The worldly philosophers tried to tell us how a country should be organized. History proved them wrong – from Plato to Marx. Why? Because there is no solution. Government, wealth producers, and the rest of us struggle to gain wealth and power. When one group becomes the dominant player, crises erupt.
This is the time when economic growth stagnates and the country becomes restless. “Greek anger rises over austerity program”, Bloomberg reports. In other countries, “general” strikes are part of the political landscape. Governments give generously. The bondholders, however, need to be paid. But countries fail to generate the wealth needed to pay the coupon.
Taxes and austerity programs are initiated. Much of the generous benefits have to be paid back through a sleuth of myriads of new taxes. Purchasing power declines, generating discontent. This is the time when people revolt. Sometimes in a peaceful way. Other times violently.
In the US, we are different. More civilized. We have tea parties. But the meaning and implications are the same. It is a revolt. A complaint against the loss of purchasing power. Against the favored groups of society. The “tea party” is spreading around the country. It is a civilized way of telling Washington that something is deeply wrong.
Mr. Clinton took a jab at these groups rallying against taxes, big government, and government overspending. The fact that Mr. Clinton mentioned them in his speech means that the politicians are taking this development seriously.
What is confusing is that first we demand social security, Medicare, Medicaid, housing and borrowing subsidies, student loans, bailouts of car manufacturing, the financial system and unions, subsidies for education and lofty pensions for municipal workers, teachers, and union members.
Then we protest because the government is overspending. And the nonsensical fight for wealth and power continues until the markets identify the winners and the losers.
(This Observations appeared in the issue of The Peter Dag Portfoliio of 4/25/10)
George Dagnino, PhD
Editor, The Peter Dag Portfolio. Since 1977
Ranked Top Market Timer in 2009 and 2010 by Timer Digest
To find out more about my in depth views of the markets and my strategy just visit our website https://www.peterdag.com/ where you can subscribe to The Peter Dag Portfolio. You can also call me at 1-800-833-2782 to discuss your specific investment portfolio.
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News. More than half of the companies in the Standard & Poor's 500 have reported quarterly earnings, 304, and 75% of them have beaten earnings estimates. Meanwhile, 63% have beaten revenue forecasts, Thomson Reuters says.
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