What can we do to turn around an economic downturn?

March 18, 2008

Below, Clip from Bloomberg News (November, 2007): David Tice, Fund Manager for Prudent Bear Fund said stock market would decline 50-60%.

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Next Steps

Over here in Europe, economies seem to be responding positively to a flat income tax. That’s the official story. We are told that when corporate profits are unburdened by heavy taxes, the money goes into things like employment, consumption and investment in innovation. In other words, the money keeps moving.

Russia went to a 13 percent flat tax on personal income in 2001 and some economists claim this facilitated the recovery of Russia’s economy without the help of the oil boom. Slovakia was the first to adopt a 19 percent flat tax on corporate and personal income. Romania followed with a 16 percent flat tax on corporate profit and personal income.

In the United States, the Republican and Democrat parties have not made any serious commitment to the concept of flat taxes. Jerry Brown (D) and Steve Forbes (R) were among the only presidential candidates (1992 campaigns) to forcefully advocate such a sweeping tax policy change. Generally speaking, Democrats and Republican seem to be stuck in a way of federal spending that only allows them to think about slightly raising and slightly lowering taxes.

The problem remains, however. How do we support and encourage small and medium size business start ups and growth in order to get the money moving again in now-vulnerable middle class circles? Getting American money moving again in the right places is one factor among several that are needed to turn around a global economic downturn.

Below, background noise for reading: David Gahan (of Depeche Mode), Kingdom:

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2009: Cribs foreclosed upon and Europe sulking

March 8, 2008

Five cents won’t even buy you a spoken paragraph of no particular value in Bablion. So consider yourself lucky that you found me…

What comes around, goes around. I imagine that as European confidence swelled over the over-valuation of the Euro and the falling of the dollar, Europeans seemed to forget two things: they had huge investments in the US credit markets and Americans were outrageous consumers when the Dollar was stronger. If you don’t believe me- just take a look at MTV’s reality television show, Cribs, about typically overly-decorated and super-sized, celebrity homes. Perhaps, Jon Stuart can follow up on the MTV hit with Cribs in Foreclosure soon.

The alpha Bush and a little humor from the Simpsons (below).

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A Brief History

The Great Depression is said to have begun on Black Tuesday, October 29, 1929 (a.k.a The Wall Street Crash of 1929) when over-valued share prices on the New York Stock Exchange collapsed and began what would be a month long fall in which the Dow Jones Industrial Average (DJIA) was down 182.57 from the booming speculative highs of 1929. The Great Depression is associated with a grinding slow down of international trade, manufacturing and construction. Personal incomes, tax revenues, prices and profits fell as unemployment, social uneasiness, and fear gathered momentum. It is also associated with private mortgage debts, commercial business debts and a great inequality between the rich and consumers.

The stage for World War II was set into action.
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Filantropica and Business in Bucharest

February 10, 2008

Five cent tour for Patsaks:

Youtube link and my take on the award-winning Romanian film, Filantropica (2002), directed and written by Nae Caranfil. If you ever thought to do any kind of business or investment in Romania, watch this movie three times.

On the radar, G7 leaders, bankers and statesmen try to find the right words for their concerns about a global recession. Problems in the U.S. property market do not just hit home; the impact is global.

Perhaps, a reason for some to think about making their investments in a low cost labor market such as Romania.
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