The markets took a beating recently when a deal to raise the debt ceiling was finally reached. The bipartisan compromise came down to the zero hour as government officials argued up to the last minute on how to effectively map out a repayment strategy. When the deal was finally reached, America's triple A credit rating was downgraded, for the first time in history, to a double A status. This has many concerned about American's economic viability, especially China. It's for these reasons that Vice President Biden traveled to China to placate fears that America could default on it's debt.
The American economy isn't new to economic troubles, but everything hit the fan when news of Standard and Poor's downgrade of the US Sovereign Credit Rating was released. The S&P 500 has long held the economic standard and credit rating for the world market, and issued a warning, not to the private sector, but to political officials.
A warning was issued to the U.S. Government that if America couldn't find an effective strategy at paying down its debt, there could be consequences. Standard & Poor has been worried about America's borrowing practices for some time now and after a contentions debate in Washington over a deal, the market has lost faith in the country’s ability to make effective and sound economic policies. After the announcement, the entire market went into a state of flux and China, the largest holder of American debt, is voicing serious concern over the way we're doing business.
The past two weeks have shown incredible volatility in the market as, after debt deal was reached, the Dow lost more than 200 points before recovering ground later on in the trading day. Ever since then, three digit swings in the market have become a daily occurrences, and almost expected. This, however, isn't as much of a concern for investors, like China. The biggest issue that's concerning the world market is the state of U.S. Bonds, long considered one of the safest investments in the world. Bonds and treasuries haven't been hit yet but, if this were to happen, the entire market could head towards something worse than any of us could imagine. This is why VP Biden is making the rounds and trying to reassure China over the viability of the American market system.
Chinese officials, who have long been surprisingly silent as the American economy has slumped ever further into recession, are now speaking up. They're now openly criticizing the political players in the government. You could consider China much like a shareholder in America as it holds over 1 trillion dollars of America's debt. This makes them the largest shareholder in the game and they've become increasingly concerned, like everyone else, about American's poor borrowing decision and partisan squabbling. It was Biden's aim to ease these tension with his most recent five day visit what some are calling America's “ Charm Offensive.”
Vice President Biden struck a much different tone on his most recent visit to the world's fastest growing economy. America, a long-time advocate of political rights and change in the region, was far more subtle than in the past. VP Biden tried to underscore the important ties that the two world powers have in shaping the future of our planet. It was a PR campaign to try and ease tensions and soften China's increasingly negative opinion of the American system.
It's not clear yet whether or not Vice President Biden's visit will prove positive, but it's not just China that the country has to worry about. There is serious and legitimate doubt regarding whether or not the country can make sound and effective decisions for the greater good of the entire country, and world for that matter. Americans, as well as the world, will be looking very closely at the country during the election coming in 2012. It's hoped that a new tone can be set, one of compromise and intelligence.
We used to have fun commenting about the bond market, including Treasuries, Mortgages, Municipals, and Corporates. But that was before the dark times. Before deleveraging. Contact the Author: accruedint at gmail.com
Monday, August 29, 2011
Monday, August 22, 2011
The President Promises No New American Recession...But Read Between the Lines
In interviews this week, United States President Barack Obama repeatedly reassured the American people that the country was not at risk for a double-dip recession. In spite of the President's statement, the recent downgrade of the American credit rating by Standard & Poor, doubts about government debt solutions, and growing concerns for the wily stock market activity and the economic panic underway in both Europe and Asia, Americans are still believing that a recession is imminent
I wouldn't say what the President says to the American public is scripted, but the head of the executive branch almost never speaks off-the-cuff about current affairs. This is especially the case when it comes to future events. When the President goes on television saying the likelihood of the United States experiencing another recession in the near future is remote, it isn't because it's what his gut tells him. It's a statement based on plenty of empirical evidence, and more importantly, politically it's something that absolutely has to be correct, or else there will be hell to pay for the President.
So while not even the President can completely guarantee that another recession won't happen, try and let his words help you relax a little bit. No politician, whether good or not, ever sees it in their best interest to offer false hope when facing a certain catastrophe. If there was uncertainty within the White House about another American recession, Obama's words wouldn't be so confident. He'd say the risk was “minimal” or something like that. But he and his team have decided that one year away from his reelection campaign Obama can confidently tell the country that we're not at immediate risk for a double-dip recession.
If you didn't pay close enough attention to the President's own words, have you been paying attention to mine? Not once did I ever say Obama said the planet isn't at risk for another recession. That's where the shiftiness exposes itself. What makes his confidence so peculiar is how close the world seems to be to falling into another economic crisis. America's hand in this new turmoil was strictly partisan nonsense: our lawmakers failed to create a responsible way to deal with our debt limit and that had untold affects on global economic confidence. But the real immediate risks for a new recession are elsewhere. Before we feel the pains we'll see them being felt across the pond and beyond.
That doesn't mean we aren't at risk for an eventual recession, and chances are Obama and his people know this.
Unfortunately, I don't know what Obama and his team are really thinking. Perhaps they see the window of time between a global economic meltdown and the fallout on the United States as an opportunity to finally initiate a job plan or enact other big government solutions. But being this close to the 2012 election, I highly doubt they'd pull such politically-charged tools out of the box. Maybe they're hoping the American private sector gets spooked by uncertainty abroad so much that they start injecting more money into the domestic economy instead of continuing to plant their profits into overseas accounts. Or maybe they've just decided that our current level of partisanship in congress makes any action impossible, and that this can only be used as fuel to feed the flame of the next election.
One thing's for sure, if a new recession hits soon, it won't be ours. For a little while anyway.
I wouldn't say what the President says to the American public is scripted, but the head of the executive branch almost never speaks off-the-cuff about current affairs. This is especially the case when it comes to future events. When the President goes on television saying the likelihood of the United States experiencing another recession in the near future is remote, it isn't because it's what his gut tells him. It's a statement based on plenty of empirical evidence, and more importantly, politically it's something that absolutely has to be correct, or else there will be hell to pay for the President.
So while not even the President can completely guarantee that another recession won't happen, try and let his words help you relax a little bit. No politician, whether good or not, ever sees it in their best interest to offer false hope when facing a certain catastrophe. If there was uncertainty within the White House about another American recession, Obama's words wouldn't be so confident. He'd say the risk was “minimal” or something like that. But he and his team have decided that one year away from his reelection campaign Obama can confidently tell the country that we're not at immediate risk for a double-dip recession.
If you didn't pay close enough attention to the President's own words, have you been paying attention to mine? Not once did I ever say Obama said the planet isn't at risk for another recession. That's where the shiftiness exposes itself. What makes his confidence so peculiar is how close the world seems to be to falling into another economic crisis. America's hand in this new turmoil was strictly partisan nonsense: our lawmakers failed to create a responsible way to deal with our debt limit and that had untold affects on global economic confidence. But the real immediate risks for a new recession are elsewhere. Before we feel the pains we'll see them being felt across the pond and beyond.
That doesn't mean we aren't at risk for an eventual recession, and chances are Obama and his people know this.
Unfortunately, I don't know what Obama and his team are really thinking. Perhaps they see the window of time between a global economic meltdown and the fallout on the United States as an opportunity to finally initiate a job plan or enact other big government solutions. But being this close to the 2012 election, I highly doubt they'd pull such politically-charged tools out of the box. Maybe they're hoping the American private sector gets spooked by uncertainty abroad so much that they start injecting more money into the domestic economy instead of continuing to plant their profits into overseas accounts. Or maybe they've just decided that our current level of partisanship in congress makes any action impossible, and that this can only be used as fuel to feed the flame of the next election.
One thing's for sure, if a new recession hits soon, it won't be ours. For a little while anyway.
Wednesday, August 17, 2011
Online College Courses Coursed to Double by End of Decade Due to Dire Economy
If you're looking for a place to put some lingering investment money, then look into the potential growth produced by online college courses. When jobs are down, higher education enrollment goes up. With the advent of instant mobile transfer of all forms of data through 4G wireless and advanced cloud computing, its obvious that online education is on an evolutionary track upward. What does that mean for the rest of us? It means there's an industry on the verge of an overhaul in need of investors, and we could be the ones backing it up.
Right now when you perform a web search for online colleges, you get an innumerable amount of lists and rankings on where's the best place to go and they mostly amount to the same series of options. None of which are considerably viewed as high-end academic institutions. Not that they should be necessarily. All I'm saying is that there's enormous room to grow in an otherwise stagnant industry.
Traditional academic institutions continue to control the majority of education, as they should. And by no means am I advocating for profiteers to take over online education. But there's business value in putting money into non-profit engines of economy. Jump start a new venue for online education, one that is leaps and bounds above the rest, and you can start churning out learned individuals who turn around and give back to the economy and ultimately become appreciative alumni.
It all sounds a bit fanciful, but hear me out. So long as unemployment continues to remain at a national average of 9 percent, and the unemployment rate of those under the age of 25 continues to stay at traumatic levels, college enrollment is set to climb. Combine that with the increased connectivity of the modern web, and it's clear that the potential for online higher education has yet to be completely attained.
So for those of you out there with limited ideas on where your money can be put, seriously consider researching any and all institutions that are educating individuals online, for pay or not. You're going to be investing in an industry that while not exactly one that is sure to earn you the most private wealth, is one that is sure to only grow stronger as the years go by. By acting now you can possibly be taking part in the early years of an academic approach that will go on to dominate the rest of the 21st century.
There's a market out there that will arrive in five to ten years that's going to ache for online academic resources. They're the Facebook generation and the kids today who have the luxury of having the whole world beamed into their pocket-sized smartphone. They'll be incredibly used to the learning constructs of the web, and will be much more open to the idea of learning online than previous generations have.
I'll keep saying it: online education is an industry primed to explode. Don't allow the way in which online education has been implemented thus-far influence the way you view its long-term role. Today it continues to exist as a cumbersome alternative to traditional academic environments. But give it another decade to soak up the benefits of instant video chat, mobile file transfer and access, and lure countless individuals away from traditional universities and see how much it changes.
Are we headed into a new age of academia? That depends on whether or not investors, such as yourself, consider online education a viable place to put capital. The market will be there whether or not the money to fuel it will be.
Right now when you perform a web search for online colleges, you get an innumerable amount of lists and rankings on where's the best place to go and they mostly amount to the same series of options. None of which are considerably viewed as high-end academic institutions. Not that they should be necessarily. All I'm saying is that there's enormous room to grow in an otherwise stagnant industry.
Traditional academic institutions continue to control the majority of education, as they should. And by no means am I advocating for profiteers to take over online education. But there's business value in putting money into non-profit engines of economy. Jump start a new venue for online education, one that is leaps and bounds above the rest, and you can start churning out learned individuals who turn around and give back to the economy and ultimately become appreciative alumni.
It all sounds a bit fanciful, but hear me out. So long as unemployment continues to remain at a national average of 9 percent, and the unemployment rate of those under the age of 25 continues to stay at traumatic levels, college enrollment is set to climb. Combine that with the increased connectivity of the modern web, and it's clear that the potential for online higher education has yet to be completely attained.
So for those of you out there with limited ideas on where your money can be put, seriously consider researching any and all institutions that are educating individuals online, for pay or not. You're going to be investing in an industry that while not exactly one that is sure to earn you the most private wealth, is one that is sure to only grow stronger as the years go by. By acting now you can possibly be taking part in the early years of an academic approach that will go on to dominate the rest of the 21st century.
There's a market out there that will arrive in five to ten years that's going to ache for online academic resources. They're the Facebook generation and the kids today who have the luxury of having the whole world beamed into their pocket-sized smartphone. They'll be incredibly used to the learning constructs of the web, and will be much more open to the idea of learning online than previous generations have.
I'll keep saying it: online education is an industry primed to explode. Don't allow the way in which online education has been implemented thus-far influence the way you view its long-term role. Today it continues to exist as a cumbersome alternative to traditional academic environments. But give it another decade to soak up the benefits of instant video chat, mobile file transfer and access, and lure countless individuals away from traditional universities and see how much it changes.
Are we headed into a new age of academia? That depends on whether or not investors, such as yourself, consider online education a viable place to put capital. The market will be there whether or not the money to fuel it will be.