February 27 Edition

Good Morning All,
The markets can't seem to muster a serious bear rally despite their highly oversold condition; and it is still all about the banks. The Obama budget is out and as "Slate" stated, "he put the money where his mouth is"; and much to the disdain of the CNBC commentators and their chosen guests, he has largely kept his campaign promises. It should be remembered at this time that it was not Dems who got us here, it was the GOP and Wall Street greed. The complaints from the right about the Obama budget are many, but essentially the most discussed concerns are related to taxation changes for the top 2% of Americans, and to a limited degree, the top 5%. None of the contentious items have been explained in detail on any of the complaining networks. In fact, when a talking head interviews a like minded guest, they speak of the tax rise from 35 to 39.5% as if this were going to destroy America's entreprenurial spirit. Think about it; some really smart guy or gal is now going to choose "welfare" over working because they have to pay an additional 4500 dollars on every 100,000 they earn over 250k. Not bloody likely. The other bugbears include the mortgage and charitable deduction clauses in the proposal. Again, these are presented on business television as if they have been totally eliminated, when in fact they have been reduced for people in the 33% plus tax bracket from the present deduction, to 28% in both cases. Example; 1000 dollars of mortgage interest or charitable donation is presently deductible at your tax rate. Under the new tax law, it will be 280 dollars per thousand versus the former 330 or 350 dollars. In Canada we have no mortgage interest deduction and a much better housing market, not to mention a much lower deficit. And once more, let's remember that this is the top 5% of American earners at 33% and the top 2% above that level. There are 300 million citizens of the United States....you do the math. America is greatly in need of some tough love and strong leadership, it is also in need of a little sacrifice and a lot less greedy whining from the already wealthy, not to mention the Trumps of the world. This morning's defacto bank nationalization may well signal a short term end to that crisis, the fat lady is warming up.