Greenspan..

nobull

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Sep 27, 2010
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Greenspan interview was excellent and point on. He is exactly correct about the wealth effect is wrong about taxes. The wealth effect came as a result of the extension of the bush tax cuts for all. The driver was in the last two weeks of Dec. Nothing else changed.

What needs to be done is reign in liberal gov spending and military spending. Afghanistan needs to be stopped immediately. Obamacare needs to be repealed. It is a tax measure and that kills growth.

The total debt side is gov spending and waste. There is no yield on waste. Afghanistan is a total waste. So is Obamacare's many taxing issues.

I don't care what any liberals on this board say, obamacare has no deficit reduction as a result of efficiency it only attributes those numbers to increased taxation which is contrationary.

What the policy makers should be concentrating on is a cheap energy policy using nuclear, natural gas, expanded oil exploration and coal. What it should not do is choose one or two technologies like ethanol and solar cells and wind generators which have oil deficits in manufacturing. By reducing the cost of energy, homeowners save money which they will spend in consumption. The electric can can become cost effective with cheap massive use of nuclear power.

These are the kinds of policies which you do not see from obama. Instead you see a relentless attack at people with incomes over 250K and relentless increases in business tax, regulatory regiments and licenses.

I have been short bonds for a while now and greenspan hit the nail on the head here. Long term rates will rise quite apart from inflation. An as I have said many times, it is not deflation that is a risk but inflation IF and only if, the M1 money supply is increased through bank lending. The Feds attempt to bid down the bonds has failed. Their intent to to stir lending. Instead interest rates are creeping up quite naturally. The QE buying spree has merely increased liquidity of the banks and spurred speculative bubbles.

Gold and Silver are completely meaningless and are generally the vehicles for the unsophisticated. As I have said, when hair dressers and taxicab drivers are talking about commodities, the end of the bubble is near.

What we do know then is that equities are low priced. Not only historically but the huge withdraw of capital and drift into the bond market has created an equities market that is virtually in a cash drought. Talk of a correction is equities is mere wishful thinking by those that have missed the boat. Any corrections at this point will be buying opportunities; they will not be market trends.

The bond market is the area where collapse is highly possible. And this extends to the Muni bonds. I think the spending spree of local gov. is far worse than any one can imagine. Look at the salaries and benefit packages of the gov sector and you will see immediately the huge waste of gov spending with no end in sight.

These bureaucracies are self feeders. The now make regulations and prey on the citizens. It doesn't matter what you want to do in life, you face endless gov regulation, fees, licensing and regulation. None of which is productive. It has made it nearly impossible for individuals to go into business. Couple this with the lavish gov salaries from the non-productive sector and you have a ticking time bomb aimed at muni bonds and insolvent governments.

Look at California. They absolutely repudiated any means whatsoever to reign in spending. Rino Arnold was replaced by an even more liberal Jerry Brown. Brown was horrible the first time he was gov and now they bring back this retread. You have illegals like obama's aunt bilking the system with no end in sight. This is nothing but gov waste. There is no return for subsidizing obama's family members. They will never be productive; they will always be parasitic.

If any one actually cares to really listen to what Greenspan said in that interview, they will find his economic interpretations to be both astute and very clearly stated.

I disagree with his policies about deflation following the dot com collapse which clearly helped trigger the housing bubble. But remember it was Clinton that virtually removed the capital gains tax off real estate ownerships and mandated banks to loan money to the unqualified shufflefoot population. So it was not Greenspan alone that triggered the bubble. Lets remember too that Bush has a tax committee that recommended significant changes to the tax code including the fair tax and other taxing schemes and did nothing, leaving in place a huge entitlement known as the earned income tax credit... another gov waste program that contracts economic development.

Overall I would say the interview was extraordinary. It is my hope that the new Republicans will pull the plug on Afghanistan and wasteful gov. spending and especially obamacare. America is on the verge of purging itself from liberal democratic socialism. The sooner the better and to do this, Gov spending should be reigned in. Here is how I would do it.

I would start with a 25% salary cut in gov jobs across the board and a hiring freeze. As people retired, I would not fill those positions and I would eliminate gov pay scales. Gov would go on a crash diet. I would eliminate homeland security over night. TSA would all get walking papers. Afghanistan would be over. Iraq would be next and we would move our military presence out of 125 countries unless those countries wanted to pay for all the costs of that deployment.

Title 9 would be finished. The Dept of Education would be no more. Ethanol would be on its own. The EPA would be grossly scaled back. This is just my first day in office.
 
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