What to Do ?

I was asked yesterday by a loquacious commentor what Barry - aka Obama - should do for a stimulus plan. As this writer is NOT a purist - pharisaic - libertarian, but favors maximum freedom for the common man with strong limits on the ruling classes, you should not be surprised that I favor a large stimulus bill, properly used.

Barry should propose a $1 trillion economic stimulus that would be spent over two years - $500 billion per year.

The money should go to the following productive investments:

1. Generalized infrastructure - roads, bridges, railroads, ports, airports, air traffic control, high speed rail between major cities within 300 miles of each other, nationwide fiber optic Internet, wireless Internet in major cities, etc.

2. Purchase foreclosed homes and rent them to lower income people under a rent-to-own contract as long as they maintain the home and actually live there for ten years. This contract could be assignable with consent of government with suitable anti-speculation rules.

Barry should also request massive global regulation on hedge funds and all aspects of global hot money. Investors in hedge funds should be required to invest for a minimum of three years - complete, strict lock-up. Hedge fund managers should be taxed on all management income as ordinary income. Of course, massive regulation of all derivatives should also be required.

Current dividend and capital gains tax rates should be kept, as they really just help lesson the double taxation of corporate income.

Also, I DO favor some kind of auto industry aid, however distasteful for that failed management and labor clique. When one buys a car, one expects the company will be around to provide service, parts, etc., and a re-sale on the trade in. An auto industry bankruptcy might seriously affect that perception with fearsome unintended consequences. In addition, the chain of bankruptcies throughout the supply chain can be enormous as payments are disrupted. This unknown is not needed now. For $25-$50 billion in aid, it's worth avoiding.

Congress wastes that much on worthless earmarks every year.

Markets

More tax loss selling is and will occur, but there do seem to be "real" nibblers buying these dips.

I have more tax loss selling to do. This is really saving me a lot of money. The timing difference between realized gains and unrealized losses can be substantial if one invests for a longer time period. I mostly re-invest in something else immediately, but do wait a bit for some, as I have other wash sale rules to carefully watch.

PS: Also, doe sanyone else notice how much of this trouble is now located in Europe ? I wonder when The Ostrich, aka ECB chief Trichet, will cut rates to a realistic level. ECB and Bank of Engalnd should cut rates to 1%.

Word of the Day

"Sadduce" - noun [$10] or "Sadducee" - this word contrasts "Pharisaic"
Sadduce means a member of a Jewish sect or party at the time of Christ that denied the resurrection of the dead, the existence of spirits, and the obligation of the traditional oral law.
Sentence: Perhaps Bunkerman is more like a sadducaic libertarian, as he opposes the strict pharisaic - purist - interpretation and favors practical limits on the rich and powerful to prevent them from oppressing the common man, re-creating an aristocracy and permitting their antics from harming the global economy. And he also denies the existence of the god or demigod of the "market" as correct interpreter or diviner of the future of the world.