The Mess That Greenspan Made - Part 416

Planes, Trains, and Automobiles

All that Neal Page wants to do is to get home for Thanksgiving. His flight has been canceled due to bad weather so he decides on other means of transport.

As well as bad luck, Neal is blessed with the presence of Del Griffith, “Shower Curtain Ring Salesman” and all-around blabbermouth, who is never short of advice, conversation, or bad jokes.

And when he decides that he is going the same direction as Neal…

This morning, a brief departure from the normal fare is in order to recall the 1987 John Hughes classic Planes, Trains, and Automobiles starring Steve Martin and John Candy. Over the years, the viewing of this film on Thanksgiving eve has become a family tradition – this summary is provided to readers courtesy of IMDb and various fan sites.

Owen: I’m to drive you to Wichita to catch a train?
Del: Yeah, we’d appreciate it.
Owen: Train don’t run out of Wichita… unlessin’ you’re a hog or a cattle.
[Clears his throat]
Owen: People train runs out of Stubbville.

Cue the music – doooo, doooo, doooo.

(more…)

It would appear that we’ve entered a holiday holding pattern for consumer sentiment and the stock market, that is, until something really bad happens either in Europe or in the U.S.

The latest take on the mood of the American consumer from Reuters and the University of Michigan shows that attitudes were virtually unchanged, the sentiment index falling from 64.2 in October to 64.1 in November. One-year inflation expectations were steady at 3.2 percent with the five-year inflation outlook rising one-tenth to 2.7 percent.

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The Cost of a Payroll Tax Increase

Now that the budget deficit supercommittee has punted on reducing the rate at which the nation accumulates debt, attention turns to two pressing issues that could have a big impact on economic growth here in the U.S. beginning in less than 40 days – the expiration of the payroll tax cut and extended unemployment benefits. In this story at the New Jersey Star Ledger, the impact of the former is detailed.

Letting the Social Security stimulus expire now would result in a tax increase equal to 2 percent of payroll on most people. Check the accompanying chart from the Center on Budget and Policy Priorities to see the impact on different workers. A typical truck driver would lose nearly $800 for example, while a plumber would lose $1,000.

Because people would have less to spend, the economy would grow more slowly. Goldman Sachs estimates it would shave two-thirds of a percentage point off the GDP.

Once everyone gets back from their Thanksgiving break, look for the debate to heat up again, though, a repeat of last December’s stunning $860 billion stimulus/tax cut deal doesn’t seem likely this year due to political considerations on both sides.

Another Bad Day in Europe

It’s been quite some time since I’ve heard a good, thick Italian accent like the one by Reuters analyst Vincenzo Albano in the video below and, I don’t know about you, but, to me, it kind of makes the situation sound even worse than it really is, if that’s possible.

Borrowing costs are spiraling out of of control again and, after a German bond auction disaster and what increasingly looks like a French credit downgrade, things may finally be coming to a head for the European sovereign debt crisis that recently entered its third year.

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