Author: Staff (Page 25 of 27)

Greenspan supports raising taxes

September 16, 2010 / Staff

The tax debate is raging on Capital Hill, and now we have this surprise from Alan Greenspan.

Former Federal Reserve chief Alan Greenspan, reversing a long-standing aversion to higher taxes, said Wednesday tax rates must rise and the fiscal stimulus wound down in order to reduce the U.S. budget deficit and allow private investment to expand.
“I am in favor for the first time in my memory of raising taxes,” Greenspan told an audience at the Council on Foreign Relations in New York. He said the economy could not recover while the high deficit remains high.
Greenspan warned that the deficit, swollen by massive stimulus spending, was crowding out capital investment. We “must find a way to simmer down fiscal activism and allow the economy to heal,” he said, adding that stimulus spending had been far less successful than anticipated.

Conservatives won’t be happy to hear this, but the reality of the long-term deficit needs serious solutions. Greenspan is stating the obvious.

Economy

Alan Greenspan budget deficit Federal Reserve higher taxes income tax rates income taxes raising taxes

Junk bond sales are booming

September 7, 2010 / Staff

Here’s an interesting twist in the new reality:

With rising fears of a prolonged recession and stomach-churning moves in the stock market, corporate bond markets have performed so well this year they look like they’re part of a parallel universe.
Banks are reluctant to lend, but large corporations with the weakest credit ratings have had little trouble finding investors happy to hand over their cash.
Companies sold $24.6 billion in junk bonds in August, the eighth-best month ever for sales, according to Thomson Reuters data. Among those feeding in the market: Goodyear Tire & Rubber Co., Rite Aid Corp. and acquisitive power giant NRG Energy Inc.
So how is it that companies with bad credit find it so easy to borrow in this economy?
“A lot of that has to do with living in a world where investments pay less than 1 percent,” said Diane Vazza, head of fixed income research at rating agency Standard & Poor’s.

More and more companies are refinancing their corporate debt, getting rid of high-interest bonds in favor of a lower interest rate. In many ways this trend is a positive as companies lower their debt costs, having the exact effect that the Fed intended.

Economy, Finance, General Business

corporate bond markets corporate debt corporate debt refinancing junk bond sales junk bonds refinancing debt Standard & Poor's Thomson Reuters

Is Lance Armstrong losing his appeal as a corporate pitchman?

August 21, 2010 / Staff

Lance Armstrong is one of the most beloved athletes in the United States, and his status as a champion as a cancer survivor has made him the ultimate corporate pitchman. Now, amid a growing story around doping allegations, can Armstrong stay on top? We’ve seen other athletes like LeBron James destroy their brands overnight with their own stupidity, but here events are out of Armstrong’s control.

I can’t find the link, but the magazine version of BusinessWeek recently ran a short story on how Lance Armstrong’s reputation has been taking a hit recently. Google searches using his name in combination with terms like steroids, drugs, liar, scandal, probe, etc. are growing.

The media is also starting to turn on him. In a recent blog post, Rich Karlgaard discusses the tragedy of Lance Armstrong and gives a powerful argument on why he know believes that Armstrong cheated.

Meanwhile, Armstrong has hired a criminal defense lawyer. That can’t be a good sign.

UPDATE: The New York Times just published a long piece on this subject. One thing I learned there involved the amount of money our U.S. Postal Service paid Armstrong to sponsor his team. Do we really need this government agency sponsoring cycling teams?

Advertising

celebrity pitchman endorsements Lance Armstrong Lance Armstrong brand Lance Armstrong drugs Lance Armstrong endorsements Lance Armstrong Google searches Lance Armstrong liar Lance Armstrong pitchman Lance Armstrong probe Lance Armstrong scandal Lance Armstrong steroids LeBron James LeBron James brand LeBron James stupidity personal brand Rich Karlgaard tragedy of Lance Armstrong

Mortgage rates keep falling

August 19, 2010 / Staff

How low can home mortgage rates go? They keep falling.

The interest rate for a 30-year mortgage fell for the eighth time in nine weeks, according to a widely watched survey, with the record lows triggering the highest volume of home refinancing in 15 months.
Freddie Mac’s weekly report on lenders said solid borrowers with 20% down payments or home equity were being offered 30-year fixed-rate loans at an average of 4.42% this week, down from 4.44% a week earlier. The borrowers would have paid 0.6% of the loan amount in upfront lender fees.
The average 30-year interest rate recorded by the survey has not risen in nine weeks, although it remained flat at 4.57% for the weeks ending July 8 and July 15.

One reason is the terrible housing market. Homeowner confidence in the real estate market has dipped again.

Homeowners(i) are more pessimistic about the short-term future of home values in their local market than they have been in the past three quarters, according to the Zillow second quarter Homeowner Confidence Survey(ii). One-third (33 percent) believe home values in their local housing market have not yet reached a bottom, while 38 percent believe they have already reached a bottom.

Clearly, the foreclosure crisis has a long way to go.

Economy, Personal Finance, Real Estate

30-year fixed-rate loans 30-year mortgage down payments foreclosure crisis foreclusures Freddie Mac home borrowers home foreclosures home lenders home mortgage home mortgage rates home refinancing home values Homeowner Confidence Survey housing market interest rates low mortgage rates mortgage rates mortgages upfront lender fees Zillow

The battle regarding Elizabeth Warren

August 16, 2010 / Staff

WASHINGTON - DECEMBER 10: Panel Chair Elizabeth Warren arrives prior to a hearing before the Congressional Oversight panel, which was created to oversee the expenditure of Troubled Asset Relief Program (TARP), December 10, 2009 on Capitol Hill in Washington, DC. The hearing was to evaluate whether the TARP helping to improve the nation�s financial situation. (Photo by Alex Wong/Getty Images)

Elizabeth Warren has been a hot topic on both Capital Hill and Wall Street, as many are waiting to see whether she will be appointed as the head of the new Consumer Protection Agency.

The New York Times has written an editorial supporting her nomination. Meanwhile, more Democratic Senators are lining up to support her. Meanwhile, Warren is reaching out to some Republicans and lobbyists.

Chris Dodd has expressed concern over whether she can be confirmed, but many liberals argue that a fight with Wall Street supporters would help the administration heading into the midterm elections and would help fire up the liberal base.

We think this is a no-brainer for Obama – appoint her already!

Finance, General Business

Chris Dodd Congressional Oversight panel consumer protection Consumer Protection Agency Elizabeth Warren Elizabeth Warren TARP TARP Troubled Asset Relief Program