TCS Daily

Sticking Our Necks Out

By Jerry Bowyer - October 10, 2006 12:00 AM

In 2003 I decided to write a book. I had been writing a regular column for National Review Online about the economy and I wanted to take those columns (and some occasional pieces that I'd written for TCS) and re-work them into a broader argument. Before it had any pages, or a publisher, it had a name - The Bush Boom. I started to throw out some feelers. The publishers loved the title. A sarcastic book, excoriating President Bush for tanking the economy was greatly needed, they told me. Clever title, they twittered knowingly. When I told them that the title wasn't sarcastic; that the data showed that the economy really had started to boom, and that someone needed to tell the world, the conversation invariably and abruptly ended.

At that time, pessimism was the received wisdom. Every news story was a doom-and-gloomer. Democrats started using names like "Herbert Hoover" and words like "depression." But in May of 2003, the President signed a bill which accelerated the income tax cuts which had up until then been on slow phase-in as part of a political compromise with House Democrats. Leading indicators rebounded and as lagging indicator data began to trickle in it became clear to me that we were in the beginning of a boom.

Since 1999, I had been a talk show host. Because I'd worked most of my life either in economics or finance, my show focused largely on matters pertaining to wealth and finance. I'd been reading a lot of supply siders like Steve Forbes, Larry Kudlow, Jude Wanniski, Robert Mundell, Alan Meltzer, Kevin Hassett, James Glassman and Brian Wesbury. In fact, these men were frequent guests on my show. They also generously mentored and tutored me off-air. My show had basically become a forum for advanced one-on-one tutoring from the greatest economic minds in the world, with an audience listening in. I wasn't there to host a show; I was there to raise my game. These guys were optimistic, too. Bigger necks than mine were on the line.

Gut check time - did I really believe my analysis? I did. My wife and I discussed it, and we decided to bet on Bush and his tax cuts. We took out a second mortgage, basically putting our house on the line. If we turned out to be wrong, we were in big trouble. We used the money for two purposes: to save our fledgling and flagging TV production company and to launch a small supply-side publishing company. The Bush Boom would be its first title. The very week that the books first came rolling off the presses, the Commerce Department shocked the world by announcing that in the prior quarter, the economy had grown at slightly more than 7%. That astonishing number was later revised - upward. We also took my wife's 401(k) roll-over out of a money market fund and put it all in equities. The Dow that day was 7,950. As of this writing, it stands at 11,733.

Copies of the book eventually made it into the hands of Lynne Cheney. From there to her husband, and eventually to his boss. We didn't lose our house (in fact we got one about three times as large). We didn't lose our yard (in fact, we now have four acres). And we didn't lose our business (in fact, it now supports our family entirely). When the Dow set its record this week, It felt like more than just good news for the country. It felt like a personal triumph.

Jerry Bowyer is an economic advisor for Independent Portfolio Partners.



Phased in tax cuts
We have both experience and theory to tell us that phased in tax cuts are always a bad idea.
Future tax cuts always depress economic activity today. This is because anyone who can, holds off on economic activity so that they can earn income in that future, lower tax environment. The current tax cuts depress tax revenues, while the deffered tax cuts depress current activity, which also reduces current tax revenue. A double tax whammy that gives ammo to those who oppose all tax cuts for religious reasons.

Conversely, future tax cuts can increase current activity as people try to bring forward taxable activities in order to avoid the future taxes.

possible typo in your post that impacts your last statement?
You wrote "Conversely, future tax cuts can increase current activity as people try to bring forward taxable activities in order to avoid the future taxes."

Based on the logic of your post wouldn't it make more sense that future tax INCREASES would increase current tax receipts?

The Boom Years
Any time you inject several trillion unearned dollars into the economy you're going to have a boom. And once it comes time to pay all that borrowed money back you're going to have a bust. The absolute joy of the arrangement is that Bush will no longer be president when it comes time to pay up.

And the markets-- first housing and now stocks-- will be forced upward by that same activity. The huge amounts of untaxed money in circulation have to find a home. People flush with borrowed cash (in the form of their untaxed fortunes) bid up the price of everything, creating bubbles that one day must burst.

The only problem is that when the system pops, those trillions in paper wealth all disappear in a puff of smoke, instead of doing any real work. Had they gone instead into paying down the Debt they could have performed a lasting benefit. They could have kept our children out of repayment slavery.

The day Bush took office we owed our creditors $5.6 trillion. Now it's $8.55 trillion. What president wouldn't be considered responsible for boom times if he took three trillion dollars and tossed them all out in the streets? This is what we're doing by buying things we apparently don't have to pay for.

The next president will have the unpleasant task of having to pay for our party.

Other titles?
The Bush "boom" has carried the Dow all the way back to where it was when he took office -- remove the red line in the graph and this becomes clear. The "boom" has not helped the middle class -- the median income has risen less than inflation since 2001. The "boom" is not based on sound economics (as Roy also said) -- but on a giveaway of trillions (with a T) that Uncle Sam doesn't have.

Other titles to consider for future books:

"The Bush Victory in Iraq" how Bush and the neocons turned a country run by Al Qaeda into a thriving pluralistic peacful democracy.

"Bush the Uniter" How a gifted statesman narrowed political differences among his countrymen, making him the most popular President since Bill Clinton.

"The Management Revolution" How corporate executives used modern management techniques to turn a failing bureaucracy into a marvel of competence. Chapters include: "Getting intellegence right", "Disaster response", "Planning for post invasion insurgencies", and "the FBI software upgrade".

"Diplomacy and arms control" How a brilliant combination of behind the scenes deplomacy and credible threats of military action kept North Korea and Iran from developing nukes.

govt taking less of your money equals unearned income?????

liberal blindness
I guess the dot com bubble and the attack on the twin towers never happened in whatever world you inhabit?

I'm on board
...with the Bush Boom. I've been running my own small business for 20 years now and really struggled through the Clinton years -- living in a one room log cabin w/out running water and making do on after tax profits of $15,000 to $20,000 per year. With the Bush tax cuts and given the opportunity to enter the stock market at a low point (2003), I now own three properties, expanded my business ten-fold and contribute a hell of a lot more money to municipal, state, and federal coffers. I always had a good business model, I just needed the right, dynamic climate. This economy works for those who've invested in it.

getting credit
You love Bush with the love a doting parent gives a wayward kid (the love Bush himself must have got from his parents in his storied past). You make excuses for anything that goes wrong and pile on the praises when anything goes right.

Just for fun, why not do this for the other books I suggested. The intellegence failures were not his fault because the President doesn't run the country or because the evil Clinton put them up to it. The insurgency in Iraq was caused by Al Qaeda, etc. Let's have it.

Your data is biased
because the DJI index and corporate profits are calculated in the absence of the losses of bankrupt corporations. It is like gauging ones worth based only on income.

The composition of the DJI changes. Bankrupt of ill-performing companies are removed from the index only to be replaced with companies that are currently doing well. So it is a fantasy index. It only means something in Fairyland.

The historic DJI record means nothing because the composition of the index changes,

In any event, gauging economic health based on a banking instrument or corporate profits is ignorant of what the economy is really about.

Sorry that it took so long
for you to figure out how to run your business. Live and learn, I guess.

Congratulations on your stock market winnings. But you know what? It really is a crap shoot. It could just as easily gone south if you had invested in the wrong companies or mutual funds.

Another article by a rich person telling us how great the economy is because he is richer.

This isn't a Bush Boom, its a Bush Bubble.

We should save this article for the kids now around age 15 to 25, so in 5-10 years or so when taxes skyrocket to pay the credit bill for our booming economy, and they want to wring our necks, we can shown them this article and show what great things came from the "boom".

It doesn't matter
It really doesn't matter what he meant to say. It's all nonsense completely contradicted by the facts in evidence. Try reading the article, dumbass (Mark, not you, wjohnson).

no wonder you are so full of jealousy
You can't even figure out how to invest properly.

man, you do love to display your ignorance
While the makeup of the DJI is adjusted from time to time, it is not changed very often. Every time it is changed, the adjustment factor is also changed to keep the index constant.

The only thing here that means nothing, is your opinion.

this is interesting
The Clinton bubble, wasn't, but the Bush recovery is.

As always, you base everything on what will make the liberals look good.

Time to destroy some myths..
Myth One:

"The "boom" has not helped the middle class -- the median income has risen less than inflation since 2001."

Incomes have risen. It just has been that health care costs have been absorbing that which would otherwise end up in our pockets. Furthermore, I'd rather live in an economy with a high capital to labor ratio than in one without it. The current job market is blazing because of that. That helps ALL workers -- esp the ones who have been previously discouraged out of the labor market.

Myth Two:

"The "boom" is not based on sound economics (as Roy also said) -- but on a giveaway of trillions (with a T) that Uncle Sam doesn't have."

Letting people keep their own money that was theirs to begin with is not a 'giveaway' and is always sound economics in a free society. The fact that Uncle Sam doesn't have what is not 'rightfully his' (as you mistakenly believe it to be) is a good thing.

"We should save this article for the kids now around age 15 to 25, so in 5-10 years or so when taxes skyrocket to pay the credit bill for our booming economy"

Yeah, and that would be all Bush's fault? What about the fools taking out negative amortization mortgages to buy way too much house than they can afford - and thus driving up housing prices and fueling that bubble? Was that Bush's fault, too?
What about everyone buying gasoline, groceries and other basics of life on credit cards? Did Bush put a gun to their heads and force them to go into debt?
Future generations may or may not pay the piper as you seem to think. But if so, it won't be Bush's fault. It will be everyone's.

it won't be everyone's fault,
just those that voted for Bush.

I agree with you about the fools buying too much house than they can afford and running up credit card debt. Personal responsibility. Amen.

But I believe personal debt is different than government debt. We the people didn't borrow money from China to give to rich people, fight in Iraq and give to pharmaceutical and oil corporations. That was Bush that did that. So yes, it will be his fault.

Economic boom or credit bubble?
I'm not sure why these discussions devolve into a political wrangle, but I would just like to observe that it is unfortunate that Mr. Bowyer's economic mentors did not include Ludwig von Mises, Kurt Richebacher, Friedrich Hayek or others of the Austrian school. If he had understood these economists, he would know the deadly aftermath of credit bubbles.

Our current expansion is not fueled by current income or the pool of savings; it is being driven by an enormous extension of credit...and credit booms eventually end in tears.

Fiat money created out of thin air has flooded into our economy, and much of it has found its way into financial speculation and the consumption of consumer goods. I am not aware of any similar credit boom in history that ended well.

It grieves me to point this out, but I think the negative outcome is unavoidable--after the binge you get the hangover.

Weep for all those untaxed dollars goes Roy
Even Marx would be ashamed to make such a ridiculous comment. But Roy demonstrates that every dollar earned is not the property of the earner but rather in Roy's view of the state. Imagine the horror of the state allowing an individual to do as he pleased with his own money.

The horror, the horror.

Loved LG's "Sour Grapes and whines for every occassion"
By just about every measure that is relevant the middle class is ahead of where Clinton left us after he presided over the largest bust in history. More people are employed, at higher wages, owning their own homes than Clinton could have ever hoped for. What is crazy is that as LG evil twin Roy tells about the joys of increased taxation one wonders how the average worker benefits from the government reducing his net pay or killing jobs through higher corporate taxation. Worse are the Left's endless solutions that involve paying people who do not work more while making those who do work shoulder this additional burden.

The Left always likes to put their hands into someone's else's pockets.

paying for what you get
"Letting people keep their own money that was theirs to begin with is not a 'giveaway' and is always sound economics in a free society. The fact that Uncle Sam doesn't have what is not 'rightfully his' (as you mistakenly believe it to be) is a good thing."

OK, suppose your town wants a new bridge. In days gone by the town might raise the money through taxes then use the tax money to hire people to build the bridge. Then came bonds: build first, pay later.

Have reached the tax free utopia, build now pay never? Send soldiers to Iraq, borrow the money to pay them, then never repay? "It's your money, don't let the government steal it", that's a Republican fantasy. Maybe if Bush had paid attention in college he would know about the social contract that Americans are born into, not by choice.

Poor LG just going into full throttle Clinton mode
Now who'd ever blame Clinton for cutting our national security agencires in half during his administration or reducing the military by 50% and then attempting to smear him with the WTC? I mean Clinton made sure the FBI was fully occupied watching those evil right wing militias and abortion bombers, so why take it out on old Slick. I mean didn't he prove his resolve by firing hundreds of cruise missile before, during and after his impeachment at camels, aspirin factories, and date groves? Didn't he provide the most moral administration in history (that is if you ignore the individuals who were convicted, took the 5th, or just plain left the country). Didn't he prove he had won the support of the international community when the Chief of Staff of the PRC high command donated over 100,000 to his campaign?

And we all know we'd never be in the mess we are in Iraq if only Slick was in power, I mean look at what he did with North Korea. Today Saddam would have th4e bomb!

The visceral resentments and poisoned logic of those who have lost their moral compass and hate all that A,merica stands for is always evident in the Leftwing morlocks faith in the inerrancy of the latest talking points from Michael Moore or Cindy Sheehan.

A moron could invest in the SP 500 index and do four times better than the government will pay you for your social security. So if the stock market is a risk what is social security?

Tlak about economic illiteracy!
Ever heard of GM? Do you think they're making money today? Do you think their losses are counted? What an idiot.

Anyone who wbelieves that the bond market or currency values do not reflect the strength of the economy have demonstrated their education and intelligence. Mrolock boy get thee back to ECON 101. Better yet I have some swampland for you at a bargain price.

The Clinton bubble
Its amazing that Clinton had the advantage of the end of the cold war; the strong economy left him courtesy of the Reagan reforms and managed to run deficits as far as the eye could see till he lost the Congress and still managed to create the biggest crash in the post depression era. What a guy?

Booby tell us how much the Democrats reduced Government Debt 1932-1994
I mean they controlled the government so I guess they ran surpluses right? They never ran a balanced budget when they controlled the government since 1969 and ran up the debt that makes the GOP look like pikers. Perhaps this is why the Left always advocates more taxes and more government spending.

Tax them till they bleed LG goes
Such a shame the Left has never bothered to balance its budgets when it has the chance. It spoends and taxes like drunken sailors and why not since its all the state's money in commissars like LG minds eye. Have you ever seen the Left eliminate one government program? Have they ever advocatedmore effective government or accountability?

Hell no, we all know the Left believes in intentions not results.

Full of sh it and spewing it
I might have let this go, then came this line - "Bush the Uniter" How a gifted statesman narrowed political differences among his countrymen, making him the most popular President since Bill Clinton."

Bill Clinton never won a majority of the voters over in either election. I will to this day stipulate and stand by the fact that, had Clinton only had to run against Bush Sr., he would have lost 55%-43%. With Perot in the race you had a very conservative Independent running against a Republican conservative Democrat moderate. Gee, who do you think Perot stole 90% of his votes from?

Therefore, how can you consider him popular? Because he once had a job approval rating above 60%? Big deal!!

Look, there were things I liked about Clinton and more I didn't like; same with Bush Jr. But Clinton can only dream of a popularity anywhere near Reagan's.

Lunacy 101
So......Keeping your own money and spending/saving it as you see fit is the same of injecting trillion$ into the economy?????
Let me guess for whom you have voted in the past....NAH, the obvious is a waste of time!
By the way....if you're interested in trying to do anything approaching 'accounting' you might want to consider the ASSETS side of the ledger as well and then you may feel that the end is no quite so near.
American economic education leaves a lot to be desired if I consider your input as representative.

Dead On...

It is important when we see a clear business opportunity that we should do what it takes and do what we can to capitalize. It is terrific that you saw the upturn and understood that the recession was only a mild correction with the government responding quickly and correctly.

I still see lots of folks who believe that our economy is doing poorly and that the Republicans are at fault...Politics. And maybe it is time for some fresh faces in Washington...Congratulations on your business success!

Crap shoot??
You do not begin to understand the concept of risk.
In Vegas the house sets the odds in its favor and not in the gamblers favor.

That's why they have the $$$ to build those huge casinos!

The stock market, conversely, is a place which DOES NOT set the risk level against the 'may' payoff big to the lucky ones but there are proven risk adjusted methods of investing which over time have NEVER failed to produce positive results for the average equity investor. Show me an aggressive long-term 'player' in Vegas who's a winner and I'll show you the owner of the Casino!
The real risk vis-a-vis Wall Street is to NOT be invested in common stocks of good American companies over time!

The government can't make the economy strong...
The President gets all the credit good or bad. But the US Economy is not strong because the government is doing good things. If anything, our government is taking too much working capital out of the GDP and spending it on programs that create zero wealth and deliver mediocre social services. Weapon systems destroy productive resources, goods and materials. Even our soldiers live at the poverty level so they cannot contribute to the health of our consumer economy. All taxation is a drag if there is a better, faster and cheaper way to accomplish the outcome. (For example, the Japanese do not need to defend themselves, really, as long as we will do that for them. Their economy has problems, but a huge defense budget is not one of them. Of course, North Korea's foolishness could change all that.)

So the White House gets credit when things go well in spite of the government, not due to the government. The financial economy runs in cycles and financial mechanisms managed by financial institutions are far more influencial on economic health than anything positive the government could do. On the other hand, governments might do (and have done) bad things to damage an economy. Here and in other countries around the world. Nevertheless, our Economy is doing fine, at this point, and the prospect of an Administration coming in that will mess things up this next time around seems remote.

My vote will go to the folks who manage best. Real public servants (if any such people run...)

In time the sovereign might make himself moot by eliminating the possibility of (a successful) imperialistic war altogether and then financial globalization will do the rest.

LG and alternate realities
In LG's world, reality is just another form of excuse.

If you want to look into intelligence failures, why not look at the decimation of our humint resources during the Clinton years.

The only reason LG and roy want to raise taxes, is so they can increase spending by twice as much.

LG and roy know that they will never earn as much money as people who work for a living. But they can't bring themselves to blame their own mistakes.
In as much as they have convinced themselves that they are vasly superior beings, the fact that they have underperformed everyone in the known universe couldn't possibly be their fault. So it must be the result of a conspiracy by evil right wingers.

this would be funny, bobby can't bring himself to admit that the guys he supported
wanted to spend even more.

As for the tax cuts, tax revenues are way up. Thanks to the tax cuts.

So if bobby had had his way, the deficit would be even bigger. But in his world, everything is Bush's fault.

Be a liberal, it's easier than thinking, and much easier than taking responsibility.

Not only that, what the hell does DJIA have to do with incomes of the middle class
....middle class incomes which are going DOWN! The DJIA is such a bogus propaganda index.

The REAL economy is how well EVERYONE in the country is doing as a whole...not just wealthy corporations.

Its just like how they measure inflation with CPI...its meaningless. It doesn't include things like housing, energy, health care, education, and other costs.

The REAL economy is the average standard of living of the middle class. Its harder to live on middle class wages with the REAL inflation being somewhere around 10% a year.

...its all the same old bullshit. I used to buy the neo"con" arguments. Now I see them for what they are...rationalizations for wanton greed.

Bush v.s Gore and Florida
I hate to use your own argument against you (actually, I don't hate, if Ralph Nader had not run, Gore would have gotten the vast majority of those 100,000 votes in Florida and the Supreme Court would not have selected Bush.

I voted for Bush...I regret it. I'm going to vote for the 3rd party candidate because I realize it really doesn't matter if Republicans or Democrats win....they are all part of the same bullshit machine.

I second this post...BUT
The government CAN do things. I personally think the "global economy" forced onto American via NAFTA, GATT, WTO, etc... will mean the demise of the American middle class. The government should protect our jobs, our borders, our culture....they are doing neither.

Yeah...fiscal policy can influence it a little...the real damage is done when government puts the interests of a few plutocrat elites ABOVE the interests of the people (because the government is bought and sold by these plutocratic elites).

Credit is just pressure to produce
Credit is not money owed as much as it is a way of forcing people to work. If I had no bills, hell, I'd probably not work very much (or I'd work at things I liked). To whom is all this "money" owed? the end...isn't it circular and mostly social psychology?

What scares me is not the debt...but the extent to which our productive capacity is being moved to the second and third world. It all revolves around the monied elites...those who control the "fiat money". There is a class of people and institutions that operate outside of this credit circle...hell, they run it.

....and now, they want new slaves. Now, they are trans-national. Now, the US is not their base of operations...the whole world is. The American middle class will be swallowed up by the "global workforce". As the standard of living rises in the second and third world, it will be drastically reduced in America.

In the end, the entire productive capacity of the world will be harnessed and brought into this cycle of credit slavery. Comparative advantage is really just a measure of willingness to be slaves (that is an oversimplification...but also, the rule of law is paramount!). The only problem I have with this is its sudden and drastic effect on the American middle class. I'm a nationalist...I don't want my American middle class to fade away.

Here's the dirty little secret: Greed reigns supreme. Society is stratified by greed....always has been, always will be. Economies evolve...they are not designed. All of this bullshit about "comparative advantage" and how outsourcing and moving operations overseas are good for America is a lie...its not good for "America"...its good for the monied elites. Its bad for the American middle class.

I think America had the chance to develop a society and economy that would take them out of slavery. Unfortunately, we are too stupid to do something about our decline.

We're on the island of misfit dollars
From Roy's upcoming winterfest TV special:

We're on the island of misfit dollars.. because no dollar is truly loved until its been taxed by a government..

But then again, Roy doesn't have the time to take two or three accounting courses-and become a stockpicking expert-for those just joining us, Roy actually made that statement a couple months ago.

Good. Let's talk...
The global economy is independent of any sovereign state. This is similar to the nation's economy being independent of any one of our 50 States here in the US. If you don't like the way Massachusetts treats you maybe you should move your business to Tennessee. And you can. The business world is pretty much completely like that today.

Global economics were not thrust upon us. On the contrary, we ourselves have been leading this process forward. But if, for some reason, we refuse to participate in globalization the same thing will happen to us that occurred in China when they cut themselves off from the rest of the World starting with the Ming Dynasty in the 14th Century. Europe advanced technically and politically. At the expense of the Chinese, among others.

China thought at that time, with good reason, that their culture was superior to any on Earth. That the rest of the people in the World were truly barbarians. However, by holding onto their values, their domestic economy, and their special culture too tightly and for too long they fell severely behind as humanity advanced.

Some of that precise sentiment is common among us today and certain politicians are playing to this foolishness in an effort to win votes among the undecided, median electorate.

Our middle class is the wealthiest in the World precisely because we have expanded our economic reach past our own borders to engage the wealth-creating factors of production everywhere. You know, we did not all whine as a nation when jobs went from Massachusetts to Tennessee. Although the citizens of Massachusetts might well have blamed their politicians for the high taxes and the crime rate in Boston that pushed those businesses away. But few of us berated American business owners for remaining competitive and for making their companies stronger. Because the new workers were also Americans. (OK. The Unions were not happy when their jobs went to "right to work" states.)

Those of us who were serious about our careers picked up and went wherever the work took us. That is how I came to live in California and that is why I also now live in Manila. Hard as I work, I am still middle class after all these years. Any middle class player who allows expanded global opportunities to lead to his professional demise is destined to fail anyway.

If you invest in index funds, OK.
Else, but even then you may have lost because bankrupsies take money and stock out of circulation.

I guess you were not invested in Enron, Qwest, Delta, etc..

Either you have a very short term memory or you are a lucky gambler who will never own the casino.

Wall Street bankers own the casino, so to speak. They are the winners when you invest in their goods.

I am not saying the economy is doing poorly. I am only saying that it is stupid to invest directly in the US stock markets.

There are good investements and good diverse mutual funds.

yes I can, and I do. Proof you just say whatever want, truth or lie is the same.

Its a scary thought Dems would spend even more, and I don't harbor denials that they probably would. I'm willing to give them a shot in light of the utter disaster Republican control has been.

If I had my way, the budget would be balanced. I would require it. No more tricky accounting to hide the cost of the war.

back at you
If Pat Buchanon had not run, Bush would have gotten the vast majority of his votes.
If the networks had not called the state early (and incorrectly) then Bush would not have lost 10,000 votes in the Pensacola area.

The Supreme court did not pick Bush. They stopped Team Gore from trying to steal the election.

Stephen says it's stupid to invest in U.S. stocks....
Your statements indicate that you really don't have a clue about investing and trading. You may find it surprising to learn that most mutual funds are invested in U.S. stocks. Mutual fund managers have zero interest in making a profit for the small-time investor. They earn their fees regardless of any loss or profit for you. The only entity that has any interest in earning a profit for you is you. If you cede this interest to another, you will reap what they sow. I've made many trading mistakes, but I am accountable to myself and have exceeded my earnings in my mutual funds (including 3 index funds) by at least 600% through trading directly in the U.S. stock markets. The education that I am receiving by actively engaging in the market surpasses the feeble course of inaction you propose.

No major arguement
Except that I will continue to vote Republican until the Democrats or some party gets away from the extremist rhetoric.

Otherwise I agree fully.

I think it should be pointed out…
that stephen is correct for a large number of small investors. Mutual funds are a way to diversify your portfolio without a major expenditure to do so. For those, like you, that have the time and understanding of the market, buying and selling individual stocks can be very profitable. Most people do not want to take that much time or learn enough to be comfortable doing that.

Generally, though, I agree with you.

And the credit boom is due to legislation passed in 2002...
Congress made credit to accountable that banks are now the leading source of junk mail and telephone solicitation. I received credit cards without asking.


Because the new laws allow banks to entrap in debt.

And we are, as a nation, being entrapped by our own debt, both domestic and that of the government, for which we ultimately will be held responsible for.

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