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September 2010

The FDIC Nightmare

Wal-Mart is often criticized because when they put up their store in a small community, they drive out small businesses and mom and pop stores which cannot compete on price.  Nevertheless, Wal-Mart still pays taxes and has a cost of capital, so they cannot go everywhere.  Imagine if a Wal-Mart like competitor to small business existed that had virtually unlimited resources, paid no taxes, and had a 0% cost of …Read More

The Bond Bubble

The financial press has given credence to those who insist that, because interest rates have fallen rapidly since April, we are in some kind of a bond bubble.  Investors, they say, should shy away from fixed income because, surely, they will be hurt when interest rates rise.  Technically, this statement is correct – the crucial part of the statement is “when interest rates rise”.  If they rise in the near …Read More

Fighting the Economic Headwinds

I have written many blogs about the faltering U.S. economy and the continuing headwinds that will prevail for the next few years.  The headwinds include: A consumer balance sheet loaded with debt with flat to falling income; The  consumer’s major asset, the home, continues to fall in value with approximately 25% of homeowners with mortgages now underwater; A banking system whose lenders to small business, community banks, are constrained by …Read More