I'm wondering what, if anything, the inmates here think the Bush administration will do to stimulate the markets.
Excellent question. and yes it interests me a good deal too. the following is my best guess: (but remember, as an inmate of this resort, it is only, my opinion):
in short, i believe that Bush II will cut taxes. Capital Gains will be reduced and death Taxes will probably disappear. (particularly now that The Grand Supremo of the World Alan Greenspan has given his de facto approval). btw Alan Greenspan IS the real President For Life, All Mighty Wizard of the Interest Rate Wand and former subject of Queen Ayn Rand. (ah yes indeed, who said that Libertarians did not have power ? he --unlike most Randian NUTZ-- is a reasonable libertarian, the type that does not have the wide-eye look clamoring for the unconditional surrender of all governments). i.e. the smart and quiet type.
Alan Greenspan will obviously be shepherding the GB II Royal Decree with his powerful Interest Rate Wand.
a force, which is wise NOT to ignore, the Fed can afford to be wrong. as Bill Fleckenstain has said accurately, "Easy Al, will be providing the cocaine to all the drunks" -G- (which means it is best to step out of the freight train, driven by a committee of party-animals on high gear).
in my opinion, for the most part politicians are mere figureheads that can only "influence" somehow the economy by passing specific laws. (that is whenever they muster enough consensuses to actually pass important ones). whatever laws are passed, private industry figures a way to either get around them (increasingly more difficult, given the amount of regulation being dispensed), or simply they figure a way to be efficient given the new environment. in other words, industry (that is corporate management and labor working together), figure the way to become profitable. in spite of government's "wisdom"
however, Alan Greenspan, although a politician himself, he is more than that. he has real & direct power, and so far it seems, has been a capable chief supremo, (although many will disagree).
it seems, given the logic that since AG has given its seal of approval to the tax cut, that the idea is taking hold on both sides, (Dems & Reps).
This here, contains some important points
Message 15254348
personally... i think that with tax cuts we have to be careful, if government spending is not curbed accordingly, then, the debt will pile up again.
perhaps AG bears some blame. that is, by having being the main orchestrator of the mania, (some say so), on the other hand, how else could he had "saved" the world from the various disasters... The Russian Debt, The Tequila Effect, The Asian Fever, The LTC fiasco, and so on...? allow true free markets to kill the least efficient ? perhaps that would have been a better alternative ? who knows. I certainly do not pretend to know what would have been a better route to take.
There are compelling reasons as to why he did "what he had to do". after all... if the only economy in the world that grew was that of the US and the rest of the world would be a total chaos.... would that be in the best interest of the USA ?
I view Alan Greenspan as the Central Banker of the world. not only the USA.
at some point, the market reached a point of mania pushed on the "assumption of the "new economy" (based on the --now semi defunct-- Internet Revolution). "productivity" was being improved to such a point that we now did not have to fear "inflation" any more.
irrationality set in and the markets took off.
the excuse was such "new economy". however the reality was pure demand/supply of issues (stocks). i am sure you realize that the baby boomer generation is at its height of "savings" years and they are piling billions of dollars that must find an "investment vehicle home". the best home possible was perceived to be the US stock market given its recent history (5 to 8 years or so).
the monster kept growing feeding on itself.
all fundamental and rational standards were ignored. the result is the present state of the market, (at least the NASCUAQ), has been cut nearly in half from its highs last March.
in retrospect, it seems that Alan Greenspan was indeed targeting the markets all along... (and i believe, continues to do so), after all... if the new economy was so efficient and represented no threat of inflationary pressures .... why was he increasing interest rates ?
in order to understand how the government looks at the statistics of the "new economy" (and its potential consequences), is good to stop by here:
financialsense.com
<snip>
Element #2 Hypothetical Hocus-Pocus
The next GDP manipulation takes place through a measure called the Hedonic Price Index. This is a statistical maneuver employed by government statisticians to measure computer output and investment. It is meant to capture the increase of computer power in terms of speed and memory. The government takes the actual increase in spending on computer investment and applies a statistical wand which changes the actual number into a higher number reflecting the hypothetical benefits of soaring computer power.
Like corporations, which keep two sets of books, one for financial reporting and another set of books for taxes, the government also keeps two different sets of books. One set is the actual dollars spent on the output of goods and services and the other set is called chained dollars, which is derived after various statistical manipulations have been applied to the actual numbers. As this table shows, actual computer spending in actual dollars went from $86.3 billion during the fourth quarter of 1998 to $114.2 billion in the second quarter of this year. This represented an increase of $28 billion in actual dollars being spent during the last six quarters. (iv)
<table not copied, see url>
However, after applying the hedonic deflator, that actual number is changed into $127 billion in chained dollars for the same six quarters. This technique magnifies the actual contribution of computer investment to GDP growth. This manipulated rise in GDP growth doesn’t reflect actual increases to GDP growth. Instead, it reflects the increase in computer power that businesses are getting for their money. As the power of computers increases, so does the impact of the hedonic deflator. Effectually, this creates a statistical mirage, which magnifies modest sums of money spent in actual dollars into giant sums in chain-weighted dollars.
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with the above in mind... one wonders... how much can anyone trust government statistics ?
Next trouble zone is corporate and personal debt. "fueled by stock market gains" (in some cases non existent any more --or rapidly being reduced). if this represents a problem, how can AL help ? lowering interest rates...
the biggest threat i see in the horizon is cost of energy. back in the mid 70's i was directly affected by the oil embargo, so naturally, i do pay attention to this. natural gas prices do not seem to slow down, come summer, when the demand for electricity will be at its height in California .... how will prices react to this ? and worse, what effect will this have on the rest of the economy ?
Read this that another poster brought up:
Message 15253806
Federal Reserve Chairman Alan Greenspan said the state's soaring utility bills and rolling blackouts are not isolated phenomena or aberrations, but signal "a significant problem that this country is going to have to address, and . . . rather quickly."
Greenspan offered no quick fixes, but said California's troubles cannot be ignored by other states or--as some Bush administration officials have suggested--by the federal government.
"It's scarcely credible that you can have a major economic problem in California which does not feed to the rest of the 49 states," Greenspan said in congressional testimony. "I think that the presumption that we can merely look at this as an issue which is going to get relatively easily resolved . . . is clearly mistaken."
direct link to article:
latimes.com
have we finally painted ourselves into a corner ?
soon we shall see...
other items that George II must address (i posted a while back an article, i think in the Washington Post --I cannot rememer), is Health Care & Social Security (with defense spending also considered).
additional reading right here on SI: (i find these threads helpful in market matters): particularly, i find the first 2, most helpful, some of the posters there, are very knowledgeable) i am just a pawn in the game of life. -g-
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good luck ..... have a fun weekend.... hey i meant to ask you....
how does it feel to live in the future ? |
