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The volume of pixels I’ve spilled arguing that the cut in payroll taxes will not create much economic stimulus has apparently created the impression that I’m against the cut.
So let me clear that up right now—I’m not against the tax cut.
My critique has always aimed at the assumption that Americans will spend most of the slight and temporary increase in take-home pay that results from a 2% cut in payroll taxes. The central planners in the Obama administration may wish that Americans could be counted on to respond so mechanically to turning the tax dial this way or that—but wishing doesn’t make it so.
On Thursday, The Bank of England didn't change its key interest rate or modify its monetary easing related to asset purchases.
A steady course from the central bank may sound like a vote of confidence for the economy— but the reality may be more complex.
Here is the rub: Inflation in England seems to be picking up—and, on the growth side of the equation, the future of the British recovery remains uncertain.
The language describing inflation in today's Wall Street Journal is rather restrained:
Half full versus half empty. Certainty versus uncertainty. Jobs versus spending.
Those are a few hiring battles Gary Burnison trying to reconcile as the CEO of Korn/Ferry International, the world's largest executive recruiting firm.
“It's this virtuous circle or vicious cycle, depending on how you want to look at it,” he told me after he broke KFY's earnings on Worldwide Exchange. “Out of income comes spending, out of spending comes jobs, out of jobs comes more spending.”
For that spending, Burnison has told me before \(like almost every other CEO guest host who sits next to me on set\) and tells me again that in order to create jobs, there needs to be more certainty.
In an effort to help with the expecting tsunami of foreclosures, the government is putting pressure on Fannie Mae and Freddie Mac to modify their "underwater" mortgages when people fall behind on payments. But won't this just encourage people to not make payments? I decided to get insight from James Lockhart, Former Federal Housing Finance Agency Director and Vice Chairman of WL Ross & Co.
No New Easing for U.K. (CNBC via Reuters) "The Bank of England voted to make no change to its monetary policy this month, in a widely expected decision as it waits to see how much growth next year suffers from UK public spending cuts and euro zone turmoil." Also, "Despite a debt bailout for neighboring Ireland, the economic outlook for Britain has changed little since November's MPC meeting and consumer price inflation has risen further above its 2 percent target to 3.2 percent. Manufacturing activity has been strong following robust overall economic growth of 0.8 percent in the third quarter, though trade data on Thursday was unexpectedly weak, casting doubt on the BoE's hopes of an export-led recovery next year."
Gorman True to His Words: Morgan Stanley Seeks to Reduce Payout (New York Times DealBook) "Even as Wall Street prepares to hand out rich year-end bonuses, one firm, Morgan Stanley, is mapping out a plan to reduce the pay of some of its senior executives, according to people with knowledge of the plan. The effort to rein in compensation in the management ranks — while still rewarding its top traders and bankers — is one way that Morgan Stanley is coming to grips with a quandary that has plagued it for a year."
Hacker Cyber War Widening? (New York Times) "In a campaign that had some declaring the start of a “cyberwar,” hundreds of Internet activists mounted retaliatory attacks on Wednesday on the Web sites of multinational companies and other organizations they deemed hostile to the WikiLeaks antisecrecy organization and its jailed founder, Julian Assange. On Thursday, a man identifying himself as one of the activists from a group called Anonymous, who used the pseudonym Coldblood in an interview with BBC radio, said: 'This campaign is not over from what I’ve seen. It’s still going strong.' The speaker had an English accent and said he was a 22-year-old software engineer with no specific political loyalty."
New York Mayor Michael Bloomberg Not Running for President \(CNBC\) "Despite growing rumors to the contrary, New York Mayor Michael Bloomberg says he is not running for president in 2012.In an interview Thursday morning with CNBC, the billionaire executive and head of Bloomberg LP denied that a spate of high-profile policy speeches was paving the way for a run at the nation's top elected office.'I'm not going to be running for president, he said. I have eleven-hundred and nineteen days left in my job. I'm looking forward to today and every other one of them.'"
Schwarzman is Short America (CNBC via The New York Times) Perhaps that is overstating the case. A bit. But Steve Schwarzman doesn't see much to be optimistic about in terms of domestic growth: "'The United States is going through a difficult time politically, and having other types of issues that everybody in this group knows about,' Mr. Schwarzman told the conference, adding, 'The political calculus of the last two years hasn’t resulted in a winning calculus.'" There is an upside: "At least half the world is doing really well." Sadly, not our half.
The Mad Dash out of Bonds (New York Times) "Prices on Treasury bonds fell sharply on Wednesday, continuing a sell-off that was ignited by the extension of the Bush tax cuts.
Equity markets on Wall Street looked to close slightly higher.
Financial markets have interpreted the tax cut deal, which was announced on Monday and must be approved by Congress, as contributing to economic growth over the next couple of years but also increasing the federal deficit and raising borrowing costs. Yields on the 10-year benchmark bond rose 19 basis points to 3.318 percent early Wednesday afternoon before retreating to 3.259 percent, after the Treasury Department reported the results of its sale $21 billion in 10-year notes. Wednesday’s sale attracted almost three times as many buyers than bonds sold, a ratio characterized as fairly typical."
Update: Visa's Web site is down.
The folks who launched an internet hacking campaign that apparently took down the website for Mastercard for several hours today, are now targeting Visa's website.
"WE ARE ATTACKING WWW.VISA.COM IN AN HOUR!" the twitter account for Operation Payback announced.
The co-ordinated distributed denial of service attacks have apparently been launched in retribution against financial companies that have cut-off WikiLeaks founder Julian Assange, who was arrested Tuesday in London.
Operation Payback has been linked in the media to the influential internet messageboard 4Chan, which has been blamed for attacks on other websites in the past.
How should you invest to profit from the one-year cut in payroll taxes that are promised in the tax compromise deal cut this week between Obama and Republican lawmakers?
The answer depends on what you think will happen to the extra-income people receive from the payroll tax cut. It’s not a lot of money: the benefit tops out at $2,100 per year for workers making $106,800 or more. But the Obama administration has high hopes that it will stimulate more consumer spending—which could create investment opportunities.
We've heard it before: Spain is too big to fail—and too big to be saved .
As I reported last month , Spain has €1 trillion of outstanding public debt.
Sovereign debt statistics, and their corresponding bailout numbers, can sometimes induce a drowsy numbness. Sure: €1 trillion—about $1.3 trillion—sounds like a lot of money.
But so does $100 billion.
Here is the takeaway fact, which can get lost in the noise: Spain has an economy twice the size of Greece, Portugal, and Ireland—combined.
The founder of a hedge fund with $21 billion under management provided three investing rules and three favorite stocks.
Former executives at Dewey & LeBoeuf were accused of using accounting gimmicks to fool banks and investors.
Will the bull run continue? The question is whether conditions are ripe for economic growth and corporate earnings to rise.