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Strategies & Market Trends : Value Investing
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To: jeffbas who wrote (16189)1/19/2003 11:41:27 AM
From: Bob Rudd  Read Replies (1) of 78594
 
Jeff: As proposed, this contains a provision that backdoors a cap gains cut so as to make it neutral for a co. to retain or pay out earnings. My opinion is that it's too complex and controversial to pass and is thus likely a 'bargaining chip' I would certainly agree that a cap gains cut designed to spur investment *should* be better for long term health of the economy - providing that 'investment' is better informed than the 'money down a rat hole' bubble era we've seen recently. Unfortunately, since we have no assurance of wise capital allocation by managements, giving the dough back to investors so they can allocate it, might do just as well. In any event, a primary driver of this package is presumably to provide current stimulation and the dividend would appear to come closer to that goal than capital gains relief...though the more favorable timing is offset by allocation weighted towards those with lower marginal propensity to spend as you imply.
Regarding the drug plan for the elderly: We need serious reengineering of the whole healthcare system - Not Hillary's version, to be sure, but something that recognizes that the insurance and employer models are broken. The GE strike over double-digit increases in HC costs is a 'tell'...this is moving up on the agenda. Movement on this front would probably do more to help restore confidence and could help the markets if done right since a big chunk of the profits 'depression' comes from the HC costs rising faster than goods and services companies sell.
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