Published 4:04 pm Tuesday, April 28, 2009
High leverage is a dangerous basic economic fact that Congress and Obamanomics choose to ignore.
Example, -if a spectator buys a share of stock and the brokerage firm only required him to put up 10 percent cash and the stock goes down 10 percent, the spectator lost 100 percent of his capital.
This is what happened to unregulated banks and other institutions when they broke a basic, sound economic principle. They were over leveraged, and we the people are having to pay the price.
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Barney Frank and Company, better known as Congress, mandated unregulated banks and other institutions such as Freddie Mac, Fannie Mae, Washington Mutual and AIG to make stupid (sub-prime) 100 percent loans that were losses waiting to happen.
In the last 90 days Congress and Obamanomics have compounded the problem of over leveraging. Congress is going to borrow (print) trillions to finance entitlements, pork and green so-called stimulus, which will not (I repeat) will not stimulate the economy. This is before fixing the bank-mortgage mess. Our grandchildren will pay the interest on this stupidity.
Obama is going to raise taxes on small businesses. If there is no profit there is no tax. Obama can raise taxes on individuals, but if they don’t have capital gain there is no tax. I understand income tax revenues are down 25 percent, because of lower profits.
Folks, if you think you have escaped tax increases, think again. If you have a savings account, CD or a money market account, your return is close to “0.” This is a hidden tax. You are being taxed to bail out institutions. Why? Greed by unregulated institutions and stupidity of Congress.
Capitalism, sound economic policies and profits create jobs, NOT socialism. I think the citizens of Decatur County understand when they look at the 12.7 percent unemployment numbers.
Uncontrolled spending has got to stop, but it’s not going to stop.
Batten down the hatches.
A concerned citizenJack H. Rich