As we watch the carnage on Wall Street where investors are cashing out of the market, it appears nothing can stop this train wreck - not an economic stimulus plan (remember that tax rebate?) and now not even a $700 Billion cash infusion.
Why is nothing helping? Where is that quick fix?
Confidence in the markets has been damaged and as the market looks to the future - it doesn't like what it sees ahead: Higher capital gains tax rates, increased regulation and bigger government. In a nutshell - the move to socialism.
This progression has become clearer over the last two weeks as the election polls have been edging towards Barack Hussein Obama. BHO has promised to increase the capital gains tax and significantly grow government (federalizing health care, expanding the IRS, unprecedented increases in foreign aid, etc, etc). In a lame attempt to defend his tax increases, BHO plays the class warfare card by saying that this tax will not affect regular folks since their 401ks are not subject to the capital gains tax upon withdrawal and only the wealthy who own stocks will be punished.
Does BHO really believe that? Let's go back and review econ 101.
By raising the capital gains tax rate, investing in stocks becomes less attractive. This will cause investors to move money out of stocks and into fixed income investments. As they do this the stock market will decline in value which will in turn hurt the overall value of stock investments and mutual funds that BHO's "ordinary folks" have in their 401Ks, IRAs and other retirement funds.
A bailout will not change this; a tax rebate will not change this. Such tactics are nothing more than band-aids. The underlying issue driving the market downward is lack of confidence in tomorrow. Today's market has lost hope in tomorrow's market.
Is Blogging Still a Thing?
5 years ago
I believe you're missing the bigger picture. Obama is gaining in the polls due to the economy blowing up, not the other way around.
ReplyDeleteUnderstand that thanks to over deregulation (primarily due to republican efforts) and Wall Street manipulation, the economy is coming apart at the seems on a global scale. What does Europe or Asia have to do with our elections? They are blowing up too.
This just goes to prove the adage that if you give someone (ie Wall Street) enough rope they will hang themselves.
At this point it really doesn't matter who gets into the white house- the deleveraging will continue. Individual investors aren't selling to cause this downdraft...hedgefunds are blowing up and they are closing their positions.
You're worrying about tax increases when you should be more concerned about what will happen if this financial collapse can't be contained. The US markets have already lost over $2 trillion in value.
By the way, Iceland may be declaring bankruptcy next. You should be worried. I am.
Global markets are following the US market meltdown.
ReplyDeleteI disagree - Individual investors are selling in droves. 401k money is being moved to fixed income investments.
The market is washing itself out and can no longer be stopped by government intervention. The Fed can only make the market go up for short periods of time. A panic decline will eventually bring us to a bottom.
Tax increases are the just the beginning of my concerns - the move to socialism is the issue.
Global markets are following the US market meltdown.
ReplyDeleteI disagree - Individual investors are selling in droves. 401k money is being moved to fixed income investments.
The market is washing itself out and can no longer be stopped by government intervention. The Fed can only make the market go up for short periods of time. A panic decline will eventually bring us to a bottom.
Tax increases are the just the beginning of my concerns - the move to socialism is the issue.
If you look at the volume the last few days, it has been below normal. This isn't individual investors managing their 401ks- the vast majority have ignored their statements out of fear. Go and ask your friends and co-workers - I bet you the majority have done nothing.
ReplyDeleteIf 401k folks were selling in droves, we certainly wouldn't be down just 5% max in a day- it would be down on the order of 15% - 30% and the volume would be spiking.
Obama doesn't want to federalize health insurance- that was Hilliary's plan. He want's to work with the private insurers to reduce costs and get rid of pre existing exclusions.
McCain's plan is to tax corporations that offer insurance, giving them no reason to offer insurance any more, and give everyone vouchers to take to our private insurers directly. This "capitalist" plan is the one you should be worried about, since this will enable the insurers to cherry pick the youngest and healthiest individuals and find ways to exclude all high risk candidates by age or any other factor they desire. Gone will be the all-pay-one-price "socialist" corporate plan now being used. This will be even worse than what we currently have.
And we should be paying higher taxes to help fund the wars currently underway, rather than the backdoor approach of borrowing from China and balooning the national debt. All those taxes we didn't pay for the last few years went straight to the national debt. Besides ourselves, we are condemning the next few generations with debt they had nothing to do with.
If this economy gets too bad, we should consider joining forces- one of us will have to guard our stuff while the other gets supplies at the food bank and soup kitchen. =) Seriously, we are the anomaly when it comes to saving.
I saw this crash coming over a year ago, but I assumed it would just be a major correction, not a potentially complete implosion.
Why is it that you used Obama's middle name when referring to him? Do you do the same when referring to McCain?
ReplyDeleteBarack Hussein Obama is his full name. He, himself, has chosen to use his full muslim name.
ReplyDeleteI was simply trying to avoid referring to him as B.O.
Wow...and to think I came to your site for sound financial advice from a fellow engineer.
ReplyDeleteI didn't expect politics and veiled racism.
Apparently I expected too much...my bad. I'll move on.