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To: Roads End who wrote (198395)	10/18/2002 10:29:52 AM
From: stan_hughes	Read Replies (1) \| Respond to of 436258

I was still a broker when Reagan was elected, i.e. during the halcyon days of the Laffer curve. I never had a problem with the general concept of lowering tax rates to encourage certain forms of investment, but there is clearly a sweet spot to occupy on that parabola where the effects are positive rather than negative, and you had better not get too far away from it. Even an indirect tax cut like the $3K writeoff effect doesn't offer much bang for the buck in the current environment IMO, except if perhaps you sell booze and cigarettes for a living. That money will probably just end up going towards bidding up house prices even more, as JSP enters the late stages of his obsession with this country's beloved game of investment musical chairs. Reagan at least had the benefit of having a very messy economy to deal with that invited the application of a number of corrective measures that were almost sure to produce results, and many of them did. Sherriff Dubya and Deputy Alan, on the other hand, have next to no economic bullets left to shoot, and neither does JSP. To me, this interest rate game is like watching a train wreck in slow motion. Once everyone who can, or wants to, own a house has one and maxes out their leverage on it, the scramble to remain liquid will be renewed for lack of there being anything else to sell or tap into to keep the personal spending music playing. And down the road apiece, the future rate shocks alone on all these ARMs, much less the unemployment issues, are going to make the RE collapse of the late 80s look like a mild pullback