Michael Deneen wrote:This stock market rally mirrors the Lakewood housing market...both a house of cards.
While it lasts, a lot of politicians will claim credit.
When the poop hits the fan, the politicians will offer excuses.
Mr. Deneen,
I would agree that politicians generally have little to do with the fundamentals or long term market returns and that Summers and City Hall can take no credit for the Lakewood housing gains.
However, in the short term, markets react to things like emotional teenagers.
The market is now somewhat overvalued based upon historical returns and dividend yields are only down slightly:
http://www.wsj.com/mdc/public/page/2_3021-peyield.html
For the wealthy folks or the average worker with a small pension, the stock market is still the only place to be--the "risk" is not being in the stock market. Where else can you preserve capital and get greater returns (as long as you don't have to sell in a down market)?
So we have 2 and 1/2 months so far of being "greater than ever...again," but it is all based upon the markets' high expectations of the new president's "talk" about policies.
The expectation that lower taxes, particularly lower corporate taxes will attract jobs and investment to the US (and perhaps help Lakewood families) is a rational driver:
https://taxfoundation.org/what-evidence ... and-growth "In this review of the literature, I find twenty-six such studies going back to 1983, and all but three of those studies, and every study in the last fifteen years, find a negative effect of taxes on growth. Of those studies that distinguish between types of taxes, corporate income taxes are found to be most harmful, followed by personal income taxes, consumption taxes and property taxes....Corporate and shareholder taxes reduce the incentive to invest and to build capital. Less investment means fewer productive workers and correspondingly lower wages. Taxes on income and wages reduce the incentive to work. Progressive income taxes, where higher income is taxed at higher rates, reduce the returns to education, since high incomes are associated with high levels of education, and so reduce the incentive to build human capital. Progressive taxation also reduces investment, risk taking, and entrepreneurial activity since a disproportionately large share of these activities is done by high income earners."
I would argue that it is somewhat beyond debate from a historical standpoint, that the lower the taxes in a country, the greater the productivity (GDP).
As a self-described "fiscal conservative" (likely at odds with most Deckers), I am cautiously optimistic for American workers under the Trump Administration. Labor leaders were in the White House this week, and by all accounts things went well.
The stock market will rise and fall...forever. Trump did not make it rise 9% any more than George W. Bush made if drop 50+% in 2008 or Newt Gingrich and Bill Clinton made it rise so high in the 1990's or Reagan in the 1980's.
But I think that high corporate taxes hurt America workers and consumers---Corporations may initially "pay" the tax, but ultimately workers and consumers pay for it. And if Lakewood raises taxes because of City Hall's blunders, all of Lakewood will suffer.
With Trump's action via TPP etc., markets will react. Right now Trump has organized labor paying attention to him. It remains to be seen whether he can and will actually help a majority of America workers and the economy.
So we are not so "great again"...yet..., and in Lakewood, the increased taxes on the horizon will surely hurt us all.