Why It’s Time to Brace Ourselves for the Fall of 2015

Like it or not, the economic prosperity the United States enjoys today may dissipate sooner than expected. Come the fall of 2015, we can anticipate that all of the market gains made over the course of the past year will be pulled out from under us, delivering a debilitating blow to the economy.

One of the primary reasons we can expect impending economic fallout? Nobody’s worried. As with silence before a storm, news media and government alike are mum when it comes to any trepidation about the state of the economy, and instead are focused on job growth, the strength of the stock market and lower unemployment rates. There’s no denying that the economy is doing better than it has in years, but even in previous times of prosperity, there was at least a small faction of experts voicing skepticism and doubt. Not so today.

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According to CEO of Bennett Group Financial Services, Dawn J Bennett, this “radio silence,” (with the exception of her own radio talk show), is perhaps the surest sign that something’s being overlooked. And that something, Bennett believes, is a slew of asset bubbles that have been expanding in a number of major industries, including housing (which brought down the economy in 2008). These asset bubbles are the product of unsound policies like the overproduction of money, the Federal Reserve’s hand in the stock market, and the continued presence of incredibly low interest rates.

Consider too that traditionally, commodity prices reflect the health of an economy. When prices or assets increase in value, such is supposed to be a reflection of a strengthening economy. Yet, we know that currently the world market is experiencing low growth and low inflation, and that our stock market in no way aligns with the performance of most major companies. In other words, these rising prices are not an indication of a growing economy. Further, the optimistic economic outlook the media and government continues to promote will only exacerbate the asset bubble conundrum; the more we taut our economic strength, the more investors will invest, the higher prices will rise beyond their actual value, and the sooner we’ll experience a bubble burst.

In all, though many like Federal Reserve Chairman Ben Bernanke will say that asset bubbles are difficult to forecast, the reality is that the “symptoms” of asset bubbles are quite apparent; it just takes a critical eye to be able to see them for what they are.

 

Bennett Group Financial Services LLC, based in Washington, D.C., is a comprehensive financial services firm committed to providing opportunities to clients’ as they seek long-term financial success. Its customized programs are designed with the potential to help grow, lower overall risk and conserve client assets by delivering a high level of personalized service and skill.

For more information, call 866-286-2268 or visit http://www.bennettgroupfinancial.com

Securities offered through Western International Securities Inc. (WIS), member FINRA/SIPC. BGFS and WIS are separate and unaffiliated entities.

About Dawn Bennett

Dawn Bennett is CEO and Founder of Bennett Group Financial Services. She hosts a national radio program called Financial Myth Busting http://www.financialmythbusting.com

She discusses educational topics and events in the financial news, along with her thoughts on the economy, financial markets, investments, and more with her live guests, who have included rock legend Ted Nugent, as well as Steve Forbes and Grover Norquist. Listeners can call 855-884-DAWN a as well as take podcasts on the road and forums for interaction.

She can be reached on Twitter @DawnBennettFMB or on Facebook Financial Myth Busting with Dawn Bennett ordbennett@bennettgroupfinancial.com

 

The Ramifications of Tax Inversions: Is There Anything to be Done?

It’s no secret that tax inversions have become increasingly appealing to U.S. companies in recent years; from Herbalife International’s reincorporation in the Cayman Islands to Medtronic’s merger with a company in Ireland, the opportunity to side-step hefty taxes by merging with companies overseas has proven attractive. However, many in the financial industry, like Dawn J Bennett and President of 21st Securities, Bob Gordon, have their concerns.

The migration of U.S. companies to offshore entities is problematic for a number of reasons, including the fact that such decreases total U.S. federal revenue and can result in an outflow of American jobs. Forbes estimates that U.S. companies are holding approximately $2 trillion dollars in foreign accounts to avoid paying steep corporate taxes back home. As Gordon notes, taking advantage of cheaper alternatives to business operations is a natural consequence of a capitalistic economy, but in the case of tax inversions, it’s the individual American taxpayer that’s footing the bill, specifically the individual shareholder. Why? Interestingly, shareholders are not exempt from taxes on shares of companies that merge with foreign corporations. Even worse, the shares of about one-third of newly merged companies perform worse than they did when in the U.S.  Tax inversions undoubtedly impose negative consequences on the U.S. economy—but what’s to be done about them?

President Obama has recently stated that he would look into an executive order to limit the abilities of companies to move abroad to seek lower rates and has also considered dropping the corporate tax rate to 28%, two proposals he has yet to act upon. However, if we note that countries like Ireland boast a 12.5% corporate rates and the Bahamas have rates as low as 5%, cutting our own by a mere 7% may not be enough to significantly halt inversions.

Gordon notes that lowering the corporate tax rate to a truly competitive figure would indeed only resolve part of the problem. Preventing increases in inversions may also depending upon changing the way in which we calculate our taxes, specifically our practice of taxing a company’s income no matter its location in the world.  Whereas other countries only tax income generated within the confines of its own borders, the U.S. proves a unique exception, spurring companies to completely merge with foreign corporations. Gordon believes that companies are primarily drawn to countries abroad for their territorial tax leverages, for it’s this difference in policy that truly affords companies significant savings on the balance sheet.

Bennett and Gordon agree that reform is imperative and could begin by introducing a revenue-neutral proposal in Congress, a process which ideally would have been initiated years ago. What we need, they argue, is not just the closure of loopholes or the type of partial fixes that have been implemented unsuccessfully for the past few years, but a comprehensive overhaul of the entire corporate tax system.

With the highest corporate tax rate in the world at 35 percent, and revenue less than the average of the entire OECD, the United States has every reason to reconsider policy, and soon.

 

Bennett Group Financial Services LLC, based in Washington, D.C., is a comprehensive financial services firm committed to providing opportunities to clients’ as they seek long-term financial success. Its customized programs are designed with the potential to help grow, lower overall risk and conserve client assets by delivering a high level of personalized service and skill.

For more information, call 866-286-2268 or visit http://www.bennettgroupfinancial.com

Securities offered through Western International Securities Inc. (WIS), member FINRA/SIPC. BGFS and WIS are separate and unaffiliated entities.

About Dawn Bennett

Dawn Bennett is CEO and Founder of Bennett Group Financial Services. She hosts a national radio program called Financial Myth Busting http://www.financialmythbusting.com

She discusses educational topics and events in the financial news, along with her thoughts on the economy, financial markets, investments, and more with her live guests, who have included rock legend Ted Nugent, as well as Steve Forbes and Grover Norquist. Listeners can call 855-884-DAWN a as well as take podcasts on the road and forums for interaction.

She can be reached on Twitter @DawnBennettFMB or on Facebook Financial Myth Busting with Dawn Bennett ordbennett@bennettgroupfinancial.com

What Scotland’s Vote for Independence Revealed about the U.S. Economy

Scotland’s historic vote on independence was wrought with international implications; from foreign policy, diplomacy, international trade and more, the prospect of an independent Scotland raised numerous questions about how all parties, not just Scots, would be affected by the potential change in governance.

Financial experts in the U.S., like CEO of Bennett Group Financial Services Dawn J Bennett, were quick to wonder how this vote for independence could negatively impact the U.S. economy. Leading up the September vote, American investors had pulled out almost $30 billion in UK assets, while Scotland’s potential succession sparked the foreboding possibility of a chain reaction among other dependent nations. Such a movement could ultimately result in global economic destabilization, which the U.S. and Europe, still largely in the throes of a recession, would be ill-equipped to handle.

Bennett noted that she believed Scottish independence would undoubtedly be a risk to financial markets across the globe, especially the fragile U.S. economy. Even more problematic was the fact that should Scotland vote for independence, the Federal Reserve would have little power to save the U.S. economy, as its current attempt at economic stabilization, infusions of cash, have proven ineffective. In fact, the Fed itself has stated that, “What monetary interventions have failed to accomplish is an increase in production to foster higher levels of economic activity.” The Federal Reserve also admitted that what monetary infusions have done instead, is widen the wealth gap between 90 percent of the American public and the top 10 percent of the nation’s investors. What should this communicate to the average American? In short, that the monetary infusions of the past five years, all of which have been in an effort to pull the U.S. economy out of a recession, have been of no value. Yet, we continue to hear in the media of economic recovery and stabilization.

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This disconnect between the actual stability of the U.S. economy and general perception of its health is evident in other financial indicators. In December of 2014, the national debt reached an all-time high at 18 trillion dollars and continues to increase, while the consequences of harboring such massive debt are left largely undiscussed or touted by politicians as being manageable given that a significant percentage is “owed to ourselves.” Even the disparity between portfolio values and stock markets like the DOW and NASDAQ should be warning signs that the economy is approaching a dangerous precipice. How can large companies perform so poorly, yet stock markets boast such exceptional numbers?

Scotland voted against independence on September 19th of 2014, effectively eliminating—for now— worries of a global economic crisis. Yet despite this outcome, this geopolitical situation helped underscore an alarming reality: the U.S. financial market is far more vulnerable than we acknowledge, and should the Federal Reserve continue to prop up our stock markets and engage in ineffective cash inflows, it may not take a major disruption in international policy to thrust the U.S. into financial calamity.

 

Bennett Group Financial Services LLC, based in Washington, D.C., is a comprehensive financial services firm committed to providing opportunities to clients’ as they seek long-term financial success. Its customized programs are designed with the potential to help grow, lower overall risk and conserve client assets by delivering a high level of personalized service and skill.

For more information, call 866-286-2268 or visit http://www.bennettgroupfinancial.com

Securities offered through Western International Securities Inc. (WIS), member FINRA/SIPC. BGFS and WIS are separate and unaffiliated entities.

About Dawn Bennett

Dawn Bennett is CEO and Founder of Bennett Group Financial Services. She hosts a national radio program called Financial Myth Busting http://www.financialmythbusting.com

She discusses educational topics and events in the financial news, along with her thoughts on the economy, financial markets, investments, and more with her live guests, who have included rock legend Ted Nugent, as well as Steve Forbes and Grover Norquist. Listeners can call 855-884-DAWN a as well as take podcasts on the road and forums for interaction.

She can be reached on Twitter @DawnBennettFMB or on Facebook Financial Myth Busting with Dawn Bennett ordbennett@bennettgroupfinancial.com