2012Jan17 Prediction is difficult

Europe:

U.S. rating agency Standard & Poor's cut its credit rating of the euro zone's EFSF rescue fund on Monday. S&P said the decision was all but inevitable following identical cuts three days earlier to the creditworthiness of France and Austria, two of the EFSF's guarantors.

The EFSF was set up in May 2010 by the 17 governments that share the European single currency. It has provided emergency loans to Ireland and Portugal and  is expected to contribute to a second bailout of Greece.

Greece remains under pressure to break a deadlock in debt swap talks to avoid an unruly default. Greece is still applying pressure to secure a last-ditch agreement with its private creditors to accept voluntary losses on their holdings of Greek bonds.

Athens is facing bankruptcy when 14.5 billion Euros of bond redemptions fall due in late March. Without the private sector voluntarily accepting losses, a 130 billion Euro international bailout for Greece will likely fail.

Markets:

Stocks are getting scarcer in the U.S. Companies have cut share sales to the lowest level since 2006 and are buying back their own stocks at the fastest pace in four years.

Amgen Inc. (AMGN), Hewlett-Packard Co. (HPQ) and 1,971 other U.S. companies repurchased $397 billion of stock last year, while they issued $169 billion of new equity, according to Birinyi Associates Inc. and Bloomberg.. As a result, the Standard & Poor's 500 Index divisor, a measure of outstanding shares, fell by 0.6 percent last quarter, the first drop since March 2009.

Shrinking supply can provide support for stock prices.

Furthermore, it usually indicates that valuations are low, and executives would rather buy back shares than spend the cash to expand. Bearish investors expect dwindling growth prospects will limit gains continuing to deter investors who withdrew from stock funds for eight straight months through December. That is the longest stretch of mutual fund redemptions in at least two decades.

"Eventually confidence will return as growth stabilizes," said Wasif Latif, vice president of equity investments at USAA Investment Management.. "All of a sudden you're going to notice that there won't be enough shares around."

Forecasting:

In light of the Patriots' blowout victory over the Broncos during Saturday's AFC Divisional Playoff game, in which Tom Brady threw for 6 touchdowns, we thought it would be worthwhile to look at the conventional wisdom on Tom Brady when he entered the league:

Tom Brady wasn't supposed to be in the league.  He was the 199th pick in the 2000 draft.  Although Brady had broken passing records at the University of Michigan, most team scouts thought he was too fragile to play with the big boys.  The pre-draft report on Brady by Pro Football Weekly summarized the conventional wisdom: "Poor build.  Very skinny and narrow.  Ended the '99 season weighing 195 pounds, and still looks like a rail at 211.  Lacks great physical stature and strength.  Can get pushed down more easily than you'd like."  The report devoted only a few words to Brady's positive attribute: "decision-making." -How We Decide, Jonah Lehrer

So far, Brady has won three Super Bowls, two Super Bowl MVP awards, and has been selected for seven Pro Bowls. Think about it when you are tempted to yield to expert forecasts.

The real 1%:

Our founders were well aware of societal classes. Our country was founded on a concept of equal opportunity. Class warfare has returned in the current election cycle. Here is an update for perspective on the current rhetoric.