CNN Money -- "Wall Street Frowns on Election."

[Leopolds Ghost]

http://money.cnn.com/2006/11/08/markets/stockswatch/index.htm?postversion=2006110803

Even if the Democrats were to win the two outstanding races, analysts didn't expect the markets to get too flustered.

"I don't think we'll see a stock pullback. And even that would be short term," said Paul Mendelsohn, chief investment strategist at Windham Financial Services, prior to the returns. "Most of the issues that the Democrats are perceived as focusing on that might upset the market, like the capital gains tax, are locked up until 2010 anyway."

[trotsky]

1. It became pretty clear in the last few days that Dems were gonna win big.

And the market was rallying. It's a right-wing lie that Democrats are bad for the markets. Just point to the Dow under Clinton.

[Chimichurri]

2. dems should leave the capital gains tax where it is and tax corporations

that have paid next to nothing thanks to Boosh. They should also dismantle the energy give aways Cheney handed to his buddies and reverse the tax cuts given to the top 1% of the population who won't miss it.

Many of us middle class have investments stored away in stocks for our retirement and there's other tax revenue they can go after. Hopefully they will have the courage to do the right thing.

[acmejack]

4. And many in the upper class live off their Capital gains

You suggest that "The right thing" is to allow them to go relatively untaxed while putting the load on labor? Great plan! You should work for the WSJ! Krugman thinks that is a loser...

The upside is you probably can get a date with Paris Hilton for that kind of talk!

[ProfessorGAC]

5. Krugman Is Correct

Although Paul hasn't actually worked at economics for quite some time, his premises are always rooted in the analytic school. Models have shown (including one in published in 1998), that capital gains tax reductions are actually counterproductive, because they impel profit taking that in no way benefit the firms issuing the stock, encourage additional tax sheltering after profit taking (long bonds to minimize risk, since the big ROI has already been achieved), and reductions in productivity.

The last of these is the interesting one: Because the big holders want profitability to drive up those stock prices so they can sell and run elsewhere, the lower tax rate encourages companies to slash costs at the expense of productivity for short term stock price gains. The result is an overall reduction in macroeconomic productivity which is a drag on GDP. So, cap gains taxation reductions actually foment economic downturns. For proof, see the late 50's, the mid to late 80's and the last 5 years.
The Professor

[EvolveOrConvolve]

7. Excellent post, Professor

(BTW, I've always loved your posts)

So, if I'm reading you correctly, the reduction of the Capital Gains tax actually decreases the tax base by far more than the small amount reduced by the original CG tax decrease? (In other words, the government realizes far smaller revenues than expected in the long run)

[Lasher]

3. Standard propaganda from the corporate news media

Wall Street doesn't like Republicans. Rich people do. There's a difference.

If you think the stock market does better under Republican control, compare the last 6 years with the gains of the Clinton years. The contrast is incredible.

[txindy]

6. Wall Street "frowns" while investments go up. Investors have faith in Dems.

Two sides of same mouth, both talking. Typical Wall Street. :eyes: