Aftershock Economy After Obama Election Victory


Aftershock Economy More Likely with Obama Election Win

The economic debacle Wiedemer predicts appears to be a virtual certainty now.  Why?

In less than 4 years total Fed Gov debt has increased from $10.6 Trillion to $16.2 Trillion and may reach $19.5 by Dec 2014.  Obama has no credible economic growth plan to increase Treasury revenues and has been increasing spending to near 25% of GDP.  Romney would have slowed spending and increase Treasury revenues, in large part with his aggressive natural gas, oil, coal drilling plans.  The odds of economic debacle would still have been quite high but nowhere high as they are now.

The risk is a dollar collapse with foreign creditors balking at financing our debt.  Our creditors will then impose a debt restructuring plan including severe entitlement, welfare, and unnecessary Fed programs and Depts such as Energy, Education, HUD, and money loosing entities such as AmTrack , Post Office, and Freddie Mac / Fannie Mae.   In sum , cuts that would largely be political suicide will be forced on us.  Intense riots such as those in Europe now would occur here.

*** Therefore, we must do all we can to lower entitlement and welfare expectations now to cushion the impact we feel with this economic debacle.  That will then speed up our recovery from this so that we can enter a new age of prosperity, not hindered by the largesse of our Nanny State.  Wiedemer points out that genuine long term economic growth is only possible via strong and continuous productivity.

What can we do?

  1. Accept the fact that at present the US does not have the prerequisites for traditional capitalism.  This must be grasped by all.  The expertise and motivation for free market capitalism, its risk taking, entrepreneurship has been in decline and accelerated over the past few years.  This is a reality and a message from the election.  Do not fight this.  Over the next year or two when your industry comes under greater Gov control do not reject it.  Rather kindly suggest ways to streamline common sense solutions to the goals of the regulations.
  2. Encourage all politicians to compromise with regard to the debt.  Accept modest increases to taxes on the most wealthy.  35% to 39.6% is not devastating and I do not think it will significantly decrease entrepreneurial activity. Agree to tax increases only with real cuts that can be verified.  These should include some l Dept cuts mentioned above.
  3. Encourage all politicians to start modest alterations to entitlements, perhaps slowing their growth, or freeze them at 0% growth for 2 years; increase SS age to 68 in 1 year then to 69.  Above all lower entitlement expectations.  This will make response and recovery to a Wiedemer economy much more productive.

References pertaining to Wiedemer’s AfterShock Economy include book reviews:

https://economics501.wordpress.com/category/aftershock-economy/

Follow me — Twitter @Economics501

Nov 7, 2012

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About economics501

1 - free market Capitalist; 2 - Fitness Entrepreneur; 56 years old, VP at an Investment Bank in NYC, ex Venture Capitalist, happily married with 2 girls. Education: Rutgers and NYU. I allow Ted Hruzd, my friend to blog at will here. He has many posts here. I have known Ted since we were both students at NYU. Ted also works for an Investment Bank as a VP in Equity Global Markets. ------------------------- I was very very Socialist leaning as a 22 year old. I then strongly believed in Gov role in helping the poor. However, as a USDA Child Nutrition Programs, I personally accounted for millions of fraud, abuse, and waste of tax payer money. I came to believe that the poor would be best served with less Gov programs and more with direct aid via tax system. Then after 5 years I became a free market capitalist, was a venture capitalist in 2007 and helped start 2 high tech companies. I dedicate this site to champion free market capitalism as the best road to Prosperity. Please join in. If you disagree, fine, but please post with dignity and class and be civil. Argue with facts always.
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5 Responses to Aftershock Economy After Obama Election Victory

  1. Craig says:

    Your recommendations seem very reasonable. Thanks for your reviews and edits of Wiedemer’s writings. Interesting bio line as well. Thanks for your series of excellent posts.

  2. Tom Naiberg says:

    wrong Fight all gov control with everything we have. never stop fighting for freedom from gov control. We have a spending problem not a tax problem. Never ever punish financial success.Cut entitlements 50% until were we can afford it again.

    • economics501 says:

      I am for decreasing tax exemptions as most have little or no correlation to increasing economic growth. However I propose a tax rate decrease to make this move revenue neutral. Why? Taxable income is success and we should encourage more of it. So this revenue neutral plan will be so only in the short run maybe a year but then after that a long term measure to better grow the economy. Treasury revenues would then increase. The ultimate tax reform is the Fair Tax now in Congress as HR25. It should pass after this stop gap short term measure. Please refer to the tax reform link on my site.
      Thanks for your feedback.
      Economics501
      Follow me on @Twitter

    • economics501 says:

      For a few days after BO reelection I supported modest tax rate increase. But after a few days of being in post election stupor, I changed my pt of view. I wil post more about this soon.

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