The fourth quarter of 2012 was a quarter filled with worldwide events that had a profound effect on the markets and beyond. Global growth continued to disappoint and remain below trend, as it has been for some time now. Of primary drivers were a sharp slowdown of growth in Japan, and the continued problems of Europe. The new recessionary environment of Europe is expected to continue for 2013, although there were a few bright spots. The European Central Bank (ECB) made a decisive step last summer toward being a more credible lender and has loosened monetary policy, floating more capital into their markets leading to a broad-based rally in risk assets in the final part of 2012. Greece decided to stay within the Euro zone and Ireland-the first country to receive a euro-bailout- may regain access to capital markets in the coming year. On the other hand though, upcoming elections this year in Italy and a French program of "reforms" may set things back as opposed to moving the economy forward as they so dearly need. Conversely, China's expected hard economic landing did not materialize, and the outlook for China is robust for 2013, as opposed to the European nations. Hopefully, the rate of global growth will grow in 2013, giving way to a path to more balanced budgets and less need for emergency bailouts.
Domestically, an upturn in the housing market in the past quarter of last year has led to a broad based recovery that includes manufacturing, labor, housing starts, and all that it takes to build a house. The continued existence of low interest rates has given many Americans the ability to pay down debt and refinance their mortgage, giving them more discretionary money at the end of the month to recirculate into the economy which is a sign of a growing, albeit slowly, and recovering economy. We cannot talk about the past quarter without thinking about the horrific incident in Newton CT. and the devastation caused by a lone maniac who has affected the lives of millions. Our hearts cannot cry enough for the families of those directly affected, and not one of us couldn't think about how much our family means to us. We will continue to pray for them. Economically, there has been much talk about putting security in every school in America- but how will it be paid for? With budgets stretched to the maximum throughout every town and city in America, one has to agree that it is indeed a fine plan to protect our children, but how will it be funded? Of all the proposals set before Congress, this surely should be put right to the top.
In the Northeast, Superstorm Sandy caused devastation beyond comprehension, destroying thousands of homes and business and forever changing the lives of scores of folks in the Northeast region of our country. It will take years of rebuilding to bring things back to normal, not to mention the billions of dollars needed to aid the recovery efforts. While the Senate and Congress had been mired in their Fiscal Cliff negotiations, the unfortunate victims of Sandy are waiting for aid... and waiting... and waiting. As of this writing, Congress is finally voting today to give them $9 billion of the $60 billion needed- the rest has to wait until they return from their winter recess (yes folksâ€¦also known as vacation) while thousands of families are still without power, or even a home. I am mystified as to how the system works, and wonder how they can go away knowing how dire the consequences of every day are for those in need. Indeed, the political system in our great country has its mysteries. The Fiscal Cliff talks went to within hours of their deadline while ample notice was there to have decided what they needed to do well in advance, causing great pain and anxiety to virtually every American. While they feel that they accomplished their primary goal of determining tax rates, the real work has yet to begin: the bargaining over cutting spending. The Fiscal Cliff issue is far from done, and it will raise its ugly head again in March which is the deadline for a proposal on spending and the negotiating once again between the parties about what is to be included.
I seem to remember from grade school a great document that said, in part, "a Government for the people, by the people." Nowhere do I remember contained within the document any mention of "our side and their side."