Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Ravencoin RVN About to EXPLODE to NEW HIGHS! Last Chance to Buy Before it goes to the MOON! - 21st Oct 21
Stock Market Animal Spirits Returning - 21st Oct 21
Inflation Advances, and So Does Gold — Except That It Doesn’t - 21st Oct 21
Why A.I. Is About To Trigger The Next Great Medical Breakthrough - 21st Oct 21
Gold Price Slowly Going Nowhere - 20th Oct 21
Shocking Numbers Show Government Crowding Out Real Economy - 20th Oct 21
Crude Oil Is in the Fast Lane, But Where Is It Going? - 20th Oct 21
3 Tech Stocks That Could Change The World - 20th Oct 21
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21
How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
The Only way to Crush Inflation (not stocks) - 14th Oct 21
Why "Losses Are the Norm" in the Stock Market - 14th Oct 21
Sub Species Castle Maze at Alton Towers Scarefest 2021 - 14th Oct 21
Which Wallet is Best for Storing NFTs? - 14th Oct 21
Ailing UK Pound Has Global Effects - 14th Oct 21
How to Get 6 Years Life Out of Your Overclocked PC System, Optimum GPU, CPU and MB Performance - 13th Oct 21
The Demand Shock of 2022 - 12th Oct 21
4 Reasons Why NFTs Could Be The Future - 12th Oct 21
Crimex Silver: Murder Most Foul - 12th Oct 21
Bitcoin Rockets In Preparation For Liftoff To $100,000 - 12th Oct 21
INTEL Tech Stock to the MOON! INTC 2000 vs 2021 Market Bubble WARNING - 11th Oct 21
AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
Stock Market Wall of Worry Meets NFPs - 11th Oct 21
Stock Market Intermediate Correction Continues - 11th Oct 21
China / US Stock Markets Divergence - 10th Oct 21
Can US Save Taiwan From China? Taiwan Strait Naval Battle - PLA vs 7th Fleet War Game Simulation - 10th Oct 21
Gold Price Outlook: The Inflation Chasm Between Europe and the US - 10th Oct 21
US Real Estate ETFs React To Rising Housing Market Mortgage Interest Rates - 10th Oct 21
US China War over Taiwan Simulation 2021, Invasion Forecast - Who Will Win? - 9th Oct 21
When Will the Fed Taper? - 9th Oct 21
Dancing with Ghouls and Ghosts at Alton Towers Scarefest 2021 - 9th Oct 21
Stock Market FOMO Going into Crash Season - 8th Oct 21
Scan Computers - Custom Build PC 6 Months Later, Reliability, Issues, Quality of Tech Support Review - 8th Oct 21
Gold and Silver: Your Financial Main Battle Tanks - 8th Oct 21
How to handle the “Twin Crises” Evergrande and Debt Ceiling Threatening Stocks - 8th Oct 21
Why a Peak in US Home Prices May Be Approaching - 8th Oct 21
Alton Towers Scarefest is BACK! Post Pandemic Frights Begin, What it's Like to Enter Scarefest 2021 - 8th Oct 21
AJ Bell vs II Interactive Investor - Which Platform is Best for Buying US FAANG Stocks UK Investing - 7th Oct 21
Gold: Evergrande Investors' Savior - 7th Oct 21
Here's What Really Sets Interest Rates (Not Central Banks) - 7th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Obama Dreaming of Deficits

Politics / Credit Crisis Bailouts Jan 06, 2009 - 04:29 PM GMT

By: Oxbury_Research

Politics Jan. 5 (Bloomberg) -- President-elect Barack Obama’s economic stimulus package will include hundreds of billions of dollars worth of tax breaks for individuals and businesses, according to a transition official and Democratic aides. Obama is asking that tax cuts make up 40 percent of a stimulus package, the people say.


I’ve been watching CNBC today with nothing but spite for a Larry Kudlow who can barely keep his pants on he’s so excited. I think if they’d let him, he’d be singing songs praising supply side this and Keynesian that.

As for the other jackals who call themselves financial reporters, there is general praise being said about this move that subtly reaches out for the non-partisan synergy that our country so greatly needs. CNBC has even had a couple of analysts on that have the cojones to praise this as the first major step towards the great change promised to us by BHO, nobody is holier than though. ARE YOU JOKING?!?!?!?

Deficits 101

Human beings are very fickle. It never ceases to amaze me how easily we see what we want to. I guess the mind has a hard time distinguishing between what is vividly imagined and what is actually happening, and rarely has it been more prevalent.

Let’s look at this while keeping in mind basic economic practicality. First, we’ll put some numbers to this. We’ll say this next stimulus is $1 trillion, because it’s been a commonly predicted number and it’s easy to work with.

If Obama gets his 40% tax cut, we’re looking in a $400 billion tax cut. Obviously that equates to a $600 billion increase in government spending. To be blatantly clear, we are talking about decreasing revenue by $400 billion and increasing expenditures by $600 billion. WHERE’S THE MONEY GOING TO COME FROM? We don’t have $1 trillion; we don’t even have $10.

Did he say Change?

Does this sort of policy sound familiar? It should, because that’s been the equation for the last 8 years economically for this country. What change is this? This sort of fiscal and monetary irresponsibility is what got us here in the first place.

Last week Peter Schiff was on CNBC in a panel discussion on Kudlow’s show. The discussion was generally about where our nation is economically, and what should be done to turn it around.

Right on cue, Kudlow brought up the notion of non-specific tax cut. He asked some of the analysts what there thoughts were, and like well-trained puppies, they answer promptly in favor of the tax cuts. Schiff was one of the last to answer the question.

Schiff responded went something like, “Yes I’m in favor of cutting taxes, BUT THEN YOU HAVE TO CUT GOVERNMENT SPENDING ACCORDINGLY.” He did emphasize the latter half.

Deficit spending has been so burned into our brains that the public has been trained to forget the negative economic consequences. Deficit spending, especially of this size, creates a global imbalance in forex markets. It’s the government’s form of a credit card, but they don’t have a limit. But eventually mommy and daddy are going to cut you off.

Wise, yet simple words that make economic sense. If you’re going to spend the money, you better have it. Now THAT is radical change. Obama is following right in the foot steps of both Bush and Clinton. Obama wants to change HOW the money is spent. That’s his philosophy. He could shake up Washington if he changed the HOW MUCH is being spent?

That’s the end of today’s article, but I have one thing I want to say on a personal note. It’s funny how deep the reach of this credit crisis really is. I predicted the municipal debt market squeeze. I discussed the factors that would cause it. The notion is simple, but I want to revisit it briefly.

The state predicts its revenues from taxes and otherwise when it draws up and eventually passes its budget. A large part of those revenues are based property taxes. Property taxes are based proportionally to the value of the home. When home values decline, so does property tax revenue.

State level regulators are idiots just like everyone else, and they absolutely didn’t see this mess coming; therefore, their perceived revenues weren’t even close to what they’re now getting. The housing recession has squeezed the state’s budget and now the wrong programs are being forced to cut.

As is usually the case, the government tends to cut the important programs with the least Washington or state influence first. Minnesota where I live, like the rest of the United States, is currently falling victim to that.

The cuts that really tick me off are those to the public school system. Don’t get me wrong, I have my issues with how public schools are run just like I have my issues with every other government run of funded program, but this is not going to work.

The thing that pisses me off the most is that in the last stimulus package, there was $150 billion of absolute pork. That pork could have been used to balance all the nation’s public schools’ budgets several times over. Then we wouldn’t need these cuts. Instead it was used for politics.

Here’s the deal. If the quality of our public school system continues to deteriorate, we are going to see an explosion of private schools. It will then become a system of how much money you have dictates the education you receive. Ladies and gentlemen, even though our public schools are far from perfect, that simply doesn’t work.

So all I ask is that you keep an eye open for educational budgeting that receives a public vote. You can write your senators and representatives, especially the ones that are supporting the bailouts. Just ask them where your money is going and why. That’s all and thank.

By Nicholas Jones
Analyst, Oxbury Research

Nick has spent several years researching and preparing for the ripsaws in today's commodities markets.  Through independent research on commodities markets and free-market macroeconomics, he brings a worldy understanding to all who participate in this particular financial climate.

Oxbury Research originally formed as an underground investment club, Oxbury Publishing is comprised of a wide variety of Wall Street professionals - from equity analysts to futures floor traders – all independent thinkers and all capital market veterans.

© 2008 Copyright Nicholas Jones / Oxbury Research - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Oxbury Research Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in