The Answer To The U.S. Debt Problem…Donate!
The U.S. Treasury is a charity case. At least super rich Warren Buffett believes it is, when he announced in Time magazine that he would match any donations made by Republicans that help pay down the U.S. debt. Not a bad idea. Get some good PR and make a dent in the deficit. A small dent but at this point every penny counts, right? Well, you can contribute, too.
What If We All Got On Board?
It’s a simple question actually. What if everyone donated $100, $500, or $1,000 to help pay down the deficit. We’ll be paying it out of our pockets or paychecks eventually. Why not just get it over with now? We could even budget it out over the next 12 months.
For as little as $8.33 a month you can make a difference in the U.S. deficit!
Doesn’t sound to bad. It’s cheaper than that Netflix account you are wasting money on and it’s going to a good cause, keeping my future taxes low.
If we go by the Bureau of Labor Statistics numbers, there are just over 240 million (the civilian noninstitutional population) able-bodied people in this country capable of working. Thus capable of donating. We should probably base it off of real workers (just over 150 million) but even people not receiving a pay check are getting some type of government benefit through unemployment, social security, or medicare. It’s certainly in their best interest to keep the deficit low or risk having these benefits cut. Read more…
New Federal Reserve Change And How It Affects You
The Federal Reserve has picked up the transparency bug again to start the year off. The new recently announced change will include quarterly forecasts on the federal funds rate. This guidance will be forward looking at least two to three years out starting with its first announcement from the January 24-25 meeting.
So why is this change important? Well, interest rates tend to move based on the direction of the federal funds rate. If you remember back in August, the Fed slipped in an addendum to expect low rates through mid-2013.
After that announcement, interest rates dropped to all time lows. With the rate drop, savings and money market account interest rates moved lower. Mortgages rates headed lower too. Many, myself included, believed this would be the lowest point of mortgage rates. If you don’t think rates can go lower, just wait. The potential of the first announcement could push long term rates lower still.
Possible Outcomes
Depending on which direction the Fed goes with its first forecast of the year, one of three outcomes are possible. Read more…
We Need U.S. Debt, Just Not All Of It
There’s been a singular view that has swept through the nation over the past few months since the debt debacle back in August. Apparently the U.S. has too much debt. The U.S. government currently has over $15 trillion in outstanding debt obligations. Some view it as excessive, wanting it paid down to a reasonable level. Others believe it should be eliminated entirely.
This isn’t the first time that the U.S. debt has become a political hot topic. The last time was back in 1992, when then presidential hopeful, Ross Perot made eliminating the deficit a major campaign issue. Clinton eventually was elected, signed the Deficit Reduction Act of 1993, and all was better. For the most part, until you fast forward to today and it’s playing out again.
A Super Committee was set up to solve the debt problem. It failed, not surprisingly. Putting debt reduction as a major talking point in the next election cycle. On a side note to the government, don’t name a committee “Super” if it’s bound to fail. It tends to destroy all meaning of the word. Anyways, the committee’s failure enacts forced spending cuts starting in 2013. Being that far out, they’ll never see the light of day. But enough about politics.
Another way of looking at this debt issue, there is currently about $15 trillion invested in U.S. debt. Used as a safe haven for money, backed by the full faith and credit of the United States. Which is the biggest argument that the debt level is fine for now. Read more…
Preparing For The Q3 Earnings Season
The third quarter earnings season begins Oct. 11 with the Alcoa earnings report at the market close. It should definitely be an interesting earning season to say the least. As earnings reports battle with the European debt crisis and the political environment, I don’t expect this season to go smoothly. In fact, I wouldn’t be surprised to see stocks fall on great earnings reports, when news comes out of Europe.
The Third Quarter Review
The story for the past three months has been defense. We’ve seen the Dow drop from its highs of the quarter, about 12%. The worst single quarter decline since Q1 2009, thanks to the debt ceiling crisis, political infighting, and increased global economic fears. The market’s been extremely volatile for much of the quarter. Even those with iron stomachs must have felt squeamish at times.
After the initial August plunge from the US debt downgrade, the markets were on a steadily declining trading range based entirely on European economic woes and mixed US economic data. Fairly nauseating to say the least and I for one am hoping for calmer waters ahead. Read more…
Avoiding The New Norm: Debit Card Fees
Bank of America took a big leap last week, jumping head first into the monthly debit card fee ring. Starting the next round of additional banking fees introduced to counteract the new limits on debit card swipe fees which took effect Oct 1st. Which has not made me and a few million other BofA customers happy campers. But don’t fret, there are still options available to avoid them.
There have been a few banks that have tested the debit card banking fee, but on a small scale. Wells Fargo has tested the new fee in five states. J.P. Morgan has done it in a small part of Wisconsin, and Suntrust Banks began charging a debit card fee in June to new customers.
With Bank of America jumping on board, it’s only a matter of time before other big banks adopt debit card fees as the norm. With the announcement last week, BofA will be charging account holders $5 each month they use a debit card for a purchase starting in 2012. The charge will not apply to BofA mortgage customers or to those account holders with a combined amount of $20,000. Read more…
Market Musing: The Day Of The Fed Meeting
“Significant” was the word of the day. As in “significant downside risks to the economic outlook.” The day was not, however, sponsored by any letter and number.
If you plan on refinancing a mortgage, yes it’s still a good idea, and yes you will have all kinds of time to do it. With 15 year and 30 year rates easily falling to and possibly below 3% and 4%, respectively, for the foreseeable future.
“Operation Twist” or “The Twist” if it hasn’t already, should make Chubby Checker more money this week than he made on the first two versions of the song. It was the most played songs rolling into and out of commercials on CNBC. Got to love free advertising.
Europe is still trying to figure out if Greece will be allowed to play in their sandbox.
The one ray of good news, new home sales were better than expected. The market acted as if it never happened.
And lastly, Apple unofficially announced the new IPhone will be out in October, which was largely drowned out by the Fed meeting.
Just My Opinion
The market has made it’s mind up about the announcement and it wasn’t good. But I’m not so sure it’s quite as bad as the market made it out to be. I’m not saying it was rosy, but I think the market overreacted. Read more…
