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Amazon.com, Inc. Message Board

  • once_on once_on Nov 16, 2012 1:10 PM Flag

    The ironic thing about this rally is that any agreement that is reached will shrink the economy next year

    Tax increase on job creaters, payroll tax increase on all workers, shrink of govt spending, higher investmet taxes (cap gains and dividends) = lower investment, more job cuts and lower consumer spending. The death spiral has started (like in 1937 post the Roosevelt re-election). Scary times.

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    • Once_On:

      As I've said many times (although mostly on other boards), we are already in a recession. GDP is only growing because we've run a fiscal deficit of 8-10% of GDP over the past 3 years, while growing NOMINALLY at 2-3%. When the gov't spending ceases to grow proportionately to GDP, GDP will stagnate (or could decline because people underestimate the fiscal multipliers for things like Defense spending where more of the value is internalized within our borders relative to other categories. One can almost think of defense $ as having higher velocity of money for the domestic economy, but that is another discussion).

      The key is to unlock the capital on non-financial balance sheets, which means to rewrite the tax code to favor investment in productive assets rather than financial ones. It will bolster US competitiveness, increase hiring and do great things for the real economy. It will also seal the fate of the "financialization" period of the US economy. Financial assets will lose value and the financial sector will bear much of the cost. It's the only way to restore long term growth (productivity through investment in productive assets rather than financial/speculative ones). It's coming because it is the only way to unlock the capital in non-financial companies, without which there isn't a solution to the crisis...

    • Once_on: Agree. That's why gold will go lower, not higher.

      Sentiment: Strong Sell

 
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