Epstein Secrets

tations of higher taxes in the long run (e.g., Ricardian equivalence). Statutory debt limit and debt subject to limit Trillions of gross debt, USD 18 US Treasury: raiding the cookie jar Billions, USD 300 Gross debt/GDP 109% 16 250 Proposed increase 99% 200 14 - 12 - Debt limit 86% 78% 87% 150 69% 73% 100 10 68

t is the lesser of 2 problems Trillions, USD 100 90 80 70 60 50 40 Present value of unfunded entitlement obligations 30 20 10 Existing debt 0 Source: US Department of the Treasury, J.P. Morgan Private Bank. Items on the table in discussions to reduce the deficit Revenue raises Spending cuts Carried interest taxed at Discretiona

t, year on year 23% 10% 21% 8% 19% 17% - 6% CPI 15% 4% 13% Deposit rate 11% 2% 9% 0% 7% 5% + 2006 2007 2008 2009 2010 2011 -2% 2005 2005 2006 Source: People's Bank of China 2007 2008 2009 Source: People's Bank of China, National Bureau of Statistics. 2010 2011 Forward-looking manufacturing surveys have declined and inter

ation of the Petroleum Exporting Countries PBOC: People’s Bank of China PCE: personal consumption expenditures PE: price

Institution has called the “fiscal fights of the Obama administration.” The first fiscal fight resulted in the Standard and Poor’s (S&P) downgrade of US Treasury debt in August 2011. The equity markets, as measured by the S&P 500 Index, dropped about 19% between April and October of 2011. Taken together, the

. We think that policy measures to support the economy should have more visible effect on activity in the second half of the year. ¢ To this effect, the People's Bank of China (PBoC) has recently cut interest rates by 25bps — the first such move since late 2008. With investment demand still sluggish, we don't expect the mea

kets over the medium term. Valuations remain attractive, and the potential for spreads to trend lower should more than offset the gradual increase in US Treasury yields in the quarters ahead. We continue to prefer increasing exposure to corporate bonds while keeping existing investments in sovereign bonds. 36