December 2012 - Forecasts & Trends

Forecasts & Trends is much more than just investment blog posts. You need to know the "big picture;" you need to have a "world view," especially in the post-911 world; and you need more information than ever before to be successful in meeting your financial goals. Gary intends to help you do just that.

Forecasts & Trends

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  • US Birth Rate Hits New Low - A Nation of Singles

    One of the issues I have been focused on for the last several years has been the trend in demographics in the US and in developed countries in general. Our populations are getting older – we all know that. But the reasons why our populations are getting older are not widely understood by many Americans. Those reasons include the falling birth rate, the falling fertility rate, the falling marriage rate and the explosion in singles – people who never marry.

    The US birth rate fell to a record low in 2011. The marriage rate is tumbling as well. And the number of single Americans is now at a record high. The implications of these developments are troubling, not only for the economy, but also for the investment markets and the continual expansion of the federal government. Government debt has spiraled out of control in recent years, and the demographics suggest that this trend will continue as we care for an aging population.

    Today, we will look at some new information on demographic trends in the US and in the West in general that should concern you – and all Americans for that matter. This will be a continuing theme in my E-Letters in the months and years ahead. Let’s get started.

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  • Why America Will Miss the Bush Tax Cuts

    As I discussed in my blog last Thursday, I believe that President Obama is more than happy to see us go over the "fiscal cliff" at the end of this year. Many, including Fed Chairman Ben Bernanke and the CBO, believe that if we go over the fiscal cliff, the combination of tax increases and mandatory spending cuts will send the economy back into a recession next year. At the same time, the stock markets could get hit very hard.

    The president has laid blame for the fiscal cliff (and everything else wrong in America) on President George W. Bush and the Republicans in the House. He has also said that the Bush tax cuts caused our deficits to soar out of control, even though he now says he wants to keep those same tax cuts for all but the “millionaires and billionaires” (defined as individuals making over $200,000 and families making over $250,000 a year).

    The mainstream media have been so critical and dishonest about the effects of the Bush tax cuts that most Americans don’t know about the benefits of lower tax rates, even though they have been in place for a decade or more. I just read the most informative article on the Bush tax cuts that I have seen anywhere. The article is by Peter Ferrara at Forbes.com. I have reprinted it for you below.

    But before we get to that, let’s take a look at the latest economic reports which have been a mixed bag once again.

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  • The US Bond Bubble Continues to Mushroom

    It was very tempting today to focus entirely on the “fiscal cliff” especially now that it is very clear that President Obama is more than willing to take us over it. Treasury Secretary Geithner made it clear to congressional leaders last week that the president will insist on his proposals for dealing with the fiscal cliff, which include $1.6 trillion in tax increases, very little in spending cuts (that may never happen) and the permanent end of the debt ceiling.

    Yet talk about the fiscal cliff is everywhere in the media 24/7. So rather than repeat what you probably already know, let’s revisit a topic that should be near and dear to almost everyone who reads my E-Letters. That would be the bond market bubble. If we do go over the fiscal cliff, that could be bearish for bonds. Fortunately, I have an “alternative” that has the potential to make money if the bond bubble bursts.

    Keep in mind that JPMorgan Chase estimates that a mere 1% rise in long-term interest rates will result in up to a 20% loss of value in long-dated bonds, including Treasury bonds. This is a topic that should be on every investor’s mind.

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