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Nationalize the Banks, Halve the Deficit, and Increase Spending (and Taxes)

Source: http://feedproxy.google.com/~r/InvestmentU/~3/kLs4SBojH_k/nationalize-the-banks.html
 Posted on Friday, February 27th, 2009 | In Contrarian Perspectives
Contributed by: Investment U (http://www.investmentu.com) -

Nationalize the Banks, Halve the Deficit, and Increase Spending (and Taxes)

Friday, February 27, 2009
By Louis Basenese
The Long and Short Alert

As I told subscribers to The Takeover Trader earlier today, the markets are trying to swallow a BIG pill right now…

The President is adamant on halving the deficit, stimulating our economy AND jacking up taxes. On multi-nationals. On oil companies. On investments. On individuals.

I think Tim Speiss, from New York-based accounting and advisory firm Eisner LLP sums it up best saying, “You can’t spur economic growth on your left hand in this economic environment while on your right hand you’re raising taxes [everywhere].”

Indeed it creates a conundrum for Mr. Market to sort out. And he’s having a tough go of it.

Add in a dose of nationalization – Citi will now be 36% government-owned – and there’s not a chance stock prices will move based on underlying fundamentals.

There you have – in a roundabout way – the reason we’ll be keeping our powder dry, until we get some clarity and direction.

At the same time it shines some light on why the yellow metal is perking up in early morning trading.

I promised an update on my gold outlook. The abbreviated version is simply this – a rally above $1,000 is likely again. But after that, it’s due for a pullback. If you’re after articulation on this viewpoint, check out the column I wrote for Investment U yesterday here .

If you just prefer the actionable advice, here it is. If gold closes above $1,005 per ounce, go ahead and buy the second half of your position in…

To continue reading and get all The Long and Short Alert’s  latest updates, subscribe today.

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