Yesterday, the US Senate passed legislation that allows US companies to seek duties to compensate against countries with “misaligned currencies.” US Senator Chuck Schumer stated, ““To those who say it’ll cause a trade war, we are in a trade war…We have our clocks cleaned every day and lose jobs every day because of unfair Chinese practices. To those who say China will retaliate, China has got far more to lose in this than we do.”
Instead of evaluating whether a currency was manipulated, the US Treasury is now charged with the task of identifying “misaligned” currencies. Then, the bill says … …READ MORE
Tag Archives: obama
Senate wants to devalue
Why any jobs plan will fail….unless
In light of the recent hyperbole coming from DC, I thought it would be instructive to point out that neither the Republican nor Democratic proposals seriously address housing. By seriously, I mean a large, systematic program that would involve banks and homeowners to write-down the loans, to allow homeowners to refinance and to allow banks upside participation from an appreciation in value of the home from the lower (written down) level (to incent them to participate in writing down the loans). The great deleveraging of the US economy stems from a massive build up in credit that has popped and … …READ MORE
Posted in Front Page Also tagged Democrats, home prices, Housing, Rasumussen, Republicans Leave a comment
FX 4 for Labor Day
Non-fattening food for thought on this Labor Day…..
1. Central Bank Blitz
Next week, there will be eleven central bank meetings. Australia, Canada, Sweden, Poland, South Korea, Indonesia, Malaysia, Philippines, Bank of England and the European Central Bank all gather to review the state of their economies and the future of their monetary policies. Given the recent downgrading of the global economic growth by the OECD and IMF, these meetings take on heightened importance.
Clearly, the highest profile meeting will be the European Central Bank or ECB due to the continued economic and financial stress in the Euro Zone. The … …READ MORE
US Debt Ceiling Negotiations
Late Saturday night, Speaker of the House John Boehner announced that there would be no “grand” deal to reduce the US debt and allow for a hike in the US debt ceiling. The grand bargain deal was reported to be around $4 trillion in spending cuts and revenue raisers over 10 years. It was the revenue or tax hike aspect that conservative Republicans objected to in the discussions. On Sunday, Senate Minority leader Mitch McConnell said that it made no sense to raise taxes and hurt the economy when US unemployment was at 9.2%.
McConnell’s statement is the clearest indication … …READ MORE
Political Cover for Debt Ceiling Deal
Today in The Hill, the leaders of President Obama’s deficit reduction commission wrote an Op-Ed that provides a window of opportunity for both sides to compromise. While the President did ignore the commission’s recommendations, Bowles and Simpson may prove to be useful yet as they argue for a $2 trillion down payment on the deficit to get agreement to raise the debt ceiling.
“….a two-part approach seems sensible, where policymakers agree to a large down payment now and follow it with more significant and structural reforms in the near future. For this to work, though, the down payment must be … …READ MORE
Lots of Negatives for US dollar
Tuesday Bullets:
· Headlines: “CHINA FX OFFICIAL WARNS OF RISKS IN “EXCESSIVE” HOLDINGS OF US DOLLAR ASSETS” and “CHINA FX OFFICIAL SAYS US DOLLAR WILL CONTINUE TO WEAKEN AGAINST OTHER MAJOR CURRENCIES.”
· On Greek debt, ECB’s Trichet states that while he’s against imposing losses on creditors, he indicated he’d approve of financial institutions maintaining their level of outstanding credit. “That is not a default,” he said at an event in Montreal late yesterday. “That is something the ECB would consider appropriate.”
· April German manufacturing orders better than expected at +2.8% vse +2.0%.
· April Euroland retail sales better … …READ MORE
Outlook for Corporate Tax Reform and Repat Act
Outlook for Corporate Tax Reform
With slow job growth, anemic economic growth at 1.8%, and a looming debt crisis, the United States is searching for answers. One of the solutions offered is individual and corporate tax reform. In his State of the Union address, President Obama stated he was in favor of cutting the corporate tax rate to spur job growth. There is broad political agreement that something needs to get done, but narrow support for changing major components of the tax code.
Given this, what are the prospects for tax reform? The debate breaks down along party lines and … …READ MORE
Obama’s Plan and the Economy
Ahead of the World Bank/IMF meetings in DC this weekend, the IMF warned the United States on their fiscal deficit and requested an austerity plan to deal with the red ink. Carlo Cottarelli, head of the IMF’s fiscal affairs department, urged the U.S. to move soon in agreeing to a plan to contain the country’s public debt, which in 2010 rose to more than 90% of gross domestic product, or the economy’s total output according to Dow Jones. Adding insult to injury, he said “If I look at fiscal fundamentals, I see the situation in Europe improving faster than in … …READ MORE
Obama Budget: DOA
My friend Larry Kudlow has been writing and promoting the idea that President Obama has acted in a similar fashion to former US President Ronald Reagan. With tax cuts and supply side like tendencies, Larry is hopeful of additional actions like a corporate tax cut that would aid the economy and job growth.
Don’t worry Steve Forbes, I don’t think President Obama is quite there yet…..but he will share another political attribute today. Obama’s budget will be declared DOA as it won’t cut spending deep enough and it will include tax increases. If memory serves correctly, this was how President … …READ MORE
3 Things you need to know now
1. State of the union or SOTU. Most of the content has been leaked already in the NYT and Washington Post so it won’t be new news by the time the President speaks tomorrow night. However, the President is likely to push for new spending on infrastructure, education and technology. The Republicans are going to oppose any new spending and the House Budget committee meets today to lay out their framework for limiting federal government growth. One of the rumors that keep surfacing is a new push from Obama for a Homeland Reinvestment Act II.
Allegedly, this new act would … …READ MORE
Posted in Front Page Also tagged ECB, Federal Reserve, Homeland Reinvestment Act, inflation Leave a comment
