Capital Ideas Newsletters


The Beat Goes On

September/October 2013

The Federal Reserve and its Chairman, Mr. Bernanke, decided last week to continue their bond buying program which has helped keep interest rates low and is supposedly keeping the economy from falling into another recession. With unemployment creeping lower due to the fact that people have decided to give up looking for jobs, the Fed is concerned about the possibility that housing will slow and that a showdown in Congress could lead to a government shutdown. (It did!)

Continued contentiousness about Obamacare has led the House of Representatives to vote for a de-funding of the Affordable Care Act. Though unlikely to be overturned, this is a strong signal that a good part of the nation’s population thinks Obamacare is poorly written and ultimately will result in lower quality care with a higher cost. Approximately $2.9 trillion, or roughly 18% of our nation’s GDP, is spent on healthcare. The Netherlands is the nation with the second highest spending as a percentage of GDP at 12%!

The shutdown and showdown in Congress is a huge embarrassment to our country. Aside from Denmark, no other nation requires a vote to raise its debt ceiling, and Denmark has never had an altercation in their government regarding this issue.

The U.S. government has already issued securities and legislated programs — why do we need to vote on a debt ceiling? A default on U.S. Government securities would be catastrophic for international confidence in U.S. markets — not to mention in the dollar’s role as the world’s reserve currency.

The gun debate rages on as we have seen even more killings. We must find a middle ground to prevent this madness.

The Food Stamp program costs the U.S. roughly $80 billion per year. This begs the question — are we going in the right direction? Lifestyles of government dependency are robbing many of the opportunity to establish lives of self-respect and upward economic mobility that come from work. Can we not create programs to foster that?

It certainly looks like the “bloom is off the rose” for J.P. Morgan Chase & Co. … There is no doubt that U.S. Attorney General, Eric Holder, is having a “whale” of a time as he tries to extract an $11 billion fine from the bank for its poor risk management. Can you imagine another situation where a CEO who oversaw a debacle such as this would be allowed to keep his position?

Cyber attacks are an increasingly troublesome issue. We should all make sure that we use the utmost care in releasing personal information on the internet. Please be diligent in protecting yourself in this area.

Blackberry lost a great opportunity to bring its new device to the forefront. Having once been the market leader, we are sad to see this innovator stumble so badly, but there is a strong lesson to be learned by this.

In your own investments and portfolio, do not become complacent and believe that what has worked in the past will continue to work now. The world continues to move faster. We must be nimble and also open to discovering new ways to protect family wealth and to achieve income and growth in this economy.

That is why we, as a firm, are dedicated to looking at different kinds of investments and evaluating new strategies to keep you on the right track in any economic environment.

Nelson Rockefeller said, “Wherever we look upon this earth, the opportunities take shape within the problem.”

Let’s take advantage of the opportunities together.

Join Our Newsletter