<<So, the industrialists and the politicians get together and conspire to wipe out tens of trillions in equity, wreak havoc with hundreds of thousands of retirement plans, and drive the retail investor out of the market for . . . $1.6 trillion in tax cuts spread out over ten years?>>
Typical hyperbole. First of all, not even $10 trillion of equity has been wiped out, much less "tens of trillions". Second, most of the equity was wiped out by January; the hysteria on the network news shows, in newspapers, on CNBC and MSNBC, etc., is coming a little late, as usual. They didn't conspire to do the initial damage; they are, however, opportunists who will use or try at least to use events to their perceived advantage. CSCO's dive hurts Chambers, for the moment, but they aren't going to go broke and neither is he. He and they will come out of this stronger, as financially weaker players get wiped out. Third, so far at least, the retail investor has hung in there, pretty much, recent outflows notwithstanding. Many people have commented on this. The outflows will undoubtedly rise with the hysteria generated on the news shows, and some won't come back, but the fact is, for ten, twenty year time horizons, the market is still the only place to be. Most people will continue to believe that, IMO, especially after this nasty fall flattens out and reverses over the next couple of years.
Fourth, I don't believe that either Bush or Chambers care all that much about the short term effects on most retirement plans. Their long range ideological goals are much more important. This isn't just about tax cuts here and now, it is about their goals for government in general, which is to say, less is better and a broke government is best. These are many of the same people--in kind if not in literal fact--who engineered the Reagan tax cuts, and who got them through Congress through blatant lying about the effects of the cuts on deficits. If you don't believe that they will do the same thing here and now, it is you who are the naive one. They believe that in the end they can control things. They believe that if you say something enough publicly, and it gets enough media repetition, it will become true politically.
Go read David Stockman's book, The Triumph of Politics to see how their minds work, and what their philosophy of government is.
Sam |
