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« Predicting the Europe Outcome: What it Means for US Stocks | Main | Investors' Guide to the Supercommittee Failure »

November 20, 2011


Progressively Defensive

Great article, sir.

Well, I'm looking at year 2011 earnings for the S & P and it looks like $95-105. If it's at $100, that's 12x earnings in a slow US economy and global economy since 2008, including 2011. Labor is cheap, capital is cheap, taxes (even with a 2-3% increase on the top 10%) are low and corporate and capital gains tax might be a lot lower in a Republican 2013-2014. I think the real crucial question will be the elections in 2012. If Republicans control all the White House and Congress and marginally the Court for 2-8 years begining in 2013, all of this points to a boom about the intensity of the 1986-2000 boom where earnings yields on the S & P were also hovering around 8%. But at that time interest rates were higher and unemployment was lower (capital and labor was expensive). [I get that unemployment lessens demand; but I wonder if those 3% more unemployed really were the economic multipliers and consumers one might miss that much.]


Spot on. Italy is one of the richest countries in the world with an average household net worth north of $300,000. This is not a crisis of means, but of method.


"...populaces, and politicians,..."


Like many, I increasingly view the Euro crisis as very akin to the debt ceiling crisis here in America. This is a self-inflicted game of chicken. On the one hand you have the ECB and Germany, who don't want to print money. On the other hand you have the peripheral debtor nations whose populaces, and populations, don't want to solve the problem primarily or exclusively with austerity.

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