Executive Summary
(Editor's Note: For those of you who missed it, see our highlights of the Neel Kashkari opening keynote session, the Day 1 NorCal conference highlights, the Michael Lewis keynote session on day 2, and the Day 2 NorCal highlights!)
MichaelKitces: Closing #FPANorCal session starting shortly: Greg Valliere, "An Insider's View from Washington"
jbrentburns: Where politics and investments collide. Introducing Greg Valliere as the final keynote at #FPANorCal. Great conference as always.
MichaelKitces: Just as economy is weakening, Washington is going to take away the punchbowl. Not great timing, but that's reality. -Valliere #FPANorCal
mkcorbin: Fed finished w/ quantitative easing. No QE3-Valliere #FPANorCal
MortgageNudge: Greg Valliere a "buzz kill"? His words, not mine. Looks like recovery is exceptionally anemic. Still suffering from meltdown. #FPANorCal
MichaelKitces: "I am convinced the Fed is done." No QE3. Not b/c inflation, but b/c of fear of political pushback. -Valliere #FPANorCal
jbrentburns: It'll be at least a year before we see rates rise. Valliere #FPANorCal
MichaelKitces: The big story is not going to be the Fed and monetary policy. It's Congress and fiscal policy. -Valliere #FPANorCal
MichaelKitces: Geitner will make increasingly apocalyptic warnings about debt ceiling approaching Aug 2nd. Congress deal in July. -Valliere #FPANorCal
jbrentburns: Cutting spending is a mission for many representatives even if it jeopardizes reelection. Unprecedented. Valliere #FPANorCal
MichaelKitces: Negotiations will focus on caps on gov't spending as %age of GDP to force spending cuts if debt rises. -Valliere #FPANorCal
MichaelKitces: New fiscal year starts on Oct 1 and spending cuts from summer debt ceiling compromise will begin economic impact then. -Valliere #FPANorCal
MichaelKitces: 3 legs of the reform stool - (general) spending, revenues (taxes), and entitlements. -Valliere #FPANorCal
MichaelKitces: Seniors are terrified of Medicare entitlement cuts, and Republicans are terrified of backlash. -Valliere #FPANorCal
MortgageNudge: Republicans in fetal position over entitlements. Party disgusted with Gingrich comments. Valliere. #FPANorCal
MichaelKitces: Republicans are in the fetal position about entitlement reform. They want to tackle, but backlash is horrific. -Valliere #FPANorCal
MichaelKitces: Social Security reform will be easy: raise retirement age. Medicare reform is the third rail. -Valliere #FPANorCal
MichaelKitces: Summer fiscal deal w/ debt ceiling will cut spending, put caps in place. Maybe TINY tax rise. NO entitlement reform. -Valliere #FPANorCal
jbrentburns: The financial deal in the House this summer will hinge on spending cuts. Valliere #FPANorCal
MichaelKitces: Tax options if economy weakens: very small tax on foreign profits to try to encourage repatriation of up to $1trillion. -Valliere #FPANorCal
MortgageNudge: If economy starts to weaken, repatriation not out of the question; maybe extension of payroll tax cut. Valliere #FPANorCal
MichaelKitces: The Republican nomination is worth winning. It could be a real close race against Obama due to unemployment & economy. -Valliere #FPANorCal
MichaelKitces: Look at electoral college map, states Obama barely won vs McCain might not hold in 2012. Further shifts from Census. -Valliere #FPANorCal
MichaelKitces: Republicans not excited about Romney, but he is the front runner. -Valliere #FPANorCal
jbrentburns: Is Obama in trouble? Could be a close race. High unemployment and weak economy will be a problem. Electoral college too-Valliere #FPANorCal
MichaelKitces: Democrats want to run against Romney b/c health reform is not an election issue due to his actions in Mass. -Valliere #FPANorCal
MichaelKitces: Next best option for Republicans is Pawlenty, although he lacks charisma. -Valliere #FPANorCal
jbrentburns: Valliere doesn't think Palin will run in 2012. #FPANorCal
MichaelKitces: If no strong Republican candidate by fall, party may reach out to: Jeb Bush, Paul Ryan, Mark Rubio, Chris Christie. -Valliere #FPANorCal
jbrentburns: If Jeb Bush was named O'Malley he'd be a Republican front runner in 2012. Valliere #FPANorCal
MichaelKitces: If Jeb Bush's last name wasn't Bush he'd be frontrunner. He'll run in 2016. Lack of candidate may accelerate to 2012. -Valliere #FPANorCal
MichaelKitces: Other big story in 2012 election is Senate. Repubs only need 4 seats. In 2012 the Democrats run 23 seats to Repub 10. -Valliere #FPANorCal
MichaelKitces: Arab kids are willing to die in streets not for jihad but for secular democracy. How cool is that? -Valliere #FPANorCal
mkcorbin: Obama still favorite, but Chris Christy scares the White House Valliere #FPANorCal
MichaelKitces: Two worries in Middle East: #1 Iran, funding terrorism everywhere there; #2 Pakistan instability & their 100+ nukes. -Valliere #FPANorCal
MichaelKitces: Dollar may stabilize soon, simply b/c Europe and Euro scares & situation getting worse. -Valliere #FPANorCal
MichaelKitces: Europe is not out of the woods; there are big big problems ahead. And will put a floor under the dollar. -Valliere #FPANorCal
MichaelKitces: Not sure about Bush tax cuts in 2013 beyond, but no tax increases before that. -Valliere #FPANorCal
MichaelKitces: May be well into spring 2012 before we clearly know the Republican candidate. -Valliere #FPANorCal
MortgageNudge: Most economists say mortgage interest deduction wasteful, inefficient. Valliere. #FPANorCal
MichaelKitces: Americans like small incremental change. The American public doesn't tolerate big change. -Valliere #FPANorCal
MortgageNudge: Re: flat tax - intellectually sound, but Valliere believes Americans prefer incremental, not radical change. Tough sell. #FPANorCal
MichaelKitces: ObamaCare in Supreme Court a year from now. Probably be 5-4 to uphold. -Valliere #FPANorCal
MichaelKitces: Nothing will be done on Fannie & Freddie (or immigration) due to gridlock. We'll pour $$$ there for years. -Valliere #FPANorCal
MortgageNudge: Likely to "continue to poor money down that rat hole that is Fannie & Freddie." Valliere. #FPANorCal
MichaelKitces: How disgraceful - we had financial services reform and didn't do anything about Fannie & Freddie. It's an outrage. -Valliere #FPANorCal
MichaelKitces: The missing catalyst on our will for spending changes is 3% on 10yr Treasury. When rates rise, the mood will change. -Valliere #FPANorCal
MortgageNudge: Japan, even before earthquake, makes U.S. look frugal. Valliere. #FPANorCal
MichaelKitces: General mood of Valliere is that Congress really is focused more on spending cuts. Thinks tax increases are very tough at best. #FPANorCal
MortgageNudge: Fiscal austerity story (for U.S.) not over. Spending cuts is trend that may have legs. Valliere. #FPANorCal
I hope you enjoyed this series of highlights from the FPA NorCal conference. If you think the conference sounds interesting, stay tuned to the FPA NorCal website for the 2012 registration in the coming year. For highlights of future conferences, you can follow this blog at www.kitces.com/blog (or get a direct email subscription when new posts are up!) and keep up on Twitter as well!
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