Derivatives to the Rescue? How ‘Betting Against’ the U.S. Could Prevent A Default Crisis

Wednesday’s plunge in the markets signaled that the impasse over the debt ceiling ,if it continues, will eventually trigger a substantial market sell-off. That belief itself should have been a warning sign; when investors dismiss what is known as “tail risk,” only trouble ensues.

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Why is Obama Opposed to a Short-Term Debt Deal? Politics

s the tortuous debt ceiling debate continues, with plot twists that even the most diehard political junkies are having a hard time keeping straight, one aspect continues to bedevil the process: the staunch refusal of both President Obama and Senate Majority Leader Harry Reid to accept a short-term deal.

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Apple Does it Again: Why Companies Win While Economies Lose

As Washington continues to skate perilously close to the economic abyss, 3,000 miles away in Cupertino, California, this week Apple released its results for the second quarter. To no one’s surprise but to almost universal amazement, Apple managed to sell more iPads (9.3 million) and iPhones (20.3 million) than ever before. Quarterly revenues of $28 billion were up more than 80% from last year, and profits were up 125%.

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Our Real Debt Problem

On Friday, I posted a piece on the U.S. debt and how we are creating a false crisis given current interest rates and our ability to manage that. Judging from the responses, you would have thought I was penning a piece in defense of eugenics. OK, the online world is not known for its sobriety, but the heated reaction to my post is typical of the current debate about debt.

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The U.S. Is Not Drowning In Debt

In case you haven’t noticed, Washington is currently consumed in an acrimonious debate over whether to raise the debt ceiling. There is no agreement about whether to do so or how, but both parties appear to accept the logic that the United States is suffering from an unacceptably high level of government debt and that further debt will doom the U.S. to generations of decline. Judging by polling data, large swaths of the country agree. Nonetheless, that consensus is wrong.

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The Rebirth of the U.S. Auto Industry? Not So Fast

Over the past year, story after story has touted the rebirth of the U.S. auto industry. Ford Motors, which unlike General Motors and Chrysler survived the 2008-2009 crisis without taking bailout money from the federal government, has enjoyed a string of positive reviews, and its earnings and revenue are higher than at any point since the 1990s.

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What Would the Founding Fathers Say About the National Debt? Don’t Default

One of America’s favorite pastimes is to play the “what would the Founding Fathers say” game. Just pick an issue du jour, and ask the question. Given that today’s world (Google, Twitter, television) is probably way beyond even the imagination of the 18th-century designers of the Constitution, the game usually says more about today’s partisan fights than about the Founders.

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How a Weak Dollar is Boosting Domestic Travel

This week, I’ve been treated to a visceral experience of the upside of a downside. Driving with my family through the Tetons and Yellowstone National Park, I have sat behind endless lines of RVs and assorted SUVs depositing masses of people who are swarming the parks, descending on Old Faithful concession stands, and snapping endless digital photos to be sent over Androids, iPhones and even Blackberries.

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The Wishful Environmentalism of Cars 2

Cars 2 opened to lukewarm reviews and a smash box office, taking in $66 million domestically and another $42 million internationally during its opening weekend. The film’s ability to transcend unusually tepid reviews is clearly a testament to the power of the Pixar brand (another gift of Steve Jobs), which has generated a remarkable series of animated hits stemming from the Toy Story franchise that began in 1995 and continuing through gems like Wall-E and The Incredibles, as well as the first Cars. But this film also carries a loud and unmistakable message about alternative energy, automobiles and their shared future.

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Banks Are Hurting? It’s All Relative

The latest out of Wall Street-land is a warning by analysts at Citibank that profits at Goldman Sachs and Morgan Stanley (and to a lesser degree at other banks as well) will show a sharp contraction for the second quarter of 2011. Leaving aside the inside baseball nature of one Wall Street firm issuing a negative report on other firms, the decline in profitability stands in contrast to the widespread perception that banks and investment houses are booming while the rest of the economy is suffering. Or does it?

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Hard or Soft Landing for China? How About No Landing

The past few weeks in financial-land have been dominated by two combustible fears: 1.) that this time Greece really will default on its debts and plunge the Eurozone into chaos; and 2.) that this time China really will hit the brakes and bring much of global economic activity down with it. One of these fears alone would be enough to roil markets. Together they have been a potent and toxic mix.

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Big Blue Turns 100: IBM’s Anniversary is One to Celebrate

Today, IBM officially marks its 100th anniversary. But the company today bears remarkably little resemblance either to the sleepy Computer Tabulating Recording Corporation that was formed on June 16, 1911, or to the more iconic International Business Machines (renamed to one-up then rival National Cash Register in the 1920s) that was one of the dominant companies during the brief but spectacular American century.

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