Elijah [D]

Massachusetts:

MA-1 Olver, John [D]

MA-6 Tierney, John [D]

MA-7 Markey, Edward [D]

MA-8 Capuano, Michael [D]

MA-9 Lynch, Stephen [D]

Michigan:

MI-5 Kildee, Dale [D]

MI-15 Dingell, John [D]

New York:

NY-5 Ackerman, Gary [D]

North Carolina:

NC-1 Butterfield, George [D]

NC-4 Price, David [D]

NC-12 Watt, Melvin [D]

NC-13 Miller, R. [D]

Ohio:

OH-10 Kucinich, Dennis [D]

The bill now has to pass the Senate before being signed into law.

(Source: allthingsd.com)

Bill Gross, Founder of bond giant Pimco:

The world has changed since early ‘08 or even ‘09. The next 10 years will involve deleveraging, re-regulation, and deglobalization. Countries will become more protective in terms of mild tariffs or currency devaluation. The result is a “new normal” of slower growth in the U.S. and global economies.

If an economy grew at 3% to 4% annually over the last 10 years, then it’ll grow at 1.5% to 2% over the next 10. We expect returns will be half of what they were in the past decade.

If you lump stocks, bonds, and real estate into one pot, we’re looking at 5% to 6%, not including inflation, as opposed to 10% to 12% returns. We think over the next 10 years the U.S. will experience 2% to 3% inflation, so real returns will probably be 2% to 3%.

Instead of a speculative Nasdaq stock at a 50 P/E, investors in the next 10 years should consider, say, an NYSE utilities stock that yields 5%. Focus on dividend income in terms of stocks, as opposed to growth and investment-grade income from bonds. You can generate a portfolio that yields 4% to 5% and that is in some fashion protected against inflation.

If you’re looking for growth, you should venture outside the U.S. Brazil and China and other Asia equities are the cherry on top of the melting sundae. It’s not only their internal economies; they’re in better shape from the standpoint of reserves and balances. Ten years ago Brazil was a basket case and beggar. Now it has hundreds of billions of dollar reserves.

Read the rest of the roundtable’s thoughts here.

Reblogged in it’s entirety from Knox’s blog, Common Stock Not.

If you know anyone who lives in Georgia, please spread the word.

ED: THIS IS HOW YOU FIX AN ECONOMY.

We need your help on an urgent matter.

A number of you are aware that certain of us have been working hard for the past several months to gain passage of a particular bill in the current Session of this year’s Georgia General Assembly. This bill, House Bill 1001, is The Angel Investor Tax Credit Bill. This bill aims at helping entrepreneurs in our state have a better chance of obtaining early stage capital, by providing an incentive for active angel investors to become more active and for those angel investors who are on the sidelines to get back into game. All of which will lead to business and job creation which in turn will help revive economic development in our state. The net results are that the state, the entrepreneurs and the investors all benefit from passage of this bill. Many of you are aware that 22 other states have such incentives in place and it is time for Georgia to step up.

This bill was introduced by TAG (Technology Association of Georgia) and has the support of the Georgia Chamber of Commerce, The National Federation of Independent Business and The Georgia Public Policy Foundation.

A group was also formed to fund the lobbying efforts associated with this bill. This group is the GAIC (Georgia Angel Investors Coalition). A number of you are members of this group and we appreciate your support.

We are pleased to share that the bill has been successfully progressing through various committees of the House of Representatives (the House originally deals with bills related to taxes) following which the bill will go to the Senate. This coming week is a very important week for the bill and this is where we seek your help. There are two very important committees which will review the bill and then the bill will go to the floor of the House for a full vote, all this coming week. Gaining support of the leadership of the House will go a long way in helping the bill successfully emerge this process in a timely fashion. We need for you to contact any/some of the people listed below, express your support for HB 1001, and encourage them to support it. Their contact info is noted below. If any these members of the House are located in your respective districts or towns we ask that you contact these for sure. Ideally if you know any of these people personally, a quick personal phone call and email would be great. Most certainly we want the Speaker of The House to learn of the widespread support for the bill. Whatever you can do we ask that it be done as soon as possible (Monday/Tuesday) as next week’s activities will have a major influence on the success or failure of the passage of the bill.

Here is the list of contacts:

Speaker of the House; David Ralston:-Blue Ridge

dralston1@etcmail.com

404.656.5020 (Office at Capitol)

706.632.2221 (District Office)

Chief of Staff: Spiro Amburn

spiro.amburn@house.ga.gov

Assistant: Gina McKinney,

ginny.mckinney@house.ga,gov

Speaker ProTem: Jan Jones-Alpharetta

janjones38@bellsouth.net

jan.jones@house.ga.gov

404.656.5072 (Capitol)

Assistant: Beth Green,

beth.green@house.ga,gov

Majority Leader: Jerry Keen-St. Simons

jerry.keen@house.ga.gov

404.656.5052 (Capitol)

912.634.3773 (District Office)

Chief of Staff: Clelila Davis

clelia.davis@nouse.ga.gov

Assistant: Misty Crockett

misty.crockett@house.ga.gov

Majority Whip: Ed Lindsey-Atlanta/Buckhead

edward.lindsey@house.ga.gov

404.656.5024 (Capitol)

404.920.4155 (District Office)

Assistant: Debbie Lynn

Debbbie.lynn@house.ga.gov

Majority Caucus Chair: Donna Sheldon-Dacula Gwinnett

donna.sheldon@house.ga.gov

404.656.5025 (Capitol)

770.963.5472 (Home)

Assistant: Linda Nations

lynda.nations@house.ga.gov

Majority Caucus Vice Chair: Jeff May-Monroe

jeff.may@house.ga.gov

404.656.5025 (Capitol)

770.318.1491 (Cell)

Assistant: Linda Nations

Lynda.nations@house.ga.gov

House Rules Chairman: Bill Hembree-Winston-Douglas

bill.hembree@house.ga.gov

hembrew@nationwide.com

404.656.5141 (Capitol)

770.942.1656 (Cell)

Assistant: Donna Woodham

dona.woodham@house.ga.gov

Listed below are talking points that can be utilized in your phone calls or emails:

–I’m calling/writing to voice my support for House Bull 1001, The Angel Investor Tax Credit Bill. Georgia needs this economic development tool TODAY.

–Many promising start-up companies in Georgia, most of which have been created by graduates of Georgia colleges and universities, are at risk in today’s challenging economic environment.

–The primary source of capital for these businesses are angel investors. Angel Investors are private individuals who take personal financial risk to enhance business and job creation in the state

–HB 1001 will incentivize angel investors to further engage to help these promising young companies get started and create jobs in our state and to stay in our state.

–22 other states have utilizing these investment incentives for years and those states have benefitted from new business creation, new jobs and new revenue

–Competing states also benefit from Georgia innovation as we’ve seen entrepreneur-graduates of our schools leave our state in pursuit of capital in other states. HB 1001 will help to address this.

–Add any personal comments

–I encourage you to support HB 1001

–Thank You for your time to discuss/read this

We’ve learned that feedback/input from voters/constituents DOES influence policy makers. In some way many if not all of us on the distribution list of this email will benefit from passage of this bill.

Thanks in advance for your help and participation.

As I’ve been saying in various conversations with people for the last 6 months or so, my biggest concern regarding a recovery in job growth is this:

The economy has been able to grow even without adding workers because employers have found ways to accomplish more with fewer workers. Productivity grew at a robust rate of 8.1 percent in the third quarter of 2009, the most recent data available.

My thought is that continued high productivity numbers will keep many companies from hiring en masse. Output is up so much with current personnel. Why take on new salaries? And until consumers are back in force (Ed. - not anytime soon), the demand isn’t there to ramp up output through a new round of hiring.  CapEx spending will continue to be the next wave in the short term.

See the full article here for an analysis of the GDP numbers (they’re always revised down), a disclaimer on the effects of tighter inventory management, exports and the cheap dollar.