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« Ten Things that Will be "More Normal" in 2011 | Main | ETF Update: Tech Stocks Take the Lead »

January 12, 2011

Comments

david

Jeff, if you post anything LESS THAN 500 words, then you will probably have lost me. I'm a little slow at understanding "soundbites"!!

Paul Nunes

Jim; thanks for explaining your thoughts. this is why Jeff has a great blog; great readers! (plus a great writer)

Jim

Paul

I agree with your comments. In short, the assumption in my original post is that the plan Illinois announced last week is a bad sign and that I would require a substantially higher interest rate to invest in that state's bonds, perhaps 200 basis points over the current (already relatively inflated) rate. I guess my outlook for Illinois is far more pessimistic than the market's. I think you have to jointly consider politics and finance in a case like Illinois or California where governments with no credibility are at the helm.

Jim

muckdog

Dr. Jeff, I always read your blog. I believe folks who are interested in investing and economics are more likely to enjoy a nice Wall of Text.

If they want to see pictures of hot women, or find the scores of the college hoops games, it doesn't matter how many words are in your blog...

Keep on!

As far as the Illinois tax hikes, I agree completely. That's the way states will do it - if they can.

Here in CA, we're going to be asked to vote to tax ourselves. Arnold tried this and it failed at the ballot box. I think Jerry will have a similar experience. Then what....?

Jeffrey

Jeff,

I haven't read the legislation thoroughly but history tells us that when legislative bodies increase tax rates they eventually increase spending. Government does an incredibly poor job of allocating capital and the tax and spend antics are absolutely a drag on investment returns over the long-term.

Of course I would welcome your additional comments on this subject.

With that said, don't limit yourself to 500 words. Write what you think is appropriate for the subject matter. You do fine work and this is evidenced by the intellectual rigor that you put into it, which isn't found often.

Robert Jones

I work for a very large national accounting and tax audit firm. (Top 5) Our firm recently sent out a national email balst to all tax and nontax professionals discussing how to help our clients switch residency from IL to FLA or TX. This email was generated in response to a huge influx of inquiries form our IL based clientel since the law passed.

The writing is on the wall, if even a small percentage of the taxpayers contacting our firm leave IL, they will take a disspraportianate share of taxed income with them.

These are not Joe Lunchpail types of individuals, these are CEO's, hedge fund managers, and other sophisticated high income, high wealth, high productivity people.

Paul Nunes

Jim; that is confusing politics versus investment; the relevent question is "are you being compensated for that risk?" Let is say you are letting history be your guide; at what price would you assume the (obvious) risk of govt. continual overspending? Ignore the fact of the 10 plus year decline in muni rates; also ignore that an Illinois or California default risk would probably impact pricing in other muni issues; why would you exclude contracts purely on the basis of location?

Jim

Jeff

Interesting argument. However, I come to the opposite conclusion. Indeed, if I were investing in a mutual fund made up of S&L bonds, I would want one that excludes Illinois (and a few other states and cities). My reasoning is as follows: the Illinois governor proposes to deal with his state's severe and chronic deficit mostly through increased tax revenues; he did not show any courage by going after spending or the pension system for state workers. My concern is that tax revenues will come in below what the governor expects and that spending will continue to grow. History has shown us that when governments get more tax revenue they cannot help themselves but to spend more.

MikeinMN

Jeff,

I have been following your blog for years. I enjoy 95% of everything you write, regardless of the length.

I would not encourage you to become too preoccupied with the number of words in your posts. You have a wonderful gift for writing about investing. I imagine counting your words will only serve as a distraction.

Naturally, Mr. Brown has a point. However, I don’t recall much of your work being guilty of over-indulgence.

Thank you for sharing your wisdom.

Mike

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