free4now
Thinks s/he gets paid by the post
- Joined
- Dec 28, 2005
- Messages
- 1,228
There's plenty of bad news to go around, so I am starting a thread for the good news on this bailout.
I see several ways that this bailout situation is better for FIREd people like myself than for other people:
I see several ways that this bailout situation is better for FIREd people like myself than for other people:
- Since I have a big portfolio and relatively small taxes, I'm much more exposed to the stock market than taxes. Lets say the bailout ends up being net 1 trillion dollars spent. That is about 2% of the US stock market capitalization, which is approx 50 trillion. So if the Guv pumps that much into the stock market it will necessarily increase the overall market by at least 2%, and of course the intention is that it will stave off a much greater decline. Two percent of a million dollar portfolio is $20k. Whether it's 2% or 10% or 50% that my portfolio is up from the bailout, it's a good thing for me. Now to calculate my tax liability... Lets assume that my income taxes are the same as that of the average US citizen, to make the calculations easy. 1 trillion divided by the US population of 300 million is approximately $3k, the present value of my share of the tax burden. Since I'm getting $20k or more in portfolio increase, at a cost of only $3k in taxes, this bailout is a very good thing for me, no matter whether it's successful or not. Of course people like ourselves with big portfolios and low taxes are rare, and most of the US population will end up worse off, but hey, I've got mine
- Just like 9/11 changed our country's approach to security, this bailout will change the country's approach to financial transparency and market regulation. In the end the markets will be more transparent and so should tend to track intrinsic value straighter and with less volatility, which helps us folks who are living off our portfolios.
- With the hangover of this credit crisis, and the new regulations adding friction, credit is likely to be scarce for a long time. This means that our big portfolios of freely investable funds will be relatively more valuable to others.