If someone were to spend more than they earn, that difference is called the deficit. The deficit has been a problem for many nations, as politicians have repeatedly spent more money than they are pulling in from revenue. Running a deficit is tolerable if it is temporary and is closely followed by a surplus that paid off the accumulated debt. The problem arises if a government continually runs a deficit, which then causes the overall debt to increase.

America: A Mirror Image of Japan 15 Years Later?

By Friday, March 22, 2013

A Mirror Image of JapanWe need to learn from this example…
Similar to the U.S. economy, only years earlier, the Japanese economy also burst following a boom in real estate prices. To help revive its economy, the Bank of Japan brought interest rates to near zero in 1999 and has done several rounds of quantitative easing since. The central bank of Japan has in… Read More

Beware Municipal Bond Investors: Storm Ahead

By Friday, March 22, 2013

Municipal bonds investors might be headed towards a storm, which may cause significant damage to their portfolios. Cities within the U.S. economy are in distress—they are struggling to keep their spending in order to not increase their budget deficit.
Detroit, one of the biggest cities in the U.S. economy, was handed an emergenc… Read More

U.S. Debt-to-GDP Ratio This Year to Surpass Greece’s 2009 “Danger” Level

By Friday, March 15, 2013

U.S. Debt-to-GDP RatioThe U.S. Department of the Treasury reported that the U.S. government incurred a deficit of $204 billion for the month of February 2013. So far, we are into the first five months of the government’s fiscal year (started October 1, 2012), and the U.S. government fiscal deficit has already grown by $494 billion. (Source: U.S. Departm… Read More

Stock Market Overpriced by 50%?

By Wednesday, February 20, 2013

Stock Market OverpricedAs the key stock indices approach highs not seen since just before the financial crisis, the underlying fundamentals are screaming “watch out.” The stock market could be edging higher on nothing but false optimism and greed.
The most basic reason for any stock market rally, corporate earnings, is missing from the equation. The… Read More

From Motor City to Fresno, Credit Ratings Being Slashed

By Wednesday, February 20, 2013

The Congressional Budget Office (CBO) expects the U.S. federal government to have a lower budget deficit this year than those of the previous four years—finally getting the annual deficit under $1.0 trillion (although, not by much). But I am skeptical when it comes to the CBO estimates, as financial conditions at the more local le… Read More