John Pitera's Market Laboratory Message Board

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Strategies & Market Trends : John Pitera's Market Laboratory

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To: Moominoid who wrote (3195)	1/26/2001 8:57:29 PM
From: Yorikke	Read Replies (1) of 33421

<<Greenspan was a major force behind Clinton raising taxes on the rich.>> David, I'd like to read the info on that, always ready to change an opinion. I think most people discuss the economy with a very heavy ceteris paribus (sp) assumption. One issue at a time is complex enough. Hence the dollar issue and its implications is mostly discussed on the monetary threads. If tax cuts to the rich will have less economic stimulus than to the poor(er) and this makes them a good idea. Then you are implying that AG does not want to see the tax cuts do much in the way of helping the economy? Kind of a fake right go left? I believe the desire to keep the dollar up is a result of the financial markets sensitivity (Something AG keeps close to his heart) to this issue. If the dollar begins to weaken, the large hoard of foreign capital will have much greater incentive to flee (back) to European and Asian financial centers. A few years ago people were willing to admit that capital inflows did much to stimulate the market, and I do not see why a reversal of the flow would not be suspected of doing the opposite. In the long run the drop in the dollar would create a renewed market for US goods, even in this country. But it takes time to retool factories and rehire skilled workers. Here I think many people will be shocked to find the skilled labor force is not a simple commodity. I would like to reiterate the importance of dealing with the Surplus. In an economy where growth has been funded by Private Debt (which ,one might assume,can not continue to grow unimpeded), the increasing Government Surplus looms as a major drain on investment capital. I listened to AG very carefully on this and from what I heard he was saying 'We must not pay this debt off to fast. We can move to pay it off, but it must be at a slower pace. If tax cuts are your idea of a good time that will work, but only if I have some control over them if things don't go quite right.' He would not have control over large vested government programs as they take on a life of their own. Again, I think that one way or the other the need to keep surplus accumulation down will be worked out through increased infrastructure expenditures. I am cynical that Congress will agree on anything. It's 'Pay Back Time' on everyone's agenda, and the congressional infighting is going to be a wonder to view. The lowest common denominator will be PORK.

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