Juggling Dynamite

Dallas Fed President Richard Fisher says that if the worst happens and the nation goes over the fiscal cliff, he doesn’t see the Fed providing a backstop. Here is a direct link.

One of the impediments to wiser policies is that while many people are excellent at criticizing, too few are willing or able to propose positive steps forward. Talk, talk, talk and too little action. Valuable commentators should be expected to lead with suggestions rather than just drone on about how hopeless things are. To come out of a crisis, the steps are admit, repent, reform, recover. Nader offers some actionable ideas in his latest book.

In his latest book The Seventeen Solutions, Ralph Nader offers what the subtitle calls: Bold Ideas for Our American Future.

“The whole theme of this book…is it’s a lot easier than you think to turn our country around in many directions and make life better,” Nader says.

Here is a direct link.

It is quite likely that risk markets may initially bounce for some period of time on news of an agreement out of Washington mitigating (deferring) elements of the “fiscal cliff”. It is also probable however that any such bounce will again be fleeting (as it was in 2010 and 2011) in the face of the spreading global recession, falling corporate profits and weakening consumption demand poised to continue over the next few quarters. It is important to understand that during secular bear deleveraging periods like our present climate, it is typical for the stock market to re-test the lows of the previous bear market phases, being in this case, 2002-03 and 2008-09 (see chart of Canadian TSX as an example below). Never a guarantee–the world is full of uncertainty; but weighing probabilities and adjusting allocations decisions accordingly, is the only prudent course for investors. Best to err on the side of capital preservation and keep eyes wide open.

Source: Cory Venable, CMT, Venable Park Investment Counsel Inc.