1/9/12

Friends and Colleagues

A New Year is upon us, bringing with it a clean slate and a fresh
opportunity to take stock of where we are and where we are going.
This week our update begins with some current observations on the state of
the economy in Greece, gathered from my conversations with local merchants
while traveling there the past few weeks. Then, with some help from our friends
at Wells Fargo Securities (WFS) we review some thoughts on the US and
EU economies as we head into 2012.

Word on the street from Greece
Based on anecdotal input from shopkeepers and restaurant workers,
we share the following:
- The mood is somber due to the current economic problems...
not unlike the US.
- News about on-going demonstrations in Athens is overblown by the media.
According to one restaurant owner, there have been only a few brief demonstrations,
each lasting only 10 minutes... just enough time for the press to take photos.
- Unemployment is currently ~20%.
- Many young people are going abroad to get their education and staying abroad
to work afterwards due to the lack of local jobs available.
- Merchants feel they are being taxed to death…the tax on a meal in a restaurant is 24%.
- Grecians perceive themselves as working very hard (10-12 hours/day) just to
make ends meet.
- One shopkeeper thinks the root of the financial disaster was easy access to money
and credit when Greece moved to the Euro... consumers who previously had very little,
all of a sudden had access to much,
and they are now reluctant to lose what they had gained.
- Tourism remains relatively strong particularly in the Greek islands, with many
summer tourists coming from Germany, England and China.
- Some merchants think things would be worse for them if Greece moved off the Euro...
others think it would be better.
Conclusion - While the headlines from Greece are dramatic, the typical person on the
street is going about their business, working hard, and just trying to make ends meet
much like over here. And like here, there is an underlying concern about the future
and about the ability of policymakers to fix the problems.


Good News on the Home Front
Recent US unemployment numbers look very promising, but WFS cautions us that
the numbers may be a bit overstated.
- Big News: +200,000 increase in nonfarm payrolls, reducing the unemployment rate
to a new cycle low of 8.5%.
- The gains were broad-based with only two sectors (government and temporary jobs)
posting declines.
- Tempering Observation - A surge in hiring of couriers (+42,000) was likely just
a seasonal increase.

Reassuring News from Europe
Recent data releases from the Eurozone and Britain have been relatively positive:
- The on-going Eurozone recession is finally making a dent on the region’s inflation numbers.
- This is good news for the inflation-hawks at the European Central Bank.
- WFS projects more opportunities ahead for the ECB to continue pushing the
monetary policy envelope
- They contend this new world of monetary policy experiments in the US and EU
will be with us for some time to come.
- WFS shares that no one knows the long-term consequences of these experiments.
- For now, they project continued monetary policy creativity, championed by the U.S.
- WFS projects the European sovereign debt crisis shows few signs of abating
- They think this will keep businesses and consumers cautious in the months ahead.
- WFS anticipates more ECB rate cuts will be forthcoming in the months ahead.
With this backdrop, WFS tells us we should expect the world economy to continue to grow,
albeit slowly, as central bankers continue to inject money.


US Fed Forecast
The Fed at its December FOMC meeting indicated the following forecast for the months ahead:
- A moderate pace of economic growth in the coming quarters.
- This will lead to only a gradual reduction in the unemployment rate.
- The European sovereign debt crisis remains the most significant risk to the economic outlook.

Overall, a reasonable picture as the New Year begins.
We can be certain that there will be unexpected twists and turns throughout the year,
so as always, stay tuned...

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Check out True Travels blog http://truetravels321.blogspot.com for a poetic
and artistic window into the world of traveling in Greece, Paris, et.al, as seen
through the eyes of my daughter, Sara Rosenthal, who is spending her junior year abroad.
================================

THOUGHT FOR THE WEEK
We Find What We Are Looking For

-It’s all gone horribly wrong!... Just one of those days where nothing seems to go right.
A day where we focus is on the bad things in our life, and everything seems dark.

-What a great day!... It’s a bright day where everything just works out.
We focus on the good things, and our life seems blessed with good.

Is it the day...or is it us?

We find what we look for in life.
If we look for problems and sorrows, we will find them.
If we look for opportunities and blessings, we will find them.

Each morning when we wake up to the gift of another day, we get to choose
where we will put our attention.
Let us choose wisely.

As we begin this New Year, may we start our days remembering to look for good.
May we choose to look for the best in others.
May we understand the importance of deciding what we will look for...
because we will surely find it.

Make it a great week!

David Rosenthal, MAI, FRICS
President & CEO
Curtis-Rosenthal, Inc.

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