I don’t consider myself a financial planner, a master strategist, a tax expert, or an oracle. If you toggle back to my entries of 5-18-08, 9-23-08, and 10-11-08 you will see I have been divesting of equities all year. Yesterday, I finished the job. I have almost zero dollars invested in equities. Next, I am trying to make sure I pay zero taxes in 2009. Why? I want my rebate checks.
Seriously, our government is going to borrow nearly a trillion dollars in the next 20 weeks. This money will be used for two big stimulus plans. The first will give a January tax rebate to those who don’t pay taxes in this calendar year. The second will go to new jobs. While the private sector lost a near record number of jobs last month and unemployment is at a 14 year high, the government grew 20,000 new jobs last month.
As an American and a patriot, I want to do my share. So, I will invest in municipal bonds. This will help cities in states other than California, New York, and Michigan keep up their services while their tax base shrinks. The states excluded are not good risks. Giving it to cities as an investment is better than giving it to the federal government as taxes, plus it’s a 10% after tax return.
California and New York are coming to America and some of us have the option of rejecting the idea in ways that go beyond voting. If you believe giving money to people who don’t pay taxes will turn this economy around, stay in the stock market or even buy more stock. If you believe increasing labor union participation in business is good for business, buy stock. If you believe we won’t have $140 a barrel oil in the next few years, stay in the market. Production is shrinking and we aren’t going to do anything to help ourselves, so invest in GM. If you believe the biggest tax in the history of America in the form of cap and trade is going to be good for business, buy stock. If you believe Governor Jennifer Granholm from Michigan should be on President elect Obama’s economic team, buy as much stock as you can buy. If you fear the whole country will go broke following the California and New York economic models, get the hell out and watch it happen.
Social reform has never worked anywhere in the world. The government can never take enough away from those who succeed to give enough to those who don’t try. We are going to try it here again, and from my perspective, I will wait until we stop trying it before I try to make money by investing in U.S. corporations who will be stymied by a hostile business climate.
