OK, I have some business experience, my wife buys and sells stock. We have also ran our own business. There are billions of dollars sitting on the sideline right now that have been pulled from the stock market. Companies use stock to pay off debt, expand, and spend to improve their market share. My company's stock right now is worth $24. It was about $80 last summer. My company can use this extra capital to expand (it is a utility), go into and service areas not served, buy new equipment, vehicles, office space, computers, desks, chairs, etc. It cannot do that with a low market value. It doesn't matter how much money the banks have to loan, they will only loan money to companies based on their value (outstanding stock and value of stock). People who make money off stock, 401(k) plans, IRA's, and just plain rich investors, have to pay capital gains taxes on the increasing value of their stocks when they pull some out for personal use. If you had a capital gains tax cut, people would go back to investing in the stock market, companies would be worth more, thus increasing their credit value if they borrow to expand or grow, thus putting people to work, making money and spending this money. So, when the stock market rebounds, it takes about 6 months for the expansion of the markets to trickle down to jobs, and spending. Face it corporations spend way more money than individuals, so when they spend, the economy expands with jobs, and more spending. If Wal-mart has a higher valued stock, they can expand into areas they are not in, expand their distribution network, put truckers to work, commercial building, thus people who have these jobs, buys cars and homes and appliances, etc. Bottom up spending like Obama wants will not stimulate the economy. Poor don't have enough money to buy big ticket items. They buy food, clothes, maybe a used car, maybe a mobile home or small home, can't expand much their except at the expense of the middle class and rich. Large Corporations used to provide 80% of the jobs in America, it is probably 50% or less now. Small business provides most of the rest. If a small business owner makes over $250,000 under Obama's plan he is screwed, so he can't expand. Doctors, Lawyers, Plumbers, Electricians, are small business, and they now have limited growth because of excessive taxes. Tax cuts for corporations, capital gains, and business owners it the only way to get expansion of the economy, it was the only thing that worked in the past, and the only thing that will work now. My banker told us to refinance our mortgage now, because next year we are probably looking at 20% interest and high inflation for all the government spending. I told you guys earlier that the Dow would get to 5500 by the end of the year, and unemployment would reach 10% before the end of 2009. Looks like it is headed that way. We are headed for Jimmy Carter style "stagflation" High interests, high unemployment, and high inflation to pay back the goverment t-bills they issued to spend this money. China and the Arab countries own most of these T-bills. So the government really don't want us to stop buying from China, and oil from the Arabs. It is a catch 22. Only way to stop it is for the Feds to stop spending, and lower taxes. When Reagan took office the Feds were spending 34% of the total GNP, 10% unemployment, 18% interest, and high inflation. When he left office, it was 22% of GNP, about 6-1/2% unemployment, and single digit interset, and 3% inflation. Got even better in the 90's with Republican control of congress under Newt Gingrich. Balanced the budget, no inflation, and low interest.
