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I'll disagree here. The bailout for the rich won't get extended. It'll be portrayed (rightfully) as increasing the deficit, so the Republicans backed themselves into a corner on this one.
I agree, no exytension of the tax cuts as Obama loses his base completely on this one. maybe they throw a few targeted credits back into the mix, or manage to vote to keep a few small measures, but the cuts expire. However I do not see this as the Republicans backing themselves into a corner, as study after study show tax cuts lead to increased spending, and tax increases lead to decreased spending. Maybe the cuts were "targeted towards the rich", but the rich have a funny way of stabilizing their income where possible, and "the poor" end up on the unstable end.
After November, it will be complete gridlock for legislation. If the Republicans take the house, there will be hearings on scandals, corruption... and meanwhile the economy will be sinking. I believe they will also bring us to the brink, and probably over the brink on several budgetary issues. Maybe preventing an extension of the National debt limit, preventing the passing of a budget... Lots and lots of crises after Nov.
Gridlock, yes. Brink, maybe... The Republicans got as drunk on spending as the Democrats used to get. Then they got their come-uppance. If they have tossed away the "deficits don't matter" kool-aid, I would expect them to hold the line on the budgets. But wat is the alternative, to keep "deeming passed" more and larger budgetary holes? Why do we have no budget now? Probably because if the real numbers came out, the Democrats would lose everything wholesale in November. Why else is the Budget Director saying adious? Who wants their name sullied like that? After Pelosi/Obama/Reid played the whole budgetary games on Republican spending excess, they went even further. If the Republicans do NOT get some fiscal discipline should they win, they will lose their fiscal base as wwell, and we could see the rise of a true third party. That could be better or worse, who knows.
As to investigations, well, the Democrats are always good at trotting those out and promising to do it to the Republicans, so should they expect any less? Frankly, in the last 1.5 years there has been plenty to investigate. How large spending bills like HC "reform"got put together would be nice, though all those Goldman Sux people running around the White House would look like juicy targets as well. Certainly ol' TurboTax(cheat)Tim Geither would be quite a prize, and if any Treasury official ever begged for a jail cell he does. But enough of that rant, realistically, the political gamesmanship of both parties is destroying the country.
No more stimulus, but I'm not sure there will be a rise in deficits. The Republicans shattered all records for use of the filibuster, and the new congress will not hesitate to filibuster any budget that increases the deficit. They probably will force a decrease in the deficit. If the Democrats hold on to the Senate, what happens in the economy could be greatly influenced by a Democratic attempt to change the rules of the filibuster.
I agree, more filibusters. But don't be so quick to sling mud at the Republicans when you seem to side with a party that passed massive spending bills like The Porkulus Project and HC "reform" without even bothering to read them. I don;t defend the Republicans, but you tread WAY to soft on the party in power. Their excesses in power shand on their own as well, especially the first ever budget deemed passed.
Now that brings up the FED's ability to implement QEII. The states and municipalities won't be able to supply (won't have the will), enough bonds to allow the FED to create much new money. And we know the deficits the Federal Gov is currently running isn't enough to stimulate the economy, and if the congress won't allow the Federal Gov to run bigger deficits, how can the FED do much QE? Bernanke is going to have to get VERY creative if he wants to pump more dollars into the economy.
I believe there are still ways the Fed will "pump & dump" money intot he economy, especially when we cannot get a full and honest audit of them. Currency swaps, no interest on deposits at the Fed, (even charge for money at the Fed?), more hidden QE thru free money to banks that buy Treasuries, and on and on. All that money is gonna be lookin for a home somewhere...
I think we're 6 months to 1 year from becoming an official 3rd world country. I agree with C1ue that a big drop in the standard of living has already come to many Americans, and many more about to share the experience.
Fully agree. I have a friend in Argentina. He makes a bit better than the avge Argentine. His pay -- $24k/yr. But everything that is "of value" like real estate is priced in dollars, and mostly at numbers he cannot afford. Hos wife probably makes close to the same as him. If they want an apartment (to buy), they need to pretty much save it all up, as there is little lending in the country. The banks are worthles, and no one with any sense keeps money there, they all send it to Uruguay. Which, BTW, Uruguay has a similar standard of living for most as a middle class Argentine, though I fail to see how as their export economy is all grain, cattle, lumber, rice. They don;t make much. 10% of their economy is profits from the banking sector. But I digress. The wealthy in that part of the world sink their money into real estate and farmland. In Argentina no one trusts the currency, in Uruguay no one has much money. In both cases though, land becomes the "bank" that preserves wealth that can be passed down to further generations. Makes me wonder how "productive" land like farmland will fare hefre in the US... I have already noted I have invested in some farmland in Uruguay to date.
As far as protecting myself from becoming one of the unfortunate many, Oil and PM's until I see something that changes the above scenario. But I also believe that things are going to get so chaotic, that I don't think you can make an investment plan for years into the future. We'll have to be constantly watching for changing conditions (mostly political) and be prepared to shift if necessary.
I STILL don;t know what to buy -- literally. More famrland out of the US? More metals? more cash? Foreign bonds? (asked EJ on this one but never got the answer I was looking for -- you can get short term dollar denominated bonds out of South America that pay better than treasuries here). Anyway, I keep telling my wife I never though there would be a day when hanging on to what we have would be the hardest job I have ever had.