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  • "How America Lost Its Mojo" - Some Troubling Trends

    In my business, I read a lot more than the average American, in large part due to my “speed-reading” training in college. Most of what I read is about the economy, markets, financial matters, world events and yes, politics among other topics.

    I especially enjoy reading well-written articles on shifting demographic trends in the US and around the globe, which give us insights regarding what the country and the world might look like in 10-20 years. I recently read just such an article on the rapidly changing demographics in America and their long-term implications.

    After thinking about it for several weeks, I decided to reprint it for you today. I think you will find it very interesting.

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  • A "Trillion" is Mind-Boggling: No, Even Worse!

    I would wager (with odds) that very few Americans understand just how mind-bogglingly enormous $1 trillion is. The analogy I will share with you today will knock your socks off! It certainly did mine.

    Yet our government is running trillion-dollar annual budget deficits like it’s no big deal. And it’s not just Obama – the first trillion-dollar deficit, which was incurred in FY2009, was actually the result of President George W. Bush’s budget, one of the few legitimate things Obama really inherited from “W.”

    I begin today by summarizing a recent eye-opening analysis - a great video, actually - that concludes that our continued trillion-dollar deficits will send us into the abyss. I realize that this is nothing new to many of my readers, but we need to continually remind ourselves how we are willingly and knowingly sending our country into economic and financial ruin.

    You will definitely want to watch this video and forward it on to others!

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  • Who’s Worse Off - America or Europe?

    We touch on several topics in today's letter, but the main theme is the question of who is worse off financially speaking, the US or Europe. I have written extensively about the growing European debt crisis in recent weeks, which I considered much more important than the debt ceiling circus that played out in Washington in July. It is now obvious to even the man on the street that there is a debt crisis in Europe, of late including even Spain and Italy, with rumors swirling about France as well. A real solution is not yet in sight.

    Yet the US has plenty of debt problems of its own, with a national debt of $14.4 trillion, by far the largest of any nation on the planet and a president who thinks that trillion-dollar annual budget deficits are no big deal. Thus, it is only natural for observers to ask which is in worse shape - Europe or America? I will give you my thoughts on the question as we go along today. In a nutshell, Europe is worse off today, but the US is not far behind and is gaining ground at warp speed, sadly.

    Following that discussion, we will explore whether or not Ben Bernanke and the Fed are cooking up another round of quantitative easing (QE3), and if they are, when we might first hear about it. Think August 26 - I'll tell you why below. Next, I will give you my thoughts on gold, and specifically why I don't think most gold buyers today have any idea how much risk they are taking. I trust that my readers are not jumping into gold at today's nosebleed levels, but I will tell you why that might not be a good idea in any event.

    Lastly, we revisit the issue of Standard & Poor's recent downgrade of US debt from AAA to AA+ when none of the other credit rating agencies felt so inclined. Could there have been some political motivation behind the S&P's unilateral move? Surely not - wink, wink. Did the S&P mean to send a message to Congress about cutting spending? Maybe. Or was the S&P just trying to salvage its tarnished reputation after rating subprime mortgages AAA in the years leading up to the financial crisis? It should be an interesting discussion.

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  • America May be in Its Own "Lost Decade"

    When most people hear the term “Lost Decade,” they immediately think of Japan during the 1990s after it incurred its own financial crisis.Now, however, there are legitimate concerns that the US may be facing its own Lost Decade. In fact, we're already halfway through it. From the 1Q of 2006 to the 1Q of 2011, the US economic growth rate (GDP) averaged less than 1% a year. As I discuss below, we may be looking at a slow economy and continued high unemployment for several more years as consumers continue to pay down debt and curtail spending.

    Clients and readers regularly ask me what it's going to take to get this economy moving once again. Normally the economy is growing at 5-6% by this point after a recession. But there are several dynamics that are different this time, most notably the fact that many of the 10 million US jobs that have been lost over the last few years are never coming back. There are numerous reasons for this, and I will point them out as we go along.

    We will also revisit the issue of the debt ceiling. While the politicians working on this issue say they're making progress on an agreement, there's no hard evidence that the two sides are remotely close to making a deal before the deadline of August 2. While interest rates have been falling due to the slowdown in the economy, things could get quite wild in the financial markets in the weeks just ahead if the debt ceiling is not raised in time. Stay tuned.

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  • More on the Financial Literacy Crisis

    The Financial Industry Regulatory Authority (FINRA) Foundation recently released a state-by-state study showing how financial literacy varies by geographical region. Unfortunately, even the states that have the best scores that are disappointingly low. If this sounds familiar, the results mirror the findings of a study that I highlighted last summer showing that financial illiteracy is rampant in America, especially among young people.

    This week, I'm going to update you on the state of financial literacy in the US and also supply some resources for those who are not learning about financial matters in school. If you have adult children, grandchildren or other family members who may be lacking in financial knowledge, I urge you to send this E-Letter on to them and encourage them to take the test. Their financial future just might depend on it.

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  • Falling Global Birthrates Threaten Prosperity

    Long-time clients and readers will recall that one of my macro concerns is the steep decline in birthrates in developed countries around much of the world, as discussed at length in my September 4, 2007 E-Letter. Given that we have a short week due to the President's Day holiday, I have elected to reprint another fascinating article on the subject of falling birthrates. The following article by Professor Steven Malanga points out that the US birthrate is hovering at just above the necessary 'replacement' level, which he and others believe will lead to a long period of healthy economic growth in the years and maybe decades ahead. However, as he points out near the end, rising taxes have a negative effect on birthrates, and with our national debt exploding, we are definitely headed in the direction of higher taxes. I think you will find this very interesting reading.

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  • Would You Buy Stock In U.S.A., Inc.?

    A few years back, I wrote an of article discussing how the US economy could be described as the largest corporation in the world and, as such, were shares of USA, Inc. an attractive investment? When I first wrote on this subject, I was confident that USA, Inc. would continue to surprise on the upside, and it did. However, in light of the many recent challenges to our economy, is USA, Inc. still a good investment?...