I love the term "noted buffoon". Something for me to aspire to.Some of the things he suggests would indeed drive the market higher.But one should first ask, with broad US equities around 40% overvaluedcompared to their long run average, why on earth would you want to do that?Skipping dividend tax is not obviously an improvement to the economy.Simpler and more consistent would be be eliminating corporate tax and taxing dividends as ordinary income since the income of companies isreally just the income of the shareholders anyway, but I'm not in charge.There is certainly very cheap natural gas in the US, and for many yearsto come plentiful natural gas, but there isn't plentiful cheap natural gas.Once people get used to this idea the bonanza will seem rather more muted.The all-in cost to bring incremental supply on line for a while is $7-8, so natural gas $2.50 to $3.50 (or $4 or $5 or $6) can't last.Plus, the gas itself won't last forever. We're just in a small countertrend blip in a very long run trend away from cheap energy.There isn't any shortage of energy and never will be, just less and less cheap stuff.One might argue that some of the policy things might remove somefear from the market which is having unpleasant effects.It's a bigger problem that firms aren't building factories than it isthat their stock prices are too low. The fiscal cliff is scaringa lot of businessmen, so that is certainly the sort of nonsense that could be fixed.My own suggestion: get people to agree that the deficit must be cutto some percentage of GDP (2%? 3%? 0%) either through spending cuts or tax rises or some combination. If you don't ask them to pick oneof those methods it might be possible to get that agreement.Then, institute a national sales tax set each year at a level that wouldin the prior few years brought the deficit down to that level.Everybody hates the idea of such a tax despite its obvious necessity,so those who wish to could see the goal as eliminating it by eliminating any need for it.The politicos can then argue and grandstand and filibuster all theywant about whether to let the sales tax stand or cut spending orincrease other taxes or some combo, but during the decade that they do so the global economy would not collapse from a US bond¤cy panic.Businesses would know that even though there are no adults at the Capitol there is at least a babysitter for the time being and they would no longer be afraid to build factories and buy tools and hire workers.One side effect is that sales tax encourages saving relative to consumption which would reduce the weighted average cost of capitalof US firms which would increase their value (not just their prices).Jim
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