Annie’s had a wreck, and so has the economy…

My little sister Annie had a car wreck, yesterday. She’s fine (just sore and banged up); but the car may not be in such good shape. It’ll be a few days before we know about that (in terms of what insurance will or won’t do and even in terms of which insurance company pays for what).

I’m not as hopeful regarding the economy… I’ve been withholding my thoughts on the most recent tax cut, for two simple reasons: (1) I think it’s a sincere effort to boost the economy, and (2) I think it’s terribly misguided. Fact is, I don’t think the government can stop a major economic crash – one which makes the Great Depression look like a speed bump – no matter how drastic the measures. Since I do think, though, that the cuts are intended to both help the average taxpayer and boost the economy, I’ve mostly kept quiet. Well, an article on the IRS website has sealed my opinion of this fiasco…

I think we just tossed $350 billion down a giant drain… Why? Well, psychology – not events – drives the economy. Think about it – in and of itself, an earnings report, a Fed rate cut, even terrorist attacks do not change the market values of stocks, new homes, or plane fares. People’s reactions do. In other words, reservations and prices at American Airlines don’t drop 20% because somebody hijacked a plane; they drop because people see that, get scared, and cancel reservations.

In any case, the problem here is that the government wants to keep people spending, because that’s the only way the economy can grow. The problem is that the average American accumulates more debt than income, each year. That can’t last! What a mess.

So, what do I think the government should do? Tighten the old belt and prepare to weather hard times, rather than wasting money and postponing the inevitable.

On a lighter note, I’m going to go enjoy some “Taylor time.” (Taylor being the manufacturer of my guitar.)

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