It Was Funny Then...
2008-10-06
Posted by: badanov
Clearest signs thus far that two things will happen regardless of who gets the White House:
1) Taxes will be going up from the federal level to the state level. Bond investors want to see government live up to their promise that they can tax their citizens more before they will pony up for proceeds from bond sales.
2) Paulson's Plan will be dismantled by Mar 2009. Politicians have clearly underestimated the extreme unhappiness with this latest plan. A repeal relies on a democratic house and senate, now inevitable with the Paulson Plan in place.
Taxes need to be slashed, from personal and corporate income taxes to capital gains taxes along with government spending across the board, the best least painful remedy in a rapidly slowing economy, but that will not happen in any case.
Once credit markets get freed with the Paulson Plan inflation will skyrocket for one very good reason:
There are too many players in FIRE. The field should be reduced. But bailouts don't work as market solutions, and in this case will delay recovery. Too many players are offering too many financial products to too few customers.
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