You would have to go back to May of 1962 to find a worse month for U.S. stocks. As of the close of business yesterday, the combined averages of the Dow Jones Industrials, S&P 500 and NASDAQ are down 7.11%. Read more
Weekly Commentary – 5/28/10: 2010 and 1962 – What do they have in common?
Weekly Commentary – 05/21/10: It’s a test of wills
Yes the stock markets around the world have negatively reacted to the problems in Europe and have given back some of their gains over the last several weeks. Read more
Weekly Commentary – 5/14/2010: European worries and a stock market correction
Wall Street has become nervous lately about Europe’s public debt problems. These worries are reflected in the recent correction in stock prices, which was not completely unexpected.
Unfortunately, the fear is that what Europe is facing now at some point we could be facing the same thing here in the U.S. Historically, government bonds are considered the safest investment vehicles since they are guaranteed to be repaid (principal and interest). This guarantee is backed by each government’s ability to raise taxes to cover their obligations. However, if a government’s debt becomes too large, the fear is that the government cannot raise taxes enough to repay their debt without creating great financial hardship for their citizens and businesses. Low economic growth is one concern, but depression-like conditions and a lower standard of living are quite another.
Weekly Commentary – 5/7/2010: Mamma Mia (the movie) and a recall notice for financial black boxes!
Mamma Mia (the movie) and a recall notice for financial black boxes!
Mamma Mia
The light hearted, musical film Mamma Mia shows the beautiful landscape of Greece and embraces the romantic side its culture. Yes, it’s a fun movie and Greece is a beautiful country. On the other hand, it is a small country of approximately 11 million people; however, you would think it was a major economic power based upon its impact on world stock markets. Not only has the Greek government spent well in excess of its tax collections, the Wall Street Journal reported today that a recent World Bank study ranks Greece as one of the most business unfriendly countries in the world. Its ranking is below Egypt, Zambia, Rwanda and Kazakhstan.
The combination of rich, unsustainable benefits for (unionized) government employees and a hostile business environment is deadly. You cannot offer what some consider luxurious employee and retiree benefits and then take a hostile approach with businesses. Basically, the Greek economic model actually is killing the golden goose (businesses) that it expects to continue to lay golden eggs (income taxes).
