Pie in the Sky – John Browne Commentary January 27, 2011Posted by Admin in Market Commentary.
Tags: debt, deficit, economy, federal spending, Fox Business, freeze, john browne, mangru, obama, president, report, state of the union, white house
Pie in the Sky
By John Browne
Following the huge gains made by Republicans in the midterm elections, it was widely expected that President Obama would use the State of the Union address to signal a major policy shift toward the center of the political spectrum. On the surface, at least, he appeared to do just that, hinting that he took budget management very seriously and that Americans should be prepared for shared sacrifice. However, as the final applause still echoed in the House chamber, many astute pundits were left trying to make sense of the many contradictory policy prescriptions the President proffered.
Classical political maneuvering dictates that when clouds are grey, politicians must offer good news, tell jokes, and remind us warmly of our childhood (or in Obama’s version, America’s triumph over Russia in the Space Race). Disclosure of specific measures should be avoided at all costs. President Obama followed these tactics closely.
While he did address plans to cut non-defence, discretionary federal spending – a small fraction of the overall budget – the President also announced his intention to increase spending on several existing and new initiatives. The scope of the new initiatives will surely eclipse the modest cuts pledged.
The President was careful to refer to all his spending plans as “investments.” The word is used in order to illicit a pleasant feeling among voters who instinctively favor capitalism over socialism, not because any thinking person expects these resources to be better allocated than they would have been by the market. Governments don’t make investments because they aren’t subject to profit-and-loss feedback. Governments provide public goods for which no profit can be measured or expected – or else we would just have the private sector take care of it. This disingenuous use of the word investment disguises the fact that the President simply intends to borrow even more money to spend on public-sector jobs.
The essential point is that while jobs in the private sector create wealth, public sector jobs actually consume wealth. When I was a Member of the British Parliament, I represented a county that spent the least amount per pupil on education of anywhere in the entire country. Yet, the achievement level of the students was by far the highest. It was vivid proof that it is not the amount of money that is crucial to success, but the quality of the spending. If the President were to lower taxation, cut the number of government regulations, and replace a political atmosphere of uncertainty with one of certainty, he might stand a chance of reviving wealth creation.
More seriously, the President made no mention of the massive debt problems facing US state governments, such as California and Illinois. The potential eruption of these debt and currency problems could well dominate investment strategies for 2011.
Yesterday, the Congressional Budget Office issued a highly embarrassing assessment that the federal deficit for 2011 would rise from the previously projected $1.1 trillion to $1.48 trillion. At a stroke, this nullified the President’s debt reduction plans. The CBO also pointed out that Social Security posted a $45 billion deficit in 2010 and will bleed more than $600 billion over the next ten years. I assume these estimates to be conservative. It is clear that the President, and the rest of Congress for that matter (with the possible exception of Congressman Paul Ryan whose austere recommendations have been ignored by most of his fellow Republicans), are dancing around the bonfire of our sovereign credit and hoping that their twirls will distract us from the conflagration.
Also yesterday, the Federal Reserve’s policy statement claimed that its massive stimulus plans are working, and that it will maintain both QE II and near-zero rates well into 2011. If the economy were indeed improving, as Messrs. Bernanke and Obama claim, why would the Fed and the Treasury need to keep administering life support? Clearly the White House and the Fed have little confidence in their own assertions; so, how should average investors react to more promises which are highly unlikely to be kept?
Rather than buying into Washington’s scripted recovery propaganda, investors should focus on the bottom line. Low interest rates are distorting the value of money and the key investment relationship between risk and reward. One side effect is that investors are being incentivized to favor equities over fixed income. A lack of viable alternatives has likely played an unsung role in supporting the current stock market rally.
Investors would be well-advised to retain a jaundiced view of all political statements, especially those of central bankers and politicians positioning themselves for the next election. In 2011, investors should focus their eyes not on the sky, but at the brick wall our Union is fast approaching.
John Browne is a Senior Market Strategist at Euro-Pacific Capital. He’s been a member of English Parliament, an advisor to Prime Minister Margaret Thatcher, and currently serves as Lead Panelist for The Mangru Report. You can view all of his commentaries by CLICKING HERE NOW.
Tags: aegis award, Anthony Pulieri, award, bert dohmen, best tv news program, carly fiorina, dan mangru, Euro-Pacific, finance, john browne, mangru, news, report, steve forbes, The Mangru Report, tv, wellington, wellington letter
We are proud to announce that The Mangru Report has won the 2010 Aegis Award for Best TV News Program. It is truly an honor, and want to thank our fans first, because without them we would not have a show.
We’d also like to thank all of our production staff, directors, producers, interns, and everyone who makes the show possible. Special thanks go to John Browne, Anthony Pulieri, Al Zucaro, Nicholas Brack, and all of our wonderful panelists who have made the show a great program to watch.
Also a big thanks to our guests such as Carly Fiorina, Steve Forbes, Bert Dohmen, Ron Paul, Jim Rogers, Robert Kiyosaki, Marc Faber, John Bogle, and everyone else who has contributed to the show.
For the complete list of 2010 Aegis Award winners click here.
Watch Steve Forbes, Peter Schiff, & More This Saturday And Sunday On Our Special Freedom Fest 2010 Episode July 26, 2010Posted by Admin in Interviews, Panel Discussion.
Tags: Adrian Day, bank, candidate, Connecticut, crisis, currency, dan mangru, economics, Everbank, finance, Forbes, Frank Trotter, global world, investing, investment, Jack Dzierwa, Lou Petrossi, mangru, peter schiff, report, senate, steve forbes, stocks, strategy, talk, Trading, tv, U.S., wealth
The wait is over. This weekend, The Mangru Report will be airing its highly anticipated Freedom Fest 2010 episode.
You’ll be able to watch Dan Mangru’s exclusive one-on-one interviews with Steve Forbes, Chairman and CEO of Forbes Inc., and Peter Schiff, President of Euro-Pacific Capital and current U.S. Senate Candidate from Connecticut.
We will also feature expert panel commentary from:
The Mangru Moment – Episode 9 – The Mangru Report July 19, 2010Posted by Admin in Dan Mangru.
Tags: and, cap, clinton, Congress, dan mangru, fannie mae, Fox Business, franklin raines, government, green, greenhouse gas, housing, mangru, obama, report, subprime, The Mangru Report, trade
If you’ve ever wondered who’s behind the Cap-And-Trade Agenda, this is a video that you have to watch. Watch Dan Mangru’s revealing “Mangru Moment” about Franklin Raines from Episode 9 of The Mangru Report.
It appears that while he was the CEO of Fannie Mae Franklin Raines developed a system for the trading residential carbon emissions, or what we now know as Cap-and-Trade. Since he was working for Fannie Mae, technically Fannie Mae owned the patent to the Cap-and-Trade system. But after Raines shamefully resigned his post he filed a second patent application which superceded the first one, and give him and his partners the sole patent on Cap-and-Trade and removed any claims to the patent by Fannie Mae’s or the taxpayers.
Tags: bailouts, dan mangru, fannie mae, FDIC, Freddie Mac, mangru, mortgages, NYSE, regulation, report, sec, stock market, trillion, wnd, worldnetdaily
By Dan Mangru
Whenever I walk into a bank, there is a big sign from the FDIC that says, “Backed by the full faith and credit of the United States government.” It makes us feel warm and fuzzy when we walk into a bank with 1,000 branches and give our hard-earned money to a bank teller we don’t know.
But just how is that full faith and credit of the United States doing these days?
Well, if you ask the New York Stock Exchange, the full faith and credit of the United States government isn’t good enough to keep you trading.
It was announced recently that both Fannie Mae and Freddie Mac have agreed to be delisted from the New York Stock Exchange.
Even though the federal government has poured $145 billion of your hard-earned tax dollars (that we know of), the markets still have rejected both government entities as not being sound investments.
That’s why shares of Fannie Mae and Freddie Mac have been trading for less than $1 for quite some time and no longer meet the requirements of listing for any major exchange, leading to their rejection.
(Editor’s Note: For the full article CLICK HERE NOW).
Cato Institute’s Dan Mitchell One-On-One with Dan Mangru – The Mangru Report – Episode 7 June 16, 2010Posted by Admin in Interviews.
Tags: brazil, cato, clinton, dan mangru, dan mitchell, federal government, finance, hillary clinton, institute, jobs, mangru, mangru report, mitchell, pakistan, private sector, public sector, report, taxes
Watch DanMangru interview Dr. Daniel Mitchell Senior Fellow at the Cato Institute about everything from the federal government being America’s top employer, global tax crackdown, what’s happening in the private sector that’s not happening in the public sector, and what he really thinks about Hillary Clinton.
Tags: bernanke, Biden, budget, D.C., dan mangru, debt, deficit, fed, federal reserve, gdp, geithner, mangru, mangru report, obama, report, trillion, Washington, wnd, worldnetdaily
by Dan Mangru
On a warm D.C. Friday evening, our pals over at the U.S. Treasury, led by our revered Treasury Secretary Tim Geithner, put out a little report that they didn’t want you to see. After all, who’s looking for news on a Friday night?
In that little report, they just happened to mention that U.S. debt will rise to at most $13.6 trillion (as if the government has never underestimated a time or two).
For all of you 110 million taxpaying Americans, that’s $123,636 each, and that’s probably just the low estimate.
But it gets even better. By 2015, based on our current path of spending, out debt will be a paltry $19.6 trillion.
For those keeping score, that’s $178,181 for each taxpaying American, assuming that there are 110 million taxpaying Americans by 2015.
You see, our buddies in Washington, D.C., named Obama, Biden and Geithner want as few Americans as possible paying taxes.
Currently 47 percent of taxpayer-eligible Americans do not pay income taxes and that number is rising steadily.
So, let’s say if that number creeps up and only 100 million Americans are paying taxes, then each taxpayer will have a bill of $196,000 even. Considering this is the federal government we are talking about let’s just round it up to an even $200k.
For most taxpaying Americans, this means that you will owe more than what you take in during any given year, which sounds about right considering that by 2015 our debt will be 102 percent of our GDP, meaning that we will owe more than what we collect.
(Editor’s Note: To read the entire article please CLICK HERE NOW.)
Tags: allen west, BP, bp oil spill, capital gains tax, col., Congress, dan mangru, energy independence, lt., mangru, military, national security, natural gas, payroll tax, report, Ron Klein, solar, space program, space shuttle, taxes, U.S., wind
Giving you real straight talk, U.S. Congressional Candidate for Florida’s 22nd District Lt. Col. Allen West sits down with Dan Mangru for a candid One-On-One interview. Mangru challenges West to explain what qualifies him to make economic decisions, what his plan on jobs is, why natural gas isn’t being used as an energy alternative, and whether the space program should be taken over by the prviate sector or remain a government expense.
Tags: allen west, bad, behavior, cato, Congress, dan, dan mangru, daniel, faith, florida, greece, institute, Iran, israel, mangru, mangru report, mitchell, poland, report, success
Be sure to tune into The Mangru Report tonight (Sunday) at 5:30 p.m. eastern time on Fox Business Network to watch U.S. Congressional Candidate Lt. Col. Allen West and Cato Institute’s Dr. Daniel Mitchell.
Also in case you missed them, here are the last two Mangru Moments. The first one is from episode 5 discussing faith and success. The second one is from episode 6 discussing how the U.S. rewards bad behavior.
Tags: Al Zucaro, allen west, Anthony Pulieri, BP, cato, Congress, dan mangru, dan mitchell, euro-pacific capital, florida, john browne, Judy Lederman, mangru, oil, report, spill, taxes, U.S., United Bullion Group, work, world trade center
From episode 6 of The Mangru Report,two hard hitting segments with our Mangru Report Panel of Experts (Anthony Pulieri, John Browne, and Al Zucaro) look at the economic and political impact of the BP oil spill and why making more money doesn’t pay off in the new Obama economy. Enjoy!
P.S. Don’t forget to tune into this Saturday and Sunday’s show with U.S. Congressional Candidate from Florida, Ret. Lt. Col. Allen West and Senior Fellow at the Cato Institute Dr. Daniel Mitchell.