Article Tags : banking . finances . Money . tax
This could affect your financial health.
Today’s Wall Street Journal headline is another reminder of how bad the Washington dynamics have gotten.
Like a bunch of sharks in a feeding frenzy, there is a “scramble by lawmakers and industry lobbyists to get favored provisions into the bill.”
Whatever the outcome, you are witnessing the world of the temporary – the world of instant gratification and fleeting pleasure.
Here’s the problem for you and me:
- The government runs by polls and getting elected-not by economic reality
- To get elected again, Obama has to look more centric and “flexible.”
- But, the tax cuts are temporary; the business tax credits go for one year; the payroll tax cuts are temporary and the unemployment extensions are temporary.
- The overall effect along with low interest rates will be temporary.
Everyone is betting on economic growth bailing us out.
Except the price is staggering.
The Obama administration along with political Fed just throws money at the problem.
If you borrow the money, print it.
And Congress is like a drug addicted, addicted to spending.
The excuse among Democratics against tax cuts is pointing to the failures of the Bush administration to create jobs with tax cuts – and there were many.
Actually, 8 million jobs were created and there was growth before the financial implosion.
But, in reality, spending increased dramatically. You can’t have your cake and eat it too. The last two years of insane, crack pot economics were under the Pelosi, Reed, Frank, Dodd controlled Congress.
The out of control spending along with tax breaks.
The Keynesians claim economic growth rest upon demand and 70% of the demand comes from consumer demand.
They say you can’t have demand without consumers but you can’t have increasing employment and more money to spend without more employment.
Two thirds of employment comes from small businesses.
Beware: We will get growth. But the growth is purchased growth – artificial – not natural growth.
The real estate markets believed in growth forever fueled by the same low interest rates.
Banks won’t lend to small businesses which need credit to grow and hear if they can borrow from you (your deposits and bail out money) and make a risk free spread buying treasuries.
As a result, the stock market will be propped along with commodities.
But, small businesses and entrepreneurs will continue to suffer.