U.S. government posts
FeedPosted Jul 1st 2009 8:40AM by Mark Fightmaster (RSS feed)
Filed under: Law, Scandals
Reportedly, Swiss bank UBS (NYSE: UBS) "systemically and deliberately" violated U.S. law by dispatching private bankers in America to recruit citizens interested in evading taxes.
UBS is now being forced by the Justice Department to reveal the identities of the 52,000 clients. This filing asks that the U.S. District Judge (Alan S. Gold) hold UBS accountable for conducting years of illegal business in the U.S. This business reportedly earned UBS more than $100 million in fees, while costing the U.S. "hundreds of millions" of dollars in unpaid taxes.
Continue reading Something's fishy at UBS
Posted Mar 2nd 2009 2:35PM by Joseph Lazzaro (RSS feed)
Filed under: Forecasts, Politics, Financial Crisis
Most investors know about the United States' anti-state political culture: in America it's private sector solution first, public sector solution second.
And, most also know that what state that does exist is anti-central government: it dates back to our federalist origination. We're even reluctant to call something 'central' for this reason: we have a central bank, but it's called the
Federal Reserve, not the Central Reserve. And it's the
Internal Revenue Service, not the Central Revenue Service.
Continue reading Socialism by any other name is probably a U.S. government program
Posted Sep 18th 2008 2:49PM by Joseph Lazzaro (RSS feed)
Filed under: Other issues, Politics
Investors and readers are no doubt aware of the benefits of the free enterprise system as practiced in the United States: entrepreneurship, innovation, ingenuity, dynamism, risk taking, wealth building, and commerce are chief among these benefits.
But readers also know that
corporate capitalism has its drawbacks, including (but not exclusively) financial crises that have resulted in devastating economic and social upheavals.
1893, 1929, 1987, 20??
Moreover, despite technological change, productivity increases, and massive increases in wealth, it's remarkable how similar both the crises and the public policy responses have been over the hundred-plus year period: excesses occur, bad debts mount, some regulatory changes are implemented by the U.S. Government (and sometimes by state governments), and then corporate capitalism resumes.
Further, whether it's due to America's culture, its vast natural resources, something innate in Americans, human nature in general, or some other factor, or a combination, every time a crisis occurs, the American people, by and large, reach the same conclusion regarding what caused the crisis or problem: bad decisions or incorrect decisions. Basically, that people, mainly executives and other business leaders (sometimes federal/state regulators), made mistakes or bad decisions.
Continue reading Who or what caused this financial crisis?
Posted Sep 9th 2008 2:20PM by Joseph Lazzaro (RSS feed)
Filed under: Forecasts, Bad news, Economic data, Politics, Presidential elections
"A billion here, a billion there, and pretty soon you're talking about real money."
To paraphrase the late Senator Everett Dirksen (R-Illinois), if a couple billion is real money, what's $400 billion amount to? Fiscal trouble for the United States, says an economist.
The U.S. federal budget deficit will double this year, to $407 billion, from $161 billion last year, the Congressional Budget Office announced Tuesday, in its revised baseline projection report (pdf).
The CBO said a weakening economy, spending for the Iraq and Afghanistan Wars and the War on Terror, higher entitlement spending, and a slowing growth rate in federal receipts are among the factors that will push the deficit to 3% of GDP this fiscal year, which ends September 30.
The deficit will rise to $438 billion next year, fiscal 2009, remain roughly at that level, $431 billion, in fiscal 2010, before tapering to $325 billion in fiscal 2011.
The CBO also expects U.S. GDP to grow just 1.5% in 2008 and slow to 1.1% in 2009.
Economist Glen Langan said the multiple $400 billion deficits are bad enough, but they could rise considerably, if the U.S. Treasury's bailout of Fannie Mae and Freddie Mac does not go well. "If the housing market does not stabilize in the year ahead, Treasury could end up spending tens of billions more per year," Langan said. "Nearly all of that cost would be born by the taxpayer, which means the deficit will increase."
Continue reading CBO: U.S. budget deficit to exceed $400 billion thru 2010
Posted Sep 8th 2008 9:40AM by Joseph Lazzaro (RSS feed)
Filed under: Forecasts, Other issues, Federal Natl Mtge (FNM), Housing
The U.S. Government 'adds' $5 trillion in debt, but the dollar doesn't fall. How is this possible?
"Because the currency markets months ago had already factored-in or priced into the dollar some form of U.S. Government takeover of both Fannie Mae and Freddie Mac," Andrew Resnick, currency trader, told BloggingStocks Monday.
The
U.S. Treasury will buy as much as $200 billion in new, senior, preferred stock in
Fannie (NYSE:
FNM) and
Freddie (NYSE:
FRE) as part of its takeover of the government service giants, whose business models ran into trouble as the housing boom ended and mortgage defaults soared. The large, potential increase in government spending/borrowing would appear to be unquestionably dollar-bearish. Not so, says Resnick.
"The bailout is going to cost the U.S. Government and taxpayers more money, there's no doubt about that. But if it represents the first step toward reaching a bottom in the housing mess and at the same time stabilizes credit markets, that would be dollar bullish," Resnick said. "And that's the currency market's view at the present time."
Indeed, the dollar showed little signs of a collapse Monday. After dipping early Monday morning in Asia, the
dollar firmed and was up about one-half cent to $1.4430 versus the
euro, and added three-tenths of a cent versus the
British pound. The dollar was rose about 1 yen to 108.52 versus
Japan's yen and rose 1 cent to $1.1290 versus the
Swiss Franc.
Continue reading Dollar is steady despite U.S. Government's $5 trillion debt 'increase'
Posted Sep 5th 2008 5:08PM by Joseph Lazzaro (RSS feed)
Filed under: Forecasts, Other issues, Politics, Presidential elections, Recession
Could the U.S. economy tolerate, and, equally significant, will the American people push the nation's chief executive, the president, in the direction of more government intervention?
The view from here is: probably not. Everything in the American ethos and culture speaks against it.
Unlike in
France, where the French Government is simply, "France," Americans, for the most part, view their government -- save defense spending -- usually as part of the problem, not the solution.
'Government is best which governs least' is a longstanding Americanism. And most investors/readers know about candidates who say they want to
"get the Washington bureaucrats off the backs of the American people" and
"clean up the mess in Washington!"Americans are anti-central government, and they are anti-state (they generally dislike the limited federal government that exists). In the United States, it is always private first, public second.
Continue reading Could U.S. economy, American people tolerate more government intervention?
Posted Aug 20th 2008 3:28PM by Joseph Lazzaro (RSS feed)
Filed under: Other issues, Bad news, Federal Natl Mtge (FNM), Politics, Housing, Recession
Few would deny that the new U.S. president, Democrat or Republican, will face a plethora of concerns and problems after reciting the oath of office in January 2009.
One issue that sort of presents the 'problems panorama' in a snapshot has, curiously, received light news coverage lately -- is the U.S. budget deficit.
Time was, just a short decade ago, the federal budget was in surplus. However, in 2001 a federal tax cut occurred. That fact, combined with required spending for the war on terror / Iraq War, and the absence of a tax increase to pay for that increased spending, has primarily led to a projected $553 billion deficit for fiscal 2008, which ends September 30, 2008, and a $403 billion deficit for fiscal 2009, which begins October 1, 2008, according to
Congressional Budget Office research (pdf).
Three factors that could balloon the deficitIn the view of many, the existing deficit is large -- but still manageable -- in the context of a $2.9-3.0 trillion federal budget. However, three factors could markedly increase the budget deficit in the immediate years ahead, and in doing so add to the new president's woes, economist Richard Felson told BloggingStocks.
First, there's the U.S. economy. If it falls into a recession (if it hasn't already), federal receipts (such as corporate and individual income taxes) will decline from current projected levels, and social program costs will increase, "adding $20-$50 billion to the deficit," Felson said.
Continue reading Recession, housing seen increasing budget deficit for new president
Posted Aug 4th 2008 5:39PM by Joseph Lazzaro (RSS feed)
Filed under: Bad news, JPMorgan Chase (JPM), Bank of America (BAC)
At first glance, word that the number of so-called primary government securities dealers decreased to 19 from 20 last month, may seem like a fairly esoteric concern that's removed from the typical investor and taxpayer.
But, in practice, it isn't that removed because fewer dealers means fewer firms bidding for U.S. bonds - - a circumstance likely to increase government (read: taxpayer) borrowing costs, Mark MacQueen, money manager of Sage Advisory Services
told Bloomberg News Monday.The number of authorized bond traders who make markets in U.S. Government debt decreased to 19 when the
Bank of America (NYSE:
BAC) acquired Countrywide Financial Corp.,
Bloomberg News reported. It will drop again, to 18, after
J. P. Morgan Chase (NYSE:
JPM) completes its takeover of Bear Stearns.
Economist David H. Wang agreed Monday that the bidder math is not running in the U.S. Government's favor at this juncture. "We know from basic economics that, historically, if the number of market makers declines, auctions will not be as efficient, and this will lead to higher financing costs for the U.S. Government," Wang said.
Another factor likely to drive up U.S. Government borrowing costs: the size of the U.S. Government's budget deficit, Wang said. The Congressional Budget Office projects that the Fiscal 2009 deficit will total $500 billion, up from $470 billion in Fiscal 2008, the current fiscal year, which ends September 30, 2008. (
pdf)
Continue reading Fewer U.S. Treasury dealers means likely higher U.S. Government borrowing costs
Posted Jul 14th 2008 5:15PM by Joseph Lazzaro (RSS feed)
Filed under: International markets, Russia, Middle East, Japan, Commodities, Oil
Oil's four-year bull run to +$140 per barrel has increased the wealth of 'petrodollar' nations, and is about set to propel another shift, this time in the bond market.
Petroleum-exporting nations, such as Saudi Arabia and Russia are set to become the biggest creditor nations to the U.S. Government,
Bloomberg News reported Monday. Holdings of petrodollar nations increased 44% to $510 billion through April,
Bloomberg News reported Monday -- an increase pace that's set to displace Japan, which holds the largest amount of U.S. Treasuries, at $592.2 billion.
Oil rose about 20 cents to $145.28 per barrel in late Monday afternoon trading.
Continue reading Oil exporting countries may become biggest U.S. Government creditors
Posted May 6th 2008 6:42PM by Joseph Lazzaro (RSS feed)
Filed under: Stocks to Buy
Readers of this space know that the investment bias is toward large-cap companies with demonstrated business models and who have a competitive advantage in established markets, preferably with a favorable global trend as a support. But every once in while an exception is made, and with the above in mind,
L-3 Communications (NYSE:
LLL) is worth a review.
L-3 makes secure and specialized systems for satellite, avionics, and marine communications, with a healthy percentage of its business coming from the U.S. Government.
Analysts like LLL's diversified revenue streams: specialized products (34%) intelligence/communications (22%) government services (25%), and aircraft modernization and maintenance (19%).
Continue reading L-3 Communications has a client with deep pockets
Posted Jan 10th 2008 4:32PM by Joseph Lazzaro (RSS feed)
Filed under: Oil, Stocks to Buy
The secular growth trends in oil and gas services and infrastructure continue, and a company well-positioned in these two promising sectors, and by extension, worth a review, is Jacobs Engineering Group.
Jacobs Engineering Group (NYSE: JEC) is a diversified engineering/professional technical services company providing services to the chemical, petroleum, pharmaceutical and biotech sectors. The company also has aerospace and defense contracts with the U.S. government.
Analysts expect 14-20% revenue growth for F2008 on strong upstream oil/gas and downstream petroleum refining work. Public transportation infrastructure work also remains solid.
Analysts also like JEC's growth opportunities for chemical projects in the Middle East and Europe. Further, overall margins are expected to improve. The Reuters F2008/F2009 EPS consensus estimates for JEC are: $2.99/$3.59.
Continue reading Jacobs Engineering: Two secular growth trends with investor appeal
Posted Jan 7th 2008 3:52PM by Joseph Lazzaro (RSS feed)
Filed under: International markets, Other issues, China
China, which has kept its currency, the
yuan, artificially low in order to keep the cost of its exports low and promote a domestic economic boom as its nation develops, is finding that the strategy has a negative effect: domestic inflation.
Unlike market-based currencies characteristic of the foreign exchange, China's government sets the yuan's value -- allowing it to trade in a tight band, currently at about or near 7.2730 yuan to the U.S. dollar. China argues that the yuan/dollar peg is necessary to promote economic growth and protect young, developing businesses and sectors.
And the strategy is working: China has registered +10% GDP growth for more than four years; has the world's third-largest economy, in purchasing power parity terms, behind the European Union and the United States; and has generated massive trade surpluses, particularly against the U.S.
Still, the U.S. counters that the peg keeps China's goods at artificially low prices and hence gives China's companies an artificial competitive advantage in trade. China has turned aside those and other U.S. concerns, particularly the trade deficit, arguing that if the U.S. wishes to lower its trade deficit, its citizens should save more and consume less, and the U.S. government should eliminate its budget deficit.
Continue reading China learned that yuan-dollar peg is a two-edged sword
Posted Jan 3rd 2008 6:56PM by Joseph Lazzaro (RSS feed)
Filed under: Stocks to Buy
If technology sector operations combined with stable government contact work sounds like an appealing play, you're not the only one to reach that conclusion.
Harris Corporation (NYSE:
HRS) develops communications products/solutions for government and commercial customers.
Harris' manufactures satellite, microwave, and wireless network transmission equipment, air traffic control systems, mobile radio systems, and digital network broadcasting and management systems. The U.S. Government is Harris' largest customer.
Continue reading Harris Corp. captures the best of the public, private realms
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So much for the April federal revenue bulge 'whisper number.' The U.S. government recorded its first budget deficit in April – historically one of the best months, if not the best federal revenue month of the year – since 1983, as the recession dragged down receipts. 
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