Dow rose 45, advancers ahead of decliners 3-1 & NAZ was up 16. The Financial Index was up a fraction in the 204s. The vastly oversold MLP index shot up 12 to o382 (one of its biggest gains in history) & the REIT index gained 2 to the 252s. Junk bond funds continued their rebound & Treasuries crawled a little higher. Oil was up on rising tension in the MidEast but gold hardly budged.
![Live 24 hours gold chart [Kitco Inc.]](http://www.kitco.com/images/live/gold.gif)
Photo: Bloomberg
Here's a thought. Allowing taxes to rise would be a small price to pay to get US lawmakers to accept spending cuts on entitlement programs, even if it leads to a “moderate recession,” former Federal Reserve (FED) Chairman Alan Greenspan said today. “Even if we have to pay the cost of a significant rise in taxes to get a significant slowing, and then decline, in social benefits that is a very cheap price,” he added. “A large increase in taxes required to fund what is currently in the books is going to cause a recession,” he said. “If we can get away with that as the only cost to this whole problem, I think that’s a pretty good deal.” Along with Paul Volker, also a former FED chairman, they said that if policy makers are unable to reach a compromise to address spending cuts & tax increases, markets will react negatively. “This is a very dangerous situation,” Greenspan said. “Markets may respond negatively before we even notice it, and that’s going to cause a huge problem.” Greenspan said it would be a mistake to think that the U.S. is going to fix its “unstoppable” spending “without pain.” This kind of thinking is responsible for the decline in stocks over the last month.
Photo: Yahoo
Leaders of Congress declared confidence Fri they could reach a deal with President Obama to avert economically convulsive tax increases & budget cuts at year's end, in a rare show of unity reflecting the dire stakes in a nation sick of political stalemate. "I believe that we can do this," House Speaker Boehner said after top lawmakers met with Obama at the White House. Significantly, the same tone emerged from Dem leaders. While all sides sought to assure weary American consumers, edgy investors & wary employers that the nation would not plunge over the "fiscal cliff" come Jan 1, they furnished few details on how they planned to proceed. That solution exists only in the broadest sense, with Reps conceding that any bargain to cut the debt must include tax revenue, & Dems acknowledging there must be spending cuts to a host of major programs relied upon by millions. Any solution likely would come in 2 phases, with steps now to avert a crisis & promises of a broader tax reform process in 2013. None of the lawmakers made any mention of a big sticking point that Obama's insistence that tax rates go up, as scheduled, at the start of the year for high income tax payers. Reps flatly oppose that proposal. At issue are a broad series of looming tax increases across every income bracket, coupled with across-the-board spending cuts. Now Obama heads for Asia while his staff works on details. Now talk needs to be converted into action.
Obama Opens Fiscal Cliff Talks as Boehner Open to Revenue
Italian Finance Minister Vittorio Grilli is confident that euro-region finance chiefs will reach an agreement on aiding Greece when they meet next week. European finance ministers will be discussing ways of plugging the funding gap resulting from that extension at a Nov 20 meeting in Brussels. “We know that there are several options for helping Greece get through this very important challenge,” Grilli said. “I am clearly optimistic that we can come to a decision.” Granting Greece more time was the latest compromise in 3 years of crisis fighting, as creditors led by Germany opted to keep money flowing instead of risking a default that could lead to the nation’s exit from the euro zone & turmoil for countries left in it. Grilli said that the IMF remains involved in efforts to shore up Greece. IMF Managing Director Lagarde took issue with a decision by euro chiefs to postpone the goal of getting Greece’s debt down to a “sustainable” level of 120% of GDP by 2 years, until 2022, raising concerns that the fund might shy away from offering future aid to Greece. Again, what is needed is converting talk into action.
EU Should Reach Deal on Greek Aid Next Week, Grilli Says
The word out of DC was comforting, but they are still far from a solution. They can see the decline in the markets & should be expected to utter calming words. But now it's time for action. That's the tough part. There is a good chance that whatever they decide, many will be unhappy. My forecast is that they will not touch the tax rates for the bottom 98% (just about everybody except the very high income earners). But make no mistake about, higher taxes will kick in next year. Medical deductions for medical expenses will have a higher threshold. Medical devices will have a federal tax. There are plenty of other taxes already enacted, but I'm not a tax expert. One tax that will affect ALL wage earners is that Social Security taxes were lowered during the last 2 years. Next year's tax is separate, but must be dealt with. Then there is a debt ceiling that needs to be raised & credit downgrades that are staring the federal gov in the face. While these talks go on in DC, business leaders are hesitating about investing in the future, not knowing where these talks are going. No shortage of worries out there. Dow finished down 227 this week after a tepid rally today.
AMJ (Alerian MLP Index tracking fund)
Treasury yields:
U.S. 3-month |
0.076% | |
U.S. 2-year |
0.238% | |
U.S. 10-year |
1.572% |
| CLZ12.NYM | ...Crude Oil Dec 12 | ...86.50 | ... 1.05 | (1.2%) |
Photo: Bloomberg
Here's a thought. Allowing taxes to rise would be a small price to pay to get US lawmakers to accept spending cuts on entitlement programs, even if it leads to a “moderate recession,” former Federal Reserve (FED) Chairman Alan Greenspan said today. “Even if we have to pay the cost of a significant rise in taxes to get a significant slowing, and then decline, in social benefits that is a very cheap price,” he added. “A large increase in taxes required to fund what is currently in the books is going to cause a recession,” he said. “If we can get away with that as the only cost to this whole problem, I think that’s a pretty good deal.” Along with Paul Volker, also a former FED chairman, they said that if policy makers are unable to reach a compromise to address spending cuts & tax increases, markets will react negatively. “This is a very dangerous situation,” Greenspan said. “Markets may respond negatively before we even notice it, and that’s going to cause a huge problem.” Greenspan said it would be a mistake to think that the U.S. is going to fix its “unstoppable” spending “without pain.” This kind of thinking is responsible for the decline in stocks over the last month.
Leaders of Congress declared confidence Fri they could reach a deal with President Obama to avert economically convulsive tax increases & budget cuts at year's end, in a rare show of unity reflecting the dire stakes in a nation sick of political stalemate. "I believe that we can do this," House Speaker Boehner said after top lawmakers met with Obama at the White House. Significantly, the same tone emerged from Dem leaders. While all sides sought to assure weary American consumers, edgy investors & wary employers that the nation would not plunge over the "fiscal cliff" come Jan 1, they furnished few details on how they planned to proceed. That solution exists only in the broadest sense, with Reps conceding that any bargain to cut the debt must include tax revenue, & Dems acknowledging there must be spending cuts to a host of major programs relied upon by millions. Any solution likely would come in 2 phases, with steps now to avert a crisis & promises of a broader tax reform process in 2013. None of the lawmakers made any mention of a big sticking point that Obama's insistence that tax rates go up, as scheduled, at the start of the year for high income tax payers. Reps flatly oppose that proposal. At issue are a broad series of looming tax increases across every income bracket, coupled with across-the-board spending cuts. Now Obama heads for Asia while his staff works on details. Now talk needs to be converted into action.
Obama Opens Fiscal Cliff Talks as Boehner Open to Revenue
Italian Finance Minister Vittorio Grilli is confident that euro-region finance chiefs will reach an agreement on aiding Greece when they meet next week. European finance ministers will be discussing ways of plugging the funding gap resulting from that extension at a Nov 20 meeting in Brussels. “We know that there are several options for helping Greece get through this very important challenge,” Grilli said. “I am clearly optimistic that we can come to a decision.” Granting Greece more time was the latest compromise in 3 years of crisis fighting, as creditors led by Germany opted to keep money flowing instead of risking a default that could lead to the nation’s exit from the euro zone & turmoil for countries left in it. Grilli said that the IMF remains involved in efforts to shore up Greece. IMF Managing Director Lagarde took issue with a decision by euro chiefs to postpone the goal of getting Greece’s debt down to a “sustainable” level of 120% of GDP by 2 years, until 2022, raising concerns that the fund might shy away from offering future aid to Greece. Again, what is needed is converting talk into action.
EU Should Reach Deal on Greek Aid Next Week, Grilli Says
The word out of DC was comforting, but they are still far from a solution. They can see the decline in the markets & should be expected to utter calming words. But now it's time for action. That's the tough part. There is a good chance that whatever they decide, many will be unhappy. My forecast is that they will not touch the tax rates for the bottom 98% (just about everybody except the very high income earners). But make no mistake about, higher taxes will kick in next year. Medical deductions for medical expenses will have a higher threshold. Medical devices will have a federal tax. There are plenty of other taxes already enacted, but I'm not a tax expert. One tax that will affect ALL wage earners is that Social Security taxes were lowered during the last 2 years. Next year's tax is separate, but must be dealt with. Then there is a debt ceiling that needs to be raised & credit downgrades that are staring the federal gov in the face. While these talks go on in DC, business leaders are hesitating about investing in the future, not knowing where these talks are going. No shortage of worries out there. Dow finished down 227 this week after a tepid rally today.
Dow Jones Industrials
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