Friday, October 16, 2009

American VAT tax coming...

"This Center for Freedom and Prosperity Foundation video explains why a value-added tax would be a dangerous money machine for big government. The evidence from Europe also shows that VATs actually lead to higher income taxes."

I spotted this on Sam's "Prima Panama" blog today and I have periodically shared videos from this same group before on this blog. It just strikes me as absurd that with the current loss of jobs and continually stressed economy that the USA government can add on top of everything else a VAT. When are the voters/citizens going to say ENOUGH! and demand downsizing and balancing of budgets? How many companies and high income citizens need to leave their own country leaving a productive vacuum in their wake before America wakes up to the reality of its dilemma and potential demise.

The DOW is up and America is rejoicing as far as I can tell from watching CNN and FOX this past week. DOW gets past 10,000...whoopee! The dollar continues to fall to all new lows against many currencies and gold and precious metals are at now highs. What does that tell even the most casual economic bystander? What indicators are driving the market?

I'll place my bets on Nouriel Roubini's perspective over the USA media's spin he states in today's blog and article at BBC News...

By Michelle Fleury

Business reporter, BBC News, New York

The US economist widely credited with having predicted the financial crisis has warned we are already "planting the seeds of the next crisis".

Nouriel Roubini told the BBC that he is concerned about the growing gap between the "bubbly and frothy" stock markets and the real economy.

Over the last six months, the Dow Jones Industrial Average has risen about 45%.

But Mr Roubini says he sees an economy where consumers are "shopped out" and "debt burdened".

'Crisis not over'

Based on the run up in share prices in recent months, investors appear to be betting that good times are around the corner. A view not shared by Mr Roubini.

"The crisis is not yet over," the New York University professor said.

"I see an economy where the consumers are shopped out, debt burdened, they have to cut back consumption and save more.

"The financial system is damaged... and for the corporate sector I don't see a lot of capital spending because there is a glut of capacity."

Mr Roubini believes US house prices have further to fall, straining America's fragile recovery.

'Frothy markets'

Property prices have already declined sharply. According to the National Association of Realtors, the national median has dropped almost 13% from a year ago to $177,700 (£110,100).

Many believe the crises in the residential market could spread to the commercial real estate market causing more headaches for the banks.

So where does the "froth" in the markets come from?

Mr Roubini - like many other economists - believes it is engineered by the Federal Reserve and the government which has been pumping cash into the economy to dampen the pain of the recession.

"There is a wall of liquidity chasing assets," he said. "But I think that there is a growing gap between what is the asset prices and the real economy."

Although he thinks there will be a correction, he believes some of the mistakes of the past can be avoided if reforms are implemented .

I continue to be totally baffled and amazed at the ludicrous controls and spins the Federal Reserve and government are placing on the markets. We are quickly getting to the point of no return on runaway inflation, runaway taxation and big government, and for sure only a revolution in American's thinking and actions will be able to restore it to its former greatness.

What used to be "God bless the USA" is quickly turning into the prayer "God HELP the USA"...

1 comment:

Bibiana said...

Hmmm, asunto complicado este del dolar, yo que estoy en Colombia, guardando unos dolares para cambiar, por que cada dia este baja mas y mas.

Que malo depender de esta moneda para tantas cosas.

Yo diria que Dios nos ayude a todos.