Driving the Snakes from Washington and the Eurozone

John Ransom
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Posted: Mar 13, 2015 12:22 PM

Ireland's economy grew by a robust 4.8%, says the Wall Street Journal, the fastest growth in the euro zone in what is a remarkable turnaround.

It was only in 2013 that Ireland decided to exit the IMF's and the Euro Zone's bailout program. In conjunction they instituted a series of so-called austerity measures, for which liberals in both the United States and Europe roundly criticized them.

But here two years later Ireland's economic growth is the envy of western nations and the fastest outside of the emerging markets.

Tax receipts are now swelling, cutting government budget deficits to about 3% of GDP.

However unemployment is still high at around 10%, which means that Ireland could actually grow even faster. Toward that end the government is proposing some modest tax cuts that could further spur economic growth.

They say austerity can’t work?

So I'll say: Erin go Bragh, which for the Celtic impaired means “Ireland forever”.

It's a fitting story for this week before St. Patrick's Day.

Maybe it’s time to drive the snakes from the Eurozone and Washington.


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Everybody complains about taxes but nobody does anything about it… until now. Republican senator Orrin Hatch and Democrat Sen. Ron Wyden are seeking public comments about how to overhaul the tax system.

They will be taking comments until April 15.

Tax reform is at the top of the agenda for president Obama along with likely presidential candidates for 2016.

Obama is looking to raise tax rates, to rollback estate tax exemptions, and raise the death tax. GOP proposals would eliminate capital gains taxes, income taxes on dividends and the death tax, along with most deductions, while paring down the tax code to three income brackets: Two for individuals, and one for businesses.

And if you don't like either plan, now is your chance to do something about it.

Send your ideas tosavings@finance.senate.gov....

But hey...keep it clean.

As much as I’d welcome tax reform, I’m guessing their ideas on tax reform and ours are vastly different.

Although big banks struggled to successfully pass the annual stress test required by the Federal Reserve most of them did well enough for the central bank to allow large dividend increases to shareholders and share buyback programs.

The annual exercise-- known as a stress test-- is run in order to make sure that the banks have sufficient capital to withstand a financial crisis.

Since the 2009 financial crisis banks have been required to keep more capital on hand to meet liquidity needs in the event of a financial panic. And it's important to investors because these exercises determine how much capital in the form of dividends banks can return to shareholders, and interestingly, how much capital they can earmark for stock buybacks.

Which brings up this question: Does anyone else find it weird that banks would preferred to buy back their own stock with capital rather than loan money to people?

Yes. That’s how broken our financial system is.

The dollar continues to flex its muscles, marking a 12 year high against the Euro. Closing at 1.05 Euros to the dollar however has economist worried that the high value of the dollar could impact US economic growth.

As the dollar becomes more expensive relative to other currencies foreigners find it less economically advantageous to do business with US firms. As a result exports drop.

However from this vantage point it seems that the strong dollar is just another excuse that economist will use --along with bad weather-- to justify why they are robust economic forecasts aren't working out as planned.

Of course the dollar was going to get more expensive when we stop quantitative easing; of course the dollar was gonna get more expensive as interest rates started coming up.

Even an economist should've known that.