--- title: Back to Work --- [![The Independent Market Observer](https://blog.commonwealth.com/hubfs/IMO-Title-1.png "The Independent Market Observer")](https://blog.commonwealth.com/independent-market-observer) [![Commonwealth Financial Network](https://blog.commonwealth.com/hubfs/lockup_citron-1.png "Commonwealth Financial Network")](https://www.commonwealth.com/) - [Home](https://blog.commonwealth.com/independent-market-observer) - [About](https://learn.commonwealth.com/about/) ### ![print this page](https://blog.commonwealth.com/hs-fs/file-1376458285-gif/images/print.gif)Print # [Back to Work](https://blog.commonwealth.com/independent-market-observer/2012/09/04/back-to-work) Posted by [Brad McMillan, CFA®, CFP®](https://blog.commonwealth.com/independent-market-observer/author/brad-mcmillan-cfa-caia-mai) Find me on: [LinkedIn](https://www.linkedin.com/in/bradmcmillancfa) [Twitter](https://x.com/BradMcMillanCFA) This entry was posted on Sep 4, 2012, 7:42:26 AM and tagged [Fiscal Cliff](https://blog.commonwealth.com/independent-market-observer/topic/fiscal-cliff), [Market Updates](https://blog.commonwealth.com/independent-market-observer/topic/market-updates), [Europe](https://blog.commonwealth.com/independent-market-observer/topic/europe), [Politics and the Economy](https://blog.commonwealth.com/independent-market-observer/topic/politics-and-the-economy), [Yesterday's News](https://blog.commonwealth.com/independent-market-observer/topic/yesterdays-news) [Leave a comment](https://blog.commonwealth.com/independent-market-observer/2012/09/04/back-to-work#comments-listing) So, I started off the morning doing the September Market Thoughtsvideo. While prepping for that, I realized how much had actually happened in August, but how little of it got translated into public perception and the markets. U.S. equity markets had a great month, and with the exception of emerging markets, so did equities around the world. The VIX, a volatility index known as the fear index, is at very low levels. All of this despite the ongoing concerns about Europe, China, and the U.S. fiscal cliff. Now that we are all back to work and paying attention, it will be interesting to see whether the markets continue to advance. I have my doubts. The big story over the weekend was Ben Bernanke’s speech at Jackson Hole. Remember I said in my last post that we would be talking about this? It made the weekend front pages in the *Financial Times* (*FT*) with “Bernanke signals Fed ready to act” and in the *Wall Street Journal* (*WSJ*) with “Fed Sets Stage for Stimulus.” The Federal Reserve clearly thinks the U.S. economy is still at risk and is prepared to do more to stimulate. The mechanism will probably be additional bond buying, pumping more money into the system. It hasn’t worked yet, so let’s do more—right? Right? Even though I am skeptical of the means, I can’t argue with the underlying problem. Growth does continue, but it is slow and has a number of headwinds. The *WSJ*’s “Countdown to a Tax Hike” (p. B7) talks about how taxes *are* going up at the end of the year unless Congress does something constructive; note that this is already baked in the cake. The other major domestic ingredient driving the slow growth is the uncertainty around Federal spending. Conditions elsewhere in the world do not help either. Europe continues to get worse in many ways, despite the perception that the problems are under control. Spain was forced to provide a €4.4 billion rescue to a large bank, as reported in the *FT* and *WSJ* over the weekend; Europe’s economy continued to decay, per “Europe’s Economy Woes Deepen” in the *WSJ* (p. A8); and even Brazil has slowed, as shown in the *WSJ*’s “Brazil’s Listless Growth Continues” (p. A10). More of the trends I talked about in “[Cracks in the BRIC wall](http://theindependentmarketobserver.com/2012/08/20/cracks-in-the-bric-wall/).” In keeping with the back-to-work theme, Tuesday’s papers had even more bad news. The *New York Times* (*NYT*) led with “Fears Rising, Spaniards Pull Their Cash and Get Out of Spain”; hard to think of a harsher headline than that. The *WSJ* had “Manufacturing Downturn Spreads Gloom Across Asia, Europe” (p. A10) and the *FT* had two articles, “Loan rates highlight cracks in Eurozone” (p. 1) and “Convergence in reverse” (p. 8). The first *FT* article talks about how borrowers in the peripheral European economies are now paying significantly more than in core economies, and the second article extends the condition to other areas of finance. The single market, a key accomplishment of and justification for the euro’s existence, is fragmenting. If that goes away, so does much of the reason for the euro itself. The fact that a major financial newspaper is running this story as a special feature tells us that the process is well advanced and that the euro may already have eroded more than is generally appreciated. This is a scary article in the medium term. Politicians are also back at work, as the Tuesday papers lead with stories about the Democratic national convention: “Obama insists he can fix US economy as he prepares to lay out his vision” in the *FT*, “Obama to press case for four more years” in the *WSJ*, and “Spirit of ’08 Gone, Democrats Reunite Against GOP Threat.” Not much analysis here, as nothing has happened yet, but we will be hitting this again. One point worth mentioning is that the focus on the economy is broadly defined. Even more than before, it really is the economy, stupid. **Quick takes** - Bad: “Crops in India Wilt in a Weak Monsoon Season” in the *NYT* (p. B1)—crop problems are not limited to the U.S. and the food crisis is not going away—more cracks in the BRIC wall. - Good: “Project Bids to Harness the Energy of Waves” in the *NYT* (p. A19)—we have talked about this before—one more brick to build the wall. - Not sure: “Are Entitlements Corrupting Us?” in the weekend *WSJ* (p. C1)—what does it say about the changing terms of debate in American society that the question is even asked in a national publication? **Question for readers: what do you think? Are entitlements corrupting us?** Short weeks are busy weeks, so I’m on to the next project. I hope everyone had as great a weekend as I did. - [Tweet](https://twitter.com/share) ### Subscribe via Email ![TMO_IMO_615x408_sidebar](https://blog.commonwealth.com/hs-fs/hubfs/TMO_IMO_615x408_sidebar.png?width=1033&height=686&name=TMO_IMO_615x408_sidebar.png "TMO_IMO_615x408_sidebar") [Episode 20](https://vimeo.com/1201911815/0f4f028be9?share=copy&fl=sv&fe=ci) June 17, 2026 [Episode 19](https://vimeo.com/1191658257/1b43ce84dd?share=copy&fl=sv&fe=ci) May 13, 2026 [Episode 18](https://vimeo.com/1183174918/e227cf7d80?share=copy&fl=sv&fe=ci) April 15, 2026 [Episode 17](https://vimeo.com/1174554734/636f0f7aba?share=copy&fl=sv&fe=ci) March 18, 2026 [Episode 16](https://vimeo.com/1163757312/bc2f802d74?share=copy&fl=sv&fe=ci) February 11, 2026 [More](https://learn.commonwealth.com/monthly-media-placements) [![Insights_CTA_IMO_233x400-1](https://no-cache.hubspot.com/cta/default/295024/interactive-187935228457.png)](https://blog.commonwealth.com/hs/cta/wi/redirect?encryptedPayload=AVxigLI6Qr%2B5w9B8%2FvShbGzlc%2BD7RAkZyPJIBTfFytc1ftNs%2F9ANux6KM0PhVdN5xh5iGz%2BfT3nNAWV1uptubi5GjD5Yt2PESTw6cJNaY6SMD%2BxfAaOtRAVqO5T7TPkP9anRveYovLc93NfFZ%2BMTzM5vTLu0uSvdXsv3QcJPKktsLiB1LdwfQH8Ik4c%3D&webInteractiveContentId=187935228457&portalId=295024) ### Hot Topics Select Category Ask Brad Commentary Economic Risk Factor Updates Economics Lessons Market Thoughts Videos In the News Investing Market Updates On My Bookshelf Politics and the Economy [![New Call-to-action](https://no-cache.hubspot.com/cta/default/295024/5f46d9ce-4d40-495c-a126-d4502b647bbf.png)](https://cta-redirect.hubspot.com/cta/redirect/295024/5f46d9ce-4d40-495c-a126-d4502b647bbf) ### Archives - 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