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| Re: Dems ready to push USA off ''fiscal cliff'' over tax increases (959545) | |||
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Re: Dems ready to push USA off ''fiscal cliff'' over tax increases |
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Posted by ClearAspect on Mon Jul 16 15:49:32 2012, in response to Re: Dems ready to push USA off ''fiscal cliff'' over tax increases, posted by Mitch45 on Mon Jul 16 14:43:21 2012. Incorrect! You neglect to react that since the deficit was decreasing the interest rate was kept low naturally thanks to that strength in the confidence of the US, rather than artificially as it is now and since the Bush Era. What rocked the stocks was not primarily the internet bubble busting but the 9/11 attacks and the subsequent investigations and lies i.e. Enron, Tyco, etc. It also lost about 1/3 of its value, similar to what happened in the late 80s with that crash. However when you raise taxes, and force cuts, you start decreasing the deficit the interest rate will lower and stocks will stay strong as investors are confident in the governments ability to handle its money. Technically a government is never supposed to run in the black, its supposed to have a 0 balance at the end of the day, neither a surplus nor a deficit but thats perfect world. What is interesting though if you look at the way the Dow Jones has performed since 2000 it strikes an eerie similarity to how the Dow Jones performed during the Reagan - Bush I era. If the Dow Jones repeats history then the down will have a small crash to the area of around 10000 later during this year or the beginning of 2013 then rebound rather quickly. Whether the dow will regain that 14000 realm it had before the crash remains to be seen. What should be noted however is that since the crash of 2007/8 the dow jones has had a near 100% recovery. If you look at the 1987 crash it took really until 1992 to get back to normal in the stocks.So while taxes and cuts may seem bad at first and may be hard to absorb initially, it shows that governments are serious about tackling issues and that makes investors turn into bulls as it builds confidence. Investors don't like squabbled governments, we learned that from Europe and as Congress and the president grabbled over the debt. Raising taxes and cuts are the only solution to getting out of debt as either raising taxes alone or cuts alone doesn't solve the problem. The US needs to cut its debt in half in 15 years or less if it does not, then this country is in trouble. |
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