It appears the government shutdown will not be resolved quickly; brinksmanship likely will continue, with the focus shifted to the debt ceiling increase, whose deadline has been targeted as October 17.
The way Congress goes about its business is maddening, counter-productive, and basically, a drag on the economy. This week we examine the partial government shutdown and its ramifications.
As St. Augustine spoke of the need for restraint, so also the Fed has spoken of its need to begin restraining its large scale asset purchase program. Though the initial bond-buying program may have helped stimulate demand in 2010 and 2011, keeping it going is now doing very little to stimulate economic growth and employment. In its announcement September 18 the Fed showed that it was as reluctant as the great Saint to implement restraint by tapering the size of its asset purchases; its message was “not yet”. Critics of the Fed believe the Fed’s unconventional program creates economic imbalances, stokes inflation, and provides markets a short-term, unsustainable “sugar high”. The unconventional program will continue, at least for a while. Markets were positively surprised by the announcement.
My daughter Susanna has a new job as Corporate Communications Manager for the Washington Redskins. It was serendipity, a fortuitous series of events that led to her first day of work on Labor Day. She received a call one Thursday evening about a job opening; she interviewed eight days later; she packed her car and drove to Ashburn, Virginia—home to Redskins Park—the following week.
Is the Fed’s policy of quantitative easing effective? This question is particularly relevant as the Federal Reserve meets September 17-18 to discuss tapering of its large scale asset purchase program. That conversation has caused markets to convulse this summer.
Labor Day is behind us and fall—usually a volatile period-- is before us. The last weeks of August showed signs of optimism for the economy and as well as a rise in tensions in the Middle East.
Frederick Beuchner—a favorite writer on many subjects—notes the dilemma of finding your right livelihood. “There are different kinds of voices calling you to all different kinds of work, and the problem is to find out which [one is right for you].” His advice is this: Among all these competing voices, find work (a) that you need most to do and (b) that the world most needs to have done.”
Sometimes good news is greeted poorly by the market. Last week the number of claims for jobless benefits dropped to the lowest level since October 2007. Consumer confidence also moved near a five-year high. However, the stock market dropped, and the yield on the benchmark 10-year Treasury note, which moves inversely to prices, climbed. Concerns that the Federal Reserve will taper asset purchases beginning as early as September have stoked a selling spree.
My Dad—a retired pastor—has Alzheimer’s disease. Last week our family checked him into a long-term care facility. With the disease’s progression, caring for him was wearing out the primary caregiver, my Mother. Anyone who has faced this crossroads knows the anguish. However, the anguish is somewhat more bearable when the family has planned ahead. I am glad my parents have a long-term care insurance policy to help defray the considerable cost of my Dad’s care.
What are the prospects for investing in real estate in a potential rising interest rate environment? The first two articles this week address the return prospects for core real estate in a rising rate environment. The third article is an update on the phenomenon of private equity funds purchasing homes for long-term rental.