How the Toxic Asset Plan Helps Me

Well, the new plan is out. The goverment will buy up toxic assets from troubled banks. After doing this they will sell them at discounted prices in an auction format. How will this toxic asset plan help me and you? It's quite simple.

The new plan will be put into motion with tax payers dollars, so all Americans will be paying for the solution (However the tax might not be as big as we all think, since these bad assets still have good value). You won't see any immediate effects, but it certainly will help the banks. I know, I know. This isn't what you want to hear. However, the way I see it is that it really is the only solution. We will all see results in the future. It will be easier to obtain loans. We will be able to get mortgages at lower rates. We will be able to refinance our mortgages at lower rates. Entrepreneurs will find it easier to obtain business loans at low interest rates.

With the increase in loans being made, the country becomes more productive. The Stock market will increase, there will be more jobs, and real estate values will start to inch their ways back up.

The negatives of this plan?
- Increase in taxes (pehaps only a small amount).
- Increase in inflation as the economy begins to pick up.

All in all, I feel this is a good move on the part of the government that should and will work.

When Fear Reaches it's Highest Point, Invest

I truly believe that when the nation is the most fearful, is when the economy (particularly the stock market) will begin to turn around. When everyone feels one way about the economy, you should try and feel the opposite of the trend.

The latest poll shows that 45% of people believe that the economy will fall into a depression. Come on. Do we still believe that this economy that has seen the DOW increase 6 of the past 8 days is going to fall into a depression? This same economy that has seen new building of homes increase 22% in the last month. People on Talkgold.com are all saying how terrible they think the economy will continue to be for years to come (Thoughts on Economy). We aren't falling into a depression. The economy is just about to start a recovery if it hasn't already.

If you recall, right before the housing collapse, the majority of the experts were saying that the housing boom will continue. People were still buying houses, stock etc. Employers were hiring like crazy to expand their businesses. Then BOOM! It all changed.

The same thing will happen with the turn around this current economic situation. It will turn around while experts and the general consensus of the economy is still negative. You watch and see.

Just a little bit of my input.

Higher Taxes for Wealthy is Not Democracy

America.

Home of the free? Yes.

Home of the brave? Yes.  

Home of Democracy? Not really

Here's why.  Democracy was created to allow people to try and achieve the American Dream.  Democracy should mean that no matter how successful you become, you should not have to pay a larger percentage of taxes then anyone else.  Democracy is supposed to encourage entrepreneurship, not discourage it.  Obama's new ideas of taxing the richer people in the United States at a higher percentage then the middle and lower classes is surely not democracy.  

If John makes $50,000 a year, he should pay the same percentage of his income to Uncle Sam as Todd who makes $300,000 a year.  Why should he pay a higher percentage?  At a 15% income tax, John would be paying $7500, while Todd would have to hand over $45,000 to the IRS.  Why should Todd have to pay a higher percentage when he already is paying a huge amount more every year?  This is against everything that democracy stands for.  Whether you are rich or poor you should still have to hand over the same percentage of income as one another, unless you are below the poverty line.  Why should we punish those Americans who have worked their butts off educating themselves, just to help those who were lazy and had no desire to make anything of themselves?  Sure, there are those of you who will say that the rich are rich simply because they have had greater means of educating themselves.  This is true in many cases.  However it is totally false in the majority of cases.  

There are solutions to raising tax revenue without taxing the rich's income.  It is called "Sales Tax".  Currently the national average sales tax is around 6%.  If we raised this amount to 23%, we could effectively eliminate income taxes all together.  This would in turn put a greater tax burden on the rich who spend more money, and reduce the burden on the poor who have less to spend.  This would be a solution, but is it a practical one?

Sales taxes to replace income taxes is of great debate among polititians today.  On the Political side of things, it seems all fine and dandy.  However on the economic side, it has the potential to be a huge disaster.  Once you stop taxing income and only taxing the purchase of goods and services, the amount of spending nationwide should see a large decrease.  With the large decrease in spending, there comes a large increase in savings.  This would harm the economy especially in a time of recession.  

There are economies in this world that have achieved eliminating income taxes in favor of a larger sales tax.  It can work, but are the politicians and economist in Washington smart enough to make it work?  Probably not.