“Sleepwalking Toward a Precipice”: Our Observations and Outlook – Part I

Our latest outlook details structural (i.e., long term) problems in the world’s largest economies that were “unmasked” by the credit crisis and Great Recession. This year’s multi-part discussion seeks to look beyond debt and deleveraging (see last year’s “The Age of Deleveraging”: Our Observations and Outlook), to assess the myriad influencers of growth, and thus market prospects going forward.

Part I focuses on structural issues in the United States. Part II discusses Europe and Asia. In the final installment, we discuss our investing approach given the “double-wide” possibilities for global growth and markets over the next decade. We hope you enjoy and please email or call with any questions.

Click the image below to enlarge and view the entire presentation. 

Sleepwalking Toward a Precipice - Cover

"Sleeping Toward a Precipice"

"Sleeping Toward a Precipice"

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2011 Market Recap - Much Ado Then Nothing

2011 Market Recap "Much Ado Then Nothing"

2011 Recap: "Much Ado Then Nothing"

Headline Drivers, Home-home on the range to unchanged and Sovereign Debt Accumulo Nimbus.

All This Talk About Growth

"All This Talk About Growth"

"All This Talk About Growth"

The idea that consumption drives growth is a fallacy. Another is that government has no role - it should provide certainty and means for business to thrive.

Pax Americana (1987-2007)

"Pax Americana"

"Pax Americana"

Economist subscribed to the view that the volatility of the business cycle had been overcome in a "Great Moderation.

The Flood

"The Flood"

"The Flood"

Debt-Tharsis, Debt Accumulo-Nimbus and the Debt-Luge are all part of the "Balance sheet recession" that followed when credit stopped flowing.

The Big Reveal - 2009-?

"The Big Reveal"

"The Big Reveal"

Masked by decades of easy credit and debt accumulation. Ceding to "Asian Tiger" economies resulted in a shift of high-wage manufacturing based economy to a lower wage service-based economy.

The Big Reveal Continued

"The Big Reveal" Cont'd

"The Big Reveal Cont'd"

U.S. Tax system is complcated, misaligned, uncompeitive, gives away too much

"Trillion Dollar Sam"

"Trillion Dollar Sam - We can rebuild him!"

Trillion dollar deficits have driven U.S. public debt/GDP over 100%, which may save 1% per year off GDP growth, and the infrastructure to grow GDP is in disrepair. This tells us what the U.S. needs.

Disfunction Junction, What's Your Function?

"Disfunction Junction, What's Your Function?"

"Disfunction Junction, What's Your Function?"

More Botox Economy and the Six Month Window our forefathers put in place to prevent major change has done its job too well.

The Fourth Branch of Government

"The Fourth Branch of Government"

"The Fourth Branch of Government"

With no anchor to gold and a fractional reserve banking system, the fed can create as much money and credit as it desires.

The Fed - The Fourth Branch of Government

"The Fourth Branch of Government" Cont'd

"The Fourth Branch of Government Cont'd"

During crisis, Fed action to save insolvent banks prevents deposits and employees from moving to solvent banks that could stimulate growth.

To recap...

"To recap..."

"To Recap"

Markets are doubly uncertain, investing in U.S. markets requires tailoring an approach that can profit in spite of uncertainties which we'll address in the final installment of our outlook.

Sources - Part I

Sources - Part I

Sources

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Sources - Part I thumbnail