The Stimulus Package- Dum Di Dum Dum!!

Back again and this time we got a big daddy of a problem here. You've got to love the government's sense of humor. The whole thing started off by coming to the table with about $750 Billion worth of tax cuts, tax credits and a miriade of other changes O'Bama and the Dems. felt would bring the economy out of the red hot burning ashes of the recession/depression. The Repulicans in their infinite wisdom were against the stimulus package, which in my opinion, I'm somewhat in agreement with, but for different reasons. Their problem with it was mainly it was throwing too much money around. When I read about this, I said to myself, "WTF?". Did the Republicans suddenly have amnesia and forgot about the Bush administration and the fact that the national debt doubled during the 8 year reign of terror? I think the real reason is the Republicans, who in general are well off financially, are worried about big government and having some of their control taken from them. Personally, I really don't care.



Anyway, O'Bama and the Dems. decide to make some changes in accordance with the wishes of the Republicans in an attempt to come to some compromise. So, the go back to the drawing board and make some changes and come back with $850 Billion. Again I said, "WTF?" A few more changes later and we are looking at slightly over $900 Billion. Pure genius.



Here is the deal on the whole kit and kaboodle. The Dems are too short sighted in this and Republicans should just shut the f*ck up, because they already had their chance for the past eight years, so they have credibility. However, should this package get passed, the Dems will have one uped the Reps in the f*ck up department. The long-term damage to the dollar and the inflation rate will dwarf the possible (not guaranteed) boost to the economy. As I have stated before, we could be looking at hyper-inflation sometime in the next 3-7 years because of this package. I'm not saying we could end up like Brazil or Mexico with 5000% inflation rates, but we could easily make the 18% inflation rate we saw in the late 70's early 80's look like a walk in the park. If this garbage keeps up, I might start shorting the dollar and heading down to the bank to buy some Yen and Euros to hedge against the fallout.



Now the big question is what should be do about our portfolios? It's too early in the game to make any drastic changes. Stay the course. If things get bad, your dollar buys more shares, if things get good, your dollar buys less shares, but the portfolio value goes up. By aware about what companies and banks get stimulus money. They are talking about capping cash compensation for executives of companies who get a "significant" amount of stimulus money and even more importantly, they are thinking about imposing a suspension of dividend payments to shareholders of these companies. Bank of America (I own) will almost certainly be one of these companies. This is extremely important to keep up on, because with no dividends to reinvest into your portfolio, this could really hurt your overall return, since about 75% of your portfolio growth over the long term is attributed to dividend reinvesting.



Just for fun, the extreme fallout of this whole thing could be the whole stock market closing and stock shares dissolved. If you want to invest and companies want to raise financing, then they all would have to issue bonds. Doubt that will ever happen, but the sh*t would hit the fan if it did.



FYI- I'll be starting a five part series outlining the five best long-term stocks to invest in and why. Peace out and enjoy the weekend!