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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (14787)	11/3/2004 10:27:58 PM
From: Elroy Jetson	Respond to of 116555

I think the Northern Trust piece is mis-titled. Their text makes a strong case for the need to re-introduce the incentives to save, which were removed from the tax-code by the Reagan administration in 1987 - as can be clearly seen in the results. home.pacbell.net Resulting in an America which today needs to import $1.8 billion of capital per day from other countries to support our spending addiction. Like Reagan, Bush has introduced and placed into law some very costly *incentives to spend* during his first four years in office. In addition his administration has sharply increased Federal Spending in virtually every area of government including farm subsidies, the number of federal workers, regulatory bodies, travel, and entertainment. Yes, some put some incentives to save back into the tax code would be a great idea, but I don't think there's too many Republicans who are interested in the idea.

To: mishedlo who wrote (14787)	11/3/2004 11:02:46 PM
From: CalculatedRisk	Read Replies (16) \| Respond to of 116555

This piece from NT's Kasriel doesn't make sense to me. I think he is correct that Baby Boomers will feel a growing need to save, but I think he is wrong that the government will provide "baby boomers what they want in the form of tax-advantaged saving options." I doubt this proposal will make any headway since there is no way to pay for it. The author confuses me when he writes: "An increase in household saving does not necessarily mean a slow down in real GDP growth." Then he contradicts himself: "But the increase in the saving rate, by definition, does imply a slowdown in the growth of discretionary consumer spending." What does he think is keeping the economy growing? It is primarily consumer spending (some of it funded by borrowing). I think a higher saving rate will lead to lower GDP growth in the short term. He is correct in the longer term - more savings would be healthy. Changes to the AMT is another issue that needs to be discussed with regards to savings / consumer spending. This will either lead to less consumer spending or larger deficits. I wish this had been discussed during the campaign.