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Today's Commentary: 08.18.04
The Flip Side of the Coin
For those that spend a good deal of your time strategizing your investments, these are trying times indeed. On one hand, there are rumors that this is a stock pickers market, a place of that is littered with as many discarded hopes as it is lit by glorified successes. For those of us who do not take an extraordinary amount of time positioning ourselves for each short term bump preferring instead, the long term grind of riding out the down markets in the belief that you will benefit ultimately and righteously, these are trying times for you as well.
In spite of some gains in the last several days, these markets are acting in a sporadic and worrisome manner. And with good reason. The oft sought messages from the nation's economic leaders have been, at best, confusing. And if it is difficult to comprehend for you, imagine the turmoil those worry warts on Wall Street must suffer.
The current economic course this country is on seems bent on self-destruction while the administration steers us toward that day of reckoning with unproven policies of growth through tax cuts and business friendly regulation.
Those tax cuts are now being questioned by the very cheerleaders that supported them originally. Mr. Bush hailed his massive swing from Clinton era surpluses to deficits as the solution that would create jobs and in doing so, create a new tax base. That so far has not happened. Instead, the Fed, who conveniently washed their hands of the widening trade deficit, found the current obligation that the U.S. has with its debtors, now at $500 billion and growing, "not necessarily imminent" in term of needing adjustment.
The effect of those deficits ultimately will ripple far and wide finding its was into your wallet. How could something as distant as our administration's economic foibles have any direct repercussions on the average person? It turns out that the answer to that question is quite simple to understand. As those deficits grow, their effect on the dollar makes our goods too expensive. The trade deficit, as reported on Friday has grown to its widest level, and while that $55 billion plus is in part due to oil prices, what cannot be ignored is the repercussive slow down in Europe and Japan. No growth overseas translates into a lackluster market for our goods.
Meanwhile, even as we are distracted by these lousy economic indicators, an election on the horizon, and an economic storm whose potential destruction will extend itself to your children, the administration is continuing its efforts to make the U.S. of A. a more accommodating place to do business. While the current wave of back room deregulation may benefit shareholders, last time I checked, those shareholders were also consumers.
Regulations on industries are in place to keep businesses honest in their dealing with the public. They do however have an impact on profits and as the President has shown in previous dealings with business, he is on their side. The Bush administration has charged businesses during his tenure with less than $1.6 billion collected in fines. Previous administrations have levied charges in excess of $7 billion a year on average dating back to Reagan administration.
Often these changes in regulations directly effect the safety of the consumers who purchase these products. Protecting the American public through regulation and not law has worked to keep private business from seeking profits above safety.
Since January of 2002, the President has reached out to deregulate industries that touch every American is some fashion while enabling businesses to sidestep safety. From easing wetland regulations and medical privacy standards, to opening up mining and forest lands, to lowering labeling standards on tire pressure inflation warnings and mercury, the President has shown that the here and now are at the center of his economic policies.
And while the here and now might be all that short term traders think about, it is not what is in the best interest of investors as a whole.
In our next column we will take a look at the economic plans the two candidates have chosen.
The Blue Money Report
Financial Commentary covering a wide range of topics concerning money, investing, and how it effects the average investor and their financial health.
It is the World of Money and Investing Explained.
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