One of the painful realities of life as an economist and professional speaker is that the subject matter of economics is typically viewed (with good reason!) by the general public as confusing, intimidating, and boring. As a result, trying to present weekly economic and financial information with an unusual twist can occasionally be a most welcome change.
Warning!! This week's Tea Leaf is my semi-annual economic, financial, and political update … using today's current movie titles. My sincere apology in advance to anyone I might offend.
I am out of the country until July 17 with my bride of 26 years. This piece was written on July 1, so the latest economic data (including the July 8 jobs report) and very recent financial developments are not included.
As Summer Unfolds …
The Debt Ceiling
At the moment, "THE FUTURE" is clouded with anxieties of all shapes and sizes. It could easily take 17 "MIRACLES" to address these anxiety issues.
At the top of the anxiety list is concern about the "MONTE CARLO" gaming approach to increasing the nation's debt ceiling, presumably no later than August 2. Republicans and Democrats are likely to approach "THE LEDGE" of a temporary U.S.default on the debt. Such a default, possibly igniting investor and consumer fears around the globe, could conceivably contribute to "THE HANGOVER PART II" … a follow-up to the painful Great Recession.
As with the near government shutdown last April 8, don't be surprised if a deal to slow future entitlement program spending growth — enough to appease Republicans — is reached with "30 MINUTES OR LESS" on the clock. Also don't be surprised if the President and the Senate Democrats gain some modest "revenue raisers" (none dare call it a tax increase) as part of the deal.
Ideally, the "SUPER 8" negotiators on both sides of the political aisle could be "TRANSFORMERS" of the political process. Hopefully, they could reinforce the notion that at the end of the day the "FINAL DESTINATION" they seek is the nation's fiscal sanity, care for the less fortunate, and incentives for all to succeed. They could weaken THE MYTH that it is all about getting re-elected and destroying the other side.
At the Federal Reserve
"CAPTAIN AMERICA" (Federal Reserve Chair Ben Bernanke) hopefully is done creating a couple trillion BUCKs out of thin air to help grease the skids of American finance. Here's hoping there will be no need for additional "quantitative easing" prior to the end of the year.
The primary issue of the day remains Greece. The band-aid application of another 100 billion euros or so to ease the Grecian debt pain was provided by "GOOD NEIGHBORS" and "FRIENDS WITH BENEFITS," principally Germany, France, and the International Monetary Fund.
Still, anxiety exists that the massive national debts of Greece, Ireland, and Portugal, combined with a similar issue in much larger Spain, could SUBMARINE financial market confidence. In this case, "THE DEVIL'S DOUBLE" … a.k.a. another global financial crisis … could ensue.
"HAYWIRE" performance of global financial markets would no doubt spoil "CRAZY, STUPID, LOVE," an enticing "MIDNIGHT IN PARIS,P and other idyllic events and settings around the globe. Say it isn't so!
Suitors of the Republican Presidential nomination now move like "PENGUINS" from one political event to another, all seeking the CROWNE of leadership and trying to avoid being the latest political "BRIDESMAIDS." Each will seek "IRONCLAD" support from their followers, while all try to avoid being the subject of derogatory "TABLOID" journalism.