Monday, December 03, 2007


A few weeks ago, close friends suggested that I take a good look at Mike Huckabee for President. Saturday, after I noticed how the polls have starting swinging hard in Huckabee's favor, I decided it was time to take my friends advice. I spent a couple of hours watching videos and reading about Mike at . I was surprised and impressed.

A week ago, when I thought Huck had no chance of winning, I discounted his message, including his "fair tax plan". My mind set was that the promise to do away with the IRS was just another politicians empty promise. Now, I believe the tax plan is one of many reasons Huck should be supported.

In our current system, the tax code is complicated and more importantly destructive to maximum economic efficiency. Our current code leads to billions of wasted dollars. Billions are wasted because it is expensive to figure out how to comply with the many complications. Billions are wasted because the code offers incentives to mis-allocate resources. Most of all, billions are wasted because America's productivity is taxed.

A few months ago, I was excited to learn that both liberals and conservatives in Congress have quietly indicated support for lower income taxes in combination with off setting taxes on carbon consumption. Such a plan would dramatically simplify the tax code. However, the "fair tax" does an even better job of raising revenue, simplifying the process and taxing all consumption while eliminating all taxes on income.


I hope you will take a good look at Huck's candidacy. Among other things, he pledges to make the US energy independent in less than 8 years. I believe his energy plan would be easily successful if his tax plan were passed. The US economy would boom, boom, boom under his tax plan because wage earners would collect 100% of their pay on payday! There would be no withholding. In addition, all citizens would get a check from the government at the first of each month to cover the tax on essentials. There would be no tax on dividends, interest, savings, inheritance, or wages. There would not even be a payroll tax.


The best three word campaign slogan I have ever heard.


The signs of slower world wide growth are welcome. Europe and the US continue to put the heat on China to let the Yuan float up so that some of the slowdown is spread more quickly to China. It is only a matter of time before slower growth in the developed nations bite the undeveloped nations hard. Stock markets in several developing nations have been pounded hard in recent weeks. Over the next 4 or 5 years, the number of stocks around the world that have out performed will gradually shrink. More and more money will pile into ownership in the biggest of all companies. Over the next several weeks, and possibly the next several months, the opposite will be true. When the markets blast off, the little companies and the speculative companies will join the party big time, at least for a few weeks. The "Santa Claus Rally" and the "New Year Effect" will give the little guys a nice boost. The slope of the yield curve will help regional banks do well. High value goods manufactures will enjoy high exports now that the dollar gives US companies a huge competitive advantage. Investors from around the world will pour more and more money into US companies to enjoy the rebound for the slow down and to enjoy the bonus of the appreciating dollar.

BUY, BUY, BUY. It is a rare time when sentiment is very negative and when insiders are buying so many shares. Any number of events could bounce the markets around in the short term but any one of these events could set the market "on fire." For example, OPEC meets Wednesday, the ECB meets Thursday and the FOMC meets on December 11. Hold onto your hat!