Biggest unforced error in history still on schedule
July 22, 2011 by Charlie Stedman · Leave a Comment
TODAY is July 19th. Two weeks from today, it will be August 2nd. On that day, or very soon thereafter, the Treasury will run out of room to use extraordinary measures to keep meeting its obligations without issuing any new debt. To avoid a default at that point, which most economists agree would be catastrophic, the Treasury will then need to slash spending immediately and precipitously—by about 44%. The process won’t be tidy; depending on what bills are coming due on a particular day, the shortfall will affect payments to state governments, public employees (including soldiers), payouts to entitlement beneficiaries, and so on. Absent an agreement to raise the debt ceiling, spending would be slashed by $134 billion over the month of August. That would represent a sudden fiscal consolidation of over 10% of GDP—enough, in all likelihood, to tip the economy into recession. And at some point, if no agreement were reached, default would become inevitable.
The potential outcomes here all seem terrible, and so most people have assumed that a deal to raise the debt limit would eventually be forthcoming. But
This and That: Chilton Interview, Covered Call ETFs and more…
July 22, 2011 by Laura Reveley · Leave a Comment
In this interview, David Chilton, author of The Wealthy Barber talks to The Globe and Mail’s Rob Carrick on how expenses and emotions play havoc with investor portfolios.
- Rob Carrick urges investors to pay more attention to covered call ETFs than just their high distributions.
- Jason Zweig writes in The Wall Street Journal that various investment promoters tout their stock-picking prowess by not counting dividends in benchmark returns. Another favourite trick is to compare performance with a completely different benchmark.
- Vanguard announced this week that it is setting up shop in Canada. Jim Yih gathered all the reactions to the announcement in this handy post.
- It appears that Vanguard’s initial focus will be on the advisor channel. Pre
Links Jul 22
July 21, 2011 by Charlie Stedman · Leave a Comment
Swiss adviser charged in tax fraud tied to UBS Reuters
Jul 21 – A Swiss financial adviser has been charged with helping more than 60 U.S. taxpayers hide more than $184 million in Swiss bank accounts and move assets from UBS AG to other Swiss banks to avoid getting caught. See Treasure Islands for insider commentary on bankers exchanging business in order to “assist” their clients.
See also: U.S. Department of Justice Press Release: Manhattan United States Attorney Announces Charges Against Swiss Financial Adviser For Conspiring With Over 60 U.S. Taxpayers To Hide More Than $184 million In Swiss Bank Accounts Hat tip Lucy Komisar.
Ex-Credit Suisse Offshore Banking Head Charged in U.S. Tax Case Bloomberg
Jul 22 – Credit Suisse Group’s former head of North America offshore banking was among seven bankers charged with conspiring to help clients in the U.S. evade taxes through secret bank accounts. I Complete Article…
This account pays 5.5% on savings – tax-free!
July 20, 2011 by Charlie Stedman · Leave a Comment
Find out how some savers are earning 5.5% on their savings, tax-free – without using up any of their ISA allowance.
The news earlier this week that RPI inflation is 5% no doubt made many savers want to weep.
It means that, if you want to stop your money from deteriorating in value, you now need to find an account that pays 6.25% if you’re a basic rate taxpayer and 8.33% if you’re a higher rate taxpayer.
Unfortunately, the best online easy access savings account – the Coventry Building Society Poppy Online Saver account – pays just 3.1%.
Believe it or not, you may actually better off sticking your savings in a current account like the Santander Preferred In-credit Bank Account. You can earn as much as 5%, and still have instant access to your money.
The catch is, you must transfer over all your direct debits. You also have to deposit at least £1,000 a month. Of course,
As Gold Reaches New Highs… Global Super Powers Find New Lows
July 20, 2011 by Charlie Stedman · Leave a Comment
So how did this happen?
For the last 500 years, European super powers and the United States have dominated the major economies of the world – or even this new burgeoning global economy that technology has given us.
It seems now as if the tables are turning, at least to some extent.
And investors are beginning to see more stability and growth opportunities in South America and Asia.
The entire world is now petrified that the United States and the European Union can’t get their respective geopolitical houses in order – because for years developed countries made risk assertions in emerging markets based on fears of political instability.
The shoe is now on the other foot…
Global Super Powers Have Super Problems
The U.S. government is having a horrible time deciding how to deal with its crushing debt. Bigger than that catastrophic issue is the government’s inability to come up with a long-term budget proposal to reign in its unsustainable spending habits.
The European Union is having a completely different set of problems. They have