Take Heart

Scholars warn that fiscal prudence will tank world economies. "This is not the time," goes the cry. Even such astute observers at Evans-Pritchard at the Telegraph have been caught up, "The US, Britain, and Europe are together embarking on a sudden and severe tightening of fiscal policy, in unison, before economic recovery has reached safe take-off speed," he laments.

In fact, for every dollar lost to the "tightening of fiscal policy," a dollar and a half will be gathered from the emboldening of the spirit of free enterprise. The private sector simply punts when overwhelmed by big gov’t.

When gov’t is on the wane, free enterprise takes heart.

So should we.


Robert Craven

The Birthing of Opportunity, Or, Experience at Stream Side

An economist friend of ours wrote us the following note: "For what it’s worth, the wire reporters I spoke to today don’t want to hear it. They are all revved up to write about weakness and don’t want to know about improving real consumption."

They, "don’t want to hear it....don’t want to know anything about...." And herein folks resides opportunity. It is the ACHILLES heel of mkt crowd behavior.

Recall that trout, when "keyed into" a certain mayfly for example will at first ignore the much larger stone fly - the evidence, just beginning to float overhead.

Robert Craven

Sanctuary

World mkts are scared to death, one reason prices on US Treasuries spiked (yields tanked). The US is still considered the world’s safest harbor (the UK and Germany providing secondary anchorage).

Most observers can only see US weakness ahead. We’re more constructive (see earlier sketch). Friday’s July Payroll number will be the first test.

Next, many expect EU contagion to hit European banks. Indeed, these banks are finding short term funds (LIBOR) harder to come by, recent days; US m mkt funds are not buying their CD’s.


Robert Craven

World Growth - Consensus vs Reality

Consensus is for a slowing into year end for the US. We expect improvement into year end.

Consensus is for EU activity to slow, perhaps to a halt. Instead, Germany and France will coat tail the US.

View has been for months for a "hard landing" for China. Instead, China will surprise to the side of vigor, sparking US exports.

Finally, Japan’s recovery will continue to broach expectations, this in spite of a now expensive Yen.


Robert Craven

Putin and the d-word.

Putin today called the US a "parasite" on the global economy.

What is that, you midget?

Recall Aug/17/98 Putin? Your country went bankrupt, suspending all payments on your debt. Sure, Yeltsin was at the helm but you were there too, in spirit. Talk about a parasite - the ineptness of you and your colleagues sucked the life out of the Baltic region, nearly turning it into a dry bag.

Don’t lecture us.


Robert Craven

Inside Wall St

The head dogs of Goldman, BofA and others, in a letter, admonished Congress to settle, compromise. Patriots? Looking out for the rest of us?

"A default on our..obligations, or a downgrade of America’s credit rating...blow to business... individuals ..raising interest rates...roiling...bond markets...."

This is BS.

We know all about this club. We were there. Lay folk are chumps. Without a mammoth supply of Treasuries, these types, so-called "reporting dealers" would wither and die. If the US did not borrow, they would be history.

Did you know that good lay people?

They’re phonies.


Robert Craven

Nutshell

Certainly the Tea Party changed the playing field. We have a start - no tax increases / immediate spending cuts.

The rest of the work is put off to a "supercommittee," charged with lowering deficits by at least $1.5trl over the next decade. Their report is due Thanksgiving. Defense cuts are the most vulnerable, and tax hikes are possible. So no victory, yet.

Near term? The rating agencies have been discredited, profoundly so. A near term downgrade then means nothing substantive to anyone except the media.
　

Robert Craven