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Day 2 of the 2011 FPA NorCal regional conference wrapped up with a keynote session by Greg Valliere, of the Potomac Research Group, sharing his perspective on the activities in Washington now and in the coming years. Here are the highlights... as captured on the #FPANorCal twitter hashtag!

(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 (or get a direct email subscription when new posts are up!) and keep up on Twitter as well!

Michael E. Kitces

I write about financial planning strategies and practice management ideas, and have created several businesses to help people implement them.

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