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Healthy School Lunches – Taxation By Representation – The Mangru Report on Fox Business October 12, 2010

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As Congress continues to debate a new bill to implement healthy school lunches across the country (HR 5504, Improving Nutrition for America’s Children Act), The Mangru Report panel of experts composed of John Browne (Euro-Pacific Capital), Anthony Pulieri (United Bullion Group), and Jim Knight (The Knight Group) discusses the merits of the bill and whether this is solving an epidemic problem or just more government spending.

The panel also weighs whether the healthy school lunches should be income based as opposed to being distributed to all students, whether food stamps should be cut to pay for it, whether physical fitness programs should accompany the healthy lunches, and whether the government should be intruding further into our lives.


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Exclusive: Breaking News – New Deal Extends Bush Tax Cuts for 2 More Years October 6, 2010

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*** This is a breaking news alert from The Mangru Report ***

Our sources in Washington D.C. have just informed us that Republican Minority Leader Rep. John Boehner has reached an agreement to extend the Bush tax cuts across the board for an additional two years. The vote on the measure will be taken before the election.

Keeping the Bush tax cuts in place for all Americans keeps the personal income tax brackets from rising roughly 5% for all income classes, but more importantly keeps capital gains taxes and dividend taxes at 15% instead of raising them to 20% and 39.6% repsectively.

For the latest updates on this situation check back on The Mangru Report website www.themangrureport.com or sign up ABSOLUTELY FREE for our insider’s club on the right hand side of our website by entering your email address, so that you can have breaking news updates delivered right to your inbox.

A Candid Appraisal of the Recovery – John Browne Commentary October 1, 2010

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A Candid Appraisal of the Recovery

By John Browne

Over the last two weeks, seemingly good economic news offered some shreds of optimism to a stock market that was desperate for a pick-me-up.

The week before last, the National Bureau of Economic Research declared that the US recession had ended back in June 2009. At the beginning of last week, news came in that month-on-month retail sales had risen by 0.4 percent. Combined with successful government debt auctions in the eurozone, increasing expectations that Republicans will take back the House (thereby blunting the leftward drift of Washington), and hopes that a new round of quantitative easing will pump up growth, mainstream analysts are developing a feeling of near-euphoria.

Although it hard to begrudge the punch drunk for grasping at a little hope, investing is a dispassionate endeavor that calls for close and realistic analysis. In that spirit, let’s dig deeper into the recent ‘good news.’

First, the single month’s rise in retail sales was a blip on what has been a long-term downtrend. Furthermore, retail sales in August typically get a large boost from seasonal ‘back to school’ spending. This year, retail sales were boosted further by temporary tax incentives and vendor discounts.

Second, the successful auction of debt from worrisome eurozone countries, like Ireland, only served to further camouflage the ongoing risk of sovereign default by these states. None of them have committed to a comprehensive program of austerity and market liberalization – Ireland maintains a ‘too big to fail’ doctrine while Greece is on the verge of riots from its so-far modest efforts at privatization. None of the PIIGS would have had successful bond sales if Germany hadn’t been pressured into becoming a ‘sovereign of last resort’ for the whole currency area.

Apart from health of the weakest nations, a more important issue is understanding how sovereign debt is analyzed by investors in the first place. Those who consider buying government debt have for many years relied on backward-looking measurements such as debt-to-GDP to analyze the investment quality.

But that’s only half the picture, and oftentimes it’s even less than that. It does not include off-balance sheet items such as unfunded pensions, social security payments, or health obligations. For the US, I estimate this total debt amounts to some $134 trillion – nearly ten times the ‘official’ figure.

On a deeper level, using the public debt-to-GDP ratio to assess sovereign solvency implies that governments have access to the entire annual production of their economies. In reality, they have access only to that portion which is taxable. As taxes increase, there are natural limits imposed by increasing inefficiency and avoidance behaviors. Therefore, ‘net GDP,’ the portion available to the government for debt service, is significantly smaller than the gross GDP of the nation.

With real government debts, including off-balance sheet items, far larger than officially recognized and net GDPs far smaller that top-line GDP, the solvency of many sovereigns should be considered dubious at best.

For example, the debt-to-GDP ratio of the United States is currently 65 percent, which puts the country towards the solvent end of the debt spectrum among developed Western nations. However, the real debt-to-net GDP ratio is a staggering 358 percent, making the US the most insolvent nation in the group, behind even Greece!

In the interest of brevity, I will only touch on the fact that the above number is actually still an underestimate. It does not account for the portion of gross GDP claimed by state and municipal governments to service their debts. After all, all levels of government tax the same base. So, the effective portion of GDP available to the US federal government is even smaller still.

The third problem with the late round of ‘good news’ is that while a GOP sweep of House races looks likely, it is unlikely to make a large impact on policy. It is doubtful that the small number of freshman GOP Representatives will be able to win over their more mature, big government-minded colleagues. Any pending GOP ‘small government’ revolution will be heavy on talk and short on accomplishments.

It should come as no surprise that the Republicans’ “Pledge to America” lacked specific commitments for cost-cutting. Republicans are terrified of becoming the party of austerity, and the next Republican President will want to avoid being seen as ‘Hoover 2.0’. Therefore, any structural changes will come slowly – and perhaps too late.

Finally, whatever actions the Fed takes in the name of further stimulus will have the same unintended consequences as all previous stimulus efforts. Long-term sustainability will be sacrificed in favor of a short-term boom. Since World War II, the underlying strength of the US economy has allowed the central bank to get away with this strategy, as the economy simply outgrew the inefficiencies caused by monetary manipulation. But what happens when we are in a period of secular decline?

So we see that Wall Street is again playing the part of Pangloss. Unfortunately, their purported inklings of a renewed rally in the US markets do not stand up to candid appraisal.

John Browne is the Senior Market Strategist for Euro-Pacific Capital and a featured panelist on The Mangru Report on Fox Business.  To view his previous commentaries please click here.

Joseph Abruzzo – Mangru One-On-One – Episode 14 – The Mangru Report August 30, 2010

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Watch rising Democratic star and Florida State Rep. Joseph Abruzzo (D-FL) go One-On-One with Dan Mangru.  During their interview, Abruzzo shares his thoughts on whether to raise taxes or cut spending, state budget deficits, where to cut spending, unfunded pension liabilities, Charlie Crist, Kendrick Meek and the 2010 U.S. Senate race in Florida.  Abruzzo is currently running for reelection to the State House of Representatives in Florida’s District 85.

“More Of” or “Moron”, Regulation Nation, & The Mangru Moment on the BP Oil Spill July 14, 2010

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As part of our best of series for episodes 8-11, we’re bringing you the following three segments: “More Of” or “Moron”, Regulation Nation, and The Mangru Moment, all from episode 8.  For videos and descriptions see below:

Dr. Nouriel Roubini is calling for more aggressive central bank policies and money printing as the answer to the financial crisis in Europe.  Ben Bernanke says that the economy cannot handle higher taxes or spending cuts.  Tim Geithner doesn’t seem to get much out of the Chinese during his “negotiations”.  So who’s a “more of” and who’s a “moron”?  Find out in Episode 8’s edition of “More Of” or “Moron”.

The easiest answer for any problem according to the government is to put a new “watchdog” on the case.  So when bank rating agencies were on the Congressional hotseat, our friends in Washington D.C. got the great idea of putting a new agency/bureaucracy on the case.  Find out more about this in our Regulation Nation segment.

As the BP oil spill continues to go on and one, did you ever wonder where were the other countries to help America?  Everytime there is an earthquake in Haiti or a financial crisis in Greece doesn’t the U.S. always come to the table with at least a couple billion?  Find out the answers in Dan Mangru’s “Mangru Moment” from Episode 8 of the Mangru Report.

Panel Discussions – The Mangru Report – Episode 7 June 20, 2010

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In case you missed last week’s panel discussions here they are:

Also don’t forget to tune in tonight to the replay of yesterday’s episode (episode 8) which features Marco Rubio and Mark Dubowitz with Martin Weiss, Mark Skousen, and Anthony Pulieri on the panel.

Cato Institute’s Dan Mitchell One-On-One with Dan Mangru – The Mangru Report – Episode 7 June 16, 2010

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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.

Lt. Col. Allen West One-On-One with Dan Mangru – The Mangru Report – Episode 7 June 14, 2010

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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.

Commodity Corner & Taxation By Representation – The Mangru Report – Episode 6 June 11, 2010

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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.

U.S. Congressional Candidate Ret. Lt. Col. Allen West To Appear On The Mangru Report This Saturday (6/12) & Sunday (6/13) June 10, 2010

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Tune in this Saturday and Sunday at 5:30 p.m. to see U.S. Congressional Candidate from Florida’s 22nd district, Ret. Lt. Col. Allen West as he sits down for a candid discussion with Dan Mangru of The Mangru Report.  During this interview, they discuss everything from the space program, jobs, the BP oil spill, the viability of natural gas and renewable energy sources, taxes, as well as what qualifies Allen West to make economic decisions.