What!!!!??????

So, for the last little while I have tried to create an argument as to why what is going on within our government makes sense and where it could be beneficial. I have still not agreed with a lot of it, but I have at least tried to look at things from their perspective. You know, tried to see both sides of the argument.

All of that was ruined this morning when I read in the Washington Post and on CNBC that our government is currently considering a VAT tax on top of the current (and proposed increases) income tax. Their reasoning? They need money to cover their spending on this recession and what they want to do with Government Health Care and other future spending. They actually even cited the fact that "many other countries are doing it." Really? Are you kidding me? We have been the number one country in the world for a long time in innovation, economic power and military strength and now suddenly we want to be more like other countries by making our inefficient government bigger?

Why on earth is the discussion not centering around slowing spending and cutting planned projects until we can afford them? Why isn't that even part of the discussion?!! Instead of thinking and operating responsibly and not spending money they don't have, they are spending like crazy and now want to tax everyone more to pay for it.

GGRRRRRRRRRRRRRRRAAAAAAAAAAAAAAAAAAAAHHHH!!!

Please join me in just getting rid of all incumbents this next election. Hopefully those currently in power will not have inflicted too irrepairable damage by then.

Destructive Deficit Spending

You know that when analysts and economists who have always tried to stay away from expressing their political viewpoints start commenting about how change needs to take place or the long-term economy will not be good.

Here is the commentary of one of my favorite CFAs regarding the deficits:

"In our analysis of the current market environment, we believe that the massive budget deficit has place the Fed in a "no win" situation, in which every path it takes leads to higher interest rates and associated with economic problems. Importantly we have only explored the consequences of the Fed simply stopping the printing presses; the Fed will encounter even more unpleasant choices when the time comes to reverse course, sell assets and drain the excess liquidity from the U.S. financial system. If we have not made progress on putting our fiscal house in order before than point, then the upward pressure on interest rates could become overwhelming.

"This does not mean that the U.S. is doomed to experience persistently high interest rate environment of the 1970s and early 1980s. The ultimate long-term solution to these problems, in our view, is for the 2010 mid-term elections to revolve around an intelligent, credible debate about the future course of government spending, taxation and debt levels. The American people could provide the next Congress with a clear mandate to restructure government priorities so as to be less dependent upon deficit financing. A credible deficit reduction plan would take tremendous pressure off the Fed and give it much more flexibility in crafting a monetary policy that boosts current economic growth while keeping long-term inflationary expecations low.

"Cynics who do not believe that Cogressional elections can affect such dramatic changes should remember the 1994 election, when Congress was granted a clear mandate to shift budget priorities and reduce the deficit. The fiscal changes negotiated between Congress and President Clinton after that election ultimately resulted in budget surpluses within a few years. Unfortunately for bond market bulls, this mandate for change was in part spurred by the painfully high mortgage rates experienced by American voter during 1994. The bond market vigilantes may have to return before budgetary change comes to Washington." - Rod Smyth of Riverfront Investment Group.

Yet another reason why I feel we should all push hard to get new people into Congress. No more of the current entrenched representatives.