tumbledry

Stocks In Decline

The Atlantic has a nice article titled The Great Stock Myth, which explains the consequences of the (likely) crappy stock market returns over the next 10 years. When the effects of these poor returns are compounded, the demands put on people to save money for retirement increase dramatically. Incidentally, there’s a nice fact about the Bush administration in here:

In the three years after the end of the tech boom, federal tax revenues plummeted from 20 percent of GDP to 16 percent. Many people blame the Bush tax cuts for the entire ensuing budget deficit, but in fact they accounted for less than half of the lost revenue. Most of the change from surplus to deficit came from other factors, most prominently from what the Congressional Budget Office calls “technical” and “economic” change: the government simply collected less revenue during the bust than analysts had anticipated. Wealthy people pay most of the income taxes in America. And their taxable incomes are extremely sensitive to the performance of the stock market—not surprising, considering how many wealthy people either work in finance, or receive compensation in the form of stock options.

Presidental terms are short compared to economic cycles, and I think people fail to realize this when they attribute economic status exclusively to actions taken by a single administration. Certainly, changes to economic policy can have immediate and seismic effects… but I don’t think this happens as often as people imagine.

Who knows, though — I’m just a student in not-economics or politics.

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