The financial terrorists are coming out of the woodwork. I recently received a warning from Jim Davidson that the U.S. economy is heading for “imminent collapse.” But it’s not just gold bugs who are predicting disaster.
A Merrill Lynch analyst expects a drop in the S&P 500 Index to 1,600, down from around 1,900 now. A Zacks analyst is predicting a recession around the corner.
At the American Economic Association (AEA) meeting Jan. 3-5 in San Francisco, Harvard University’s Martin Feldstein, the George F. Baker Professor of Economics, said we were headed for a “financial crisis.” And a European money manager urged its clients to “sell all stocks” in anticipation of a meltdown.
Wall Street does indeed climb a wall of worry. But is there any genuine justification for these scary scenarios? Certainly trouble is brewing in China, with its economic growth slowing. Oil is plunging to $30 or less, causing rumors of bankruptcies for some oil and gas firms. In addition, some heavily-leveraged mining companies are likely to go under.
But in the United States, employment figures are steadily rising, and real gross output (GO) and gross domestic product (GDP) growth continue to be positive, if a bit slower.
The Federal Reserve recently raised interest rates for the first time in years. Is this suggesting tight money? Hardly. The money supply (M2) is still growing at a 5-6% annual rate. If the money supply were dropping precipitously, I’d be worried. But so far, that hasn’t happened.
I remain a cautious bull. Corrections in the market are expected from time to time, and the latest sustained pullback is one of them. But are we heading toward an end-of-the-world collapse? I don’t see it.
You Blew It! Two ‘Small Government’ Republicans Promote a Bad Tax Idea
It’s hard to believe that Senators Ted Cruz and Rand Paul, both running for President of the United States on a political platform that features small government as a centerpiece, would advocate a value-added tax (VAT).
Senator Paul proposes a 14.5% “business activity tax” as part of his flat tax plan and Senator Cruz favors a 16% VAT that is expected to net $25 trillion during the next decade to help address our nation’s extreme debt problem.
There are a lot of problems with the VAT, as Europe has demonstrated. To start, it is a hidden tax that consumers don’t notice because it is a tax imposed along the entire supply chain. Business pays the tax directly, while consumers pay it indirectly.
Not surprisingly, value-added taxes have risen substantially in Europe. Over time, 26 of the 33 advanced nations with VATs have raised their rates. From 1975 to the present, VAT rates have risen in the United Kingdom from 8% to 20%. In Norway, such taxes increased from 20% to 25%. Denmark’s VAT was 10% in 1967; it is now 25%, on top of the nation’s top income tax rate of 56%. In 1968, Germany levied a 10% VAT. Germans are more fortunate; their VAT has risen “only” to 19%, and their highest income tax rate is “just” 48%.
And let’s be clear: Congress is never going to abolish the income tax to impose a VAT. If a VAT is adopted in America, you will end up not only with that, but an income tax, too, sooner or later.
Upcoming Conferences
Special Announcement: Subscribers to the Skousen CAFÉ should be happy to know that for the first time in two years, I am hosting the Global Financial Summit, a special private investment seminar, in the Bahamas. The focus will be on “High Income & Fast Money Investing” — combining my two most successful trading services!
My “All Star High Income & Fast Money” experts for this exclusive private meeting will include Alex Green, investment director of the Oxford Club, and editor of three trading services (Momentum Alert, Insider Trader and True Value Alert). Alex is rated the #5 best investor according to Hulbert Financial Digest. I’ve also confirmed Martin Truax, vice president at Raymond James, whose “income & growth” portfolio has more than tripled during the past 10 years. He and his partner Ron Miller also have developed a highly successful trading system using “red” and “green” signals to determine when to get in and out of markets (they flashed “sell” in May and now are flashing “buy” — good calls!)
Our keynote speaker will be Steve Moore, the chief economist for the Heritage Foundation and the #1 columnist for the Wall Street Journal, who will speak on “Money & Politics 2016: The Inside Story for Private Investors.”
The dates are March 16-19, 2016, at the five-star Atlantis Resort on Paradise Island, Nassau, Bahamas. This is during high “Spring Break” season, so I urge you to make your flight reservations now.
I soon will be announcing more top experts in portfolio management, tax and estate planning and foreign investing. But I want to encourage you to sign up now and take advantage of our special “early bird” discount — $200 off the retail price for Skousen CAFÉ subscribers if you register by Jan. 15. The price is only $495 per person/$795 per couple with the discount. And hotel rates at the five-star Atlantis Resort are only $209 per night. We are limiting this private meeting to 200 attendees only. To sign up, call Karen or Jennifer at 855-850-3733 ext 202, email info@freedomfest.com or go to gfs.freedomfest.com.
Private ‘Wednesday Meeting’ at FreedomFest!
We’re getting a huge response to this year’s big FreedomFest show in Las Vegas, with more than 100 new attendees signing up every week. Every time I mention to people that George Foreman is our keynote speaker, they get excited. And libertarians are thrilled that Judge Andrew Napolitano will be addressing us. Now I have more good news: Grover Norquist, president of Americans for Tax Reform and the person CNN calls “the most powerful man in Washington,” will be holding his famous “Wednesday Meeting” at FreedomFest on Wednesday afternoon, July 13, 2016, at Planet Hollywood. The Wednesday Meeting is a private, by-invitation-only meeting of the nation’s most influential activists. I’ve attended several, and believe me, you will want to be there to see what is said and heard.
Grover Norquist, Donald Trump, Sen. Mike Lee and your Editor Dr. Mark Skousen meet at last year’s FreedomFest.
This meeting will fill up quickly (the room holds only 400 people), so I urge you to reserve your spot now by registering today at http://freedomfest.com/register-now/. Or call toll-free: 1-855-850-3733.
Rates Will Rise Next Month: Here’s How to Save
Special announcement: Due to rising costs, we are raising our prices for FreedomFest for the first time in 10 years. But we are still offering the same price for our “early bird” discount — only $395 per person/$595 per couple. Call toll-free 1-855-850-FREE (3733) or go to http://freedomfest.com/register-now/.
Note: Good news! Due to strong demand, we have extended our early bird discount to Jan. 31, but it must end at this time. Please sign up now to take advantage.
In case you missed it, I encourage you to read my e-letter column from last week about the interest rate outlook and asset bubble potentials in 2016. I also invite you to comment in the space provided below.
