We spent the morning musing on the Maginot Line. The French built this elaborate line of fortifications along its border with Germany in the 1930s to thwart an invasion by its Great War enemy. When Germany invaded France in May 1940, Adolf Hitler’s armies simply bypassed the line and invaded France through neighbouring Belgium. The Maginot Line proved to be an elaborate dud.
“U.S. stocks strike solid gains on second-quarter GDP,” ran a gleeful headline yesterday on MarketWatch.
“Investors, showing no sign of concern about the outlook, took the GDP report at face value and pushed stocks up sharply on the news,” ran another breathless piece of editorial, following data that showed U.S. GDP up 3.3% in the second quarter.
But as Addison Wiggan and Ian Mathias pointed out yesterday in Agora Financial’s 5. Min Forecast, the government’s stimulus check program and a weaker dollar were partly responsible…
The government’s bailouts of failed banks and its economic stimulus splurge widened the federal budget deficit to $102.8 billion in July.
Bond king Bill Gross would like to see the budget deficit reach $1 trillion.
Last month, he wrote an open letter to Barack Obama asking him, if he is elected, to save the US economy by upping federal spending by a further $500 billion.
According to Dan Amoss, Gross’s prescription for the economy would do more harm than good. For a start it would cause the price of oil imports to spike…
