• 287 days Will The ECB Continue To Hike Rates?
  • 287 days Forbes: Aramco Remains Largest Company In The Middle East
  • 289 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 689 days Could Crypto Overtake Traditional Investment?
  • 694 days Americans Still Quitting Jobs At Record Pace
  • 696 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 699 days Is The Dollar Too Strong?
  • 699 days Big Tech Disappoints Investors on Earnings Calls
  • 700 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 702 days China Is Quietly Trying To Distance Itself From Russia
  • 702 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 706 days Crypto Investors Won Big In 2021
  • 706 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 707 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 709 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 710 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 713 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 714 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 714 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 716 days Are NFTs About To Take Over Gaming?
What's Behind The Global EV Sales Slowdown?

What's Behind The Global EV Sales Slowdown?

An economic slowdown in many…

The Problem With Modern Monetary Theory

The Problem With Modern Monetary Theory

Modern monetary theory has been…

How Millennials Are Reshaping Real Estate

How Millennials Are Reshaping Real Estate

The real estate market is…

  1. Home
  2. Markets
  3. Other

Fiscal Cliff Nonsense Abates and Economy Continues to Improve

A Sense of Drama

Stuck between a hard place and a rock, the Republicans finally relented and an agreement concerning the Fiscal Cliff was reached. The issue seems to have been a holdover from the sudden rise of the Tea Party, which during the last administration promoted a nonsensical pledge among Republicans to never agree to any legislation that included any tax increases. Well intentioned and an attempt to roadblock the continual increase in debt of the USA, but idiotically misguided and a knee jerk reaction to what seemed the political flavor of the day. Now that pledge is a matter of yesterday, and is wildly out of flavor this month.

Everyone knew that an agreement had to be reached, yet there was teeth gnashing and obstructionism to the very end. Should an agreement not have been reached, the politicians would have been directly blamed for a dip in the economy, for tax increases, and for the polar ice melting, as well as everything else the media could think up. The media needs a story of hysteria every month to whip up emotions and attract viewers. The Fiscal Cliff was ideal for this.

The ridiculousness of the matter, was that the politicians had all the way through this piece, the ability to retroactively put an agreement in place, and the effects of that agreement were not dramatically different regardless of the timing of the agreement. In other words, an agreement could have been reached yesterday, or next month, and by the stroke of a pen it could have been made retroactive to yesterday, or to any other day. So the hysteria of the media in insisting on an agreement by yesterday, was simply that - hysteria.

Theatrics became the flavor of the day. The politicians pretended to be working night and day, and miraculously, an agreement was reached at 11:59 PM of the 11th hour. This allowed every politician to shout out how important his/her contribution was. The only word for it is "disgusting".


The US Economy is Recovering

Regardless of the political foolishness, the private sector of the US is doing what it does best. Free enterprise people are starting to re-assert themselves and the economy is showing irrefutable signs of recovery and growth.

The latest economic info shows growth and positive movement. The American Bankers Association said today that delayed repayments of bank-card loans dropped to the lowest level since 1994 in Q3, falling to 2.75% of all accounts from 2.93% in Q2. Delinquencies in a composite ratio of eight installment-loan categories, which doesn't include bank cards or mortgages, fell to 2.16% from 2.24%.

US Car makers enjoyed their best year in 2012 since 2007 selling almost 14.5M vehicles in the U.S. in 2012, up 13% from 2011 and the highest since 2007. A strong December for Ford (F), GM (GM) and Chrysler (FIATY.PK) capped off the year, while Japanese car firms improved sales dramatically from the earthquake-ravaged levels of 2011.


The Eurozone is Also Recovering

The world is slowly pulling out of the bottom of this cycle. Europe also is now showing positive signs, in spite of the doom and gloom pontificaters. Eurozone composite output PMI rose to 47.2 in December from 46.5 in November, with the services index edging up to 47.8 from 46.7.


Some Other New Signs

Canadian banks are now moving into the void created by US banks by giving mortgages on real estate in the US. TD Canada Trust and The Royal Bank of Canada now have programs in place to offer mortgages to good credit borrowers. Real estate in Florida and in many other centers have stabilized and the great bargains of the last two years have disappeared. House prices in prime areas are climbing, and there are even multiple offers on some properties. There is no boom yet, but the market is strengthening.

The price of real estate in major markets is definitely moving up, sometimes quite dramatically. Great numbers of homes remain under water and unsellable, but certain markets are starting to show remarkable strength, such as vacation properties in Florida, in New York, in gated communities, and in prime areas. In some cases selling prices are 20% higher than last year. Good values are being snapped up by Canadian buyers, by Russian buyers, by Argentinian buyers, and other international buyers. What is remarkable, and at the same time expected, is that people from around the world are coming to the USA to buy real estate, for the same reason that the US will continue to lead the world. The US remains the shining light as to the rule of law, the rights of the individual, the reliance of property rights and patent rights, and the freedom and security of its citizens. The US will continue to lead the world as a result, and slowly but surely the next economic cycle will take shape.


Investing in the Stock Market

What all of this means to the average investor, is that now is the time to buy beaten down good value stocks.

 


The views expressed in this blog are opinions only and are not investment advice. Persons investing should seek the advice of a licensed professional to guide them and should not rely on the opinions expressed herein. This blog is not a solicitation for investment and we do not accept unsolicited investment funds.

 

Back to homepage

Leave a comment

Leave a comment