[Rhodes22-list] Economics More good news

[David Culp]

Warren:

Here's a stab at your good questions:

1.  Why don't Americans absorb the national debt themselves?  Answer:  When
you spread the national debt over the number of people who actually have the
disposable income to pay it off, it becomes a much larger number then the
per capita figure we see get thrown around in the media.  Secondly, it is
better for the economy (less painful) to spread payments over a long period
of time then to have to write the check on the spot.  In other words, we
couldn't have the records being set on Wall Street as they are at the
present time, if we had to write a check every month for the Iraq war.
Taxes would have to go up and that would reduce consumer spending and if you
even mention that consumers might start spending less you will see very
quickly what happens to all those records.  They become distant memories.
So some borrowing to act like a shock absorber in war time for instance is a
good thing.  On the other hand, if you bailed the government out on the
national debt it wouldn't do any good without a balanced budget amendment
and you can't get many politicians from either party to go for that.
Another Warren, last name Buffet says that if we Americans continue our
present practice of spending more then we have, we are going to end up as
mere sharecroppers.  Last I heard, people seem to think that he's a pretty
smart fellow, but I don't think anyone is listening-republican or democrat.

2.  Why do so many Americans look for ways to spend money to save on taxes?
The simple answer is rationalization or a way for the means to justify the
end result.  We Americans want things.  We love to buy.  When you go to shop
for a house, you are told to buy the most house you can, even a little more
then you can afford.  Everyone takes this to be the gospel truth  Are these
Realtors and lenders really looking out for you?  I doubt it.  Americans
love to use credit cards.  We are told to spend, spend, spend and when we
reach our credit limit, we either get the limit raised or get an additional
card.  Yes, just rationalization.  I've never met an alcoholic who thought
he had a problem with drinking and suspect its the same with the American
consumer with regard to spending.  A better question might be, " Why are you
Warren, the American taxpayer subsidizing my house"?  Can't I afford to pay
for it on my own?  The same holds true for me, why am I subsidizing you?
Can't you afford the house you're in?   Joe the Ragman over here rents, he's
really mad!   Why should he have to subsidize either one of us?  The reason
is that the politicians have been convinced by the Realtors lobby that if we
don't have subsidized housing, that you and I won't have the money to go to
Home Depot to buy improvements, jacking up their revenues which will send
their stock higher, make everyone feel happy, who turn will buy bigger
houses and more stock setting new records.  This is a fun cycle until the
music stops....

David Culp




Brad,

Why is so much of the national debt held by China and why does the
Federal Government allow this to happen? (honest question, I don't
know).

You mentioned in a previous post yesterday the apparent good economic
news and rise of the S&P and workers 401k's.  Yes, I checked mine this
morning and all of the funds I am investing in are at record highs as
well as many of the individual companies I am invested in - I love it!
(for today): (maybe, as the current funds going into these funds are
purchasing fewer shares).

(I'll pause for L.Sailor (Elle) - Do I use too much punctuation?)

However, I remain concerned that because of political and terrorism
issues, the growth of the market is not sustainable.  I am young enough
(though not necessarily young, 47 with 20 or so years to retirement
(maybe them I can purchase a Rhodes 22)) that I feel that my 401k
retirement account can bridge more than one more significant market
corrections due to (political/terrorism/Mr. Market/ whatever).

I know I am rambling but my primary question (not necessarily to you but
to the list) is, why don't Americans absorb the national debt ourselves
rather than allow it to go to other countries?  Aren't we the wealthiest
nation the world?  I think that the simple answer is the lack of
confidence in the administrations, whether it was Bush, Clinton, Bush or
however far back you want to go, and a thought that the stock market
(whether American or International) will provide a better return, which
is probably (no definitely) true.

I my opinion, the typical American individual and companies view that a
potential lower overall return of investment in the United States of
America (via Saving Bonds or Treasury Bills), is super ceded by the
perception of a potential additional rate of return by investing in the
markets.  In short, I think that greed rules over national pride and
provision of national security.

Simi related question - Why do so many Americans look for ways to spend
money to save on taxes?  I know people who have effectively blown
thousands of dollars to keep from paying a couple of hundred in Federal
taxes?  (I do understand that it is potentially better for the overall
economy).

Sorry for the long rant, I've got work to do and I can't go sailing as
Rummy has my boat.  How is the boat Rummy?

Warren Foy