COVID was used to crater the strong economy that Trump’s policies created, to provide an opportunity for big government to remake it top-down according to a new ‘green’ vision, and to blame Trump for the wreckage. The fact that the lockdown destroyed millions of Americans’ savings, businesses, and jobs appears to have been worth it to the politicians who have imposed another round in the face of new real data that ought to have reshaped their policy response. Recall that the first lockdown was based on the junk models and the wildly overwrought estimates by Neil Ferguson that 3 million Americans were about to die. These politicians, abetted by the media, have revealed their willingness to hurt the people in order to gain political power. They played things this way in order to get you to vote for their candidate in November. Highly ironic, and very far from the way votes are supposed to be won.
In bills like mail-in-voting and others, the democrats are now embedding appropriations to keep the blue states, whose pension schemes were already broke even before the COVID crash, quasi-solvent a bit longer. Everyone in investment management should know that the democrats also want to impose a new tax on all transactions in financial instruments such as stocks and derivatives. Every purchase and sale will be taxed. Trump is resisting the attempts by democrats in Washington to temporarily bail out the indebted liberal states. Blue governors have their backs against the fiscal wall, but don’t want to raise taxes too drastically before the election. So if you live in one of them, get ready for new state taxes in 2021 no matter who becomes president; the hunt for taxes is about to go into high gear. If Trump loses, Kamala Harris becomes the new acting president of the USA, income taxes will rise as high as 70%, and the transformation of American society will become more extreme and permanent. California is now working on imposing a wealth tax (an annual tax on all the assets you have already purchased and paid sales taxes on) of 0.4%. They want this to apply even retroactively to ex-residents now living in other states. So if you worked and contributed to your 401K or other retirement fund while a Californian, they want to force you to pay an annual wealth tax on it in perpetuity even after you’ve become a Nevadan or a Texan – and even if your retirement fund incurs a substantial loss. While no longer a resident eligible for the public benefits of California, you will still be required to pay to fund them. This is blatantly taxation without representation, the very injustice that the American revolution was fought to oppose.
Zillow’s “2020 Urban-Suburban Market Report” shows a 96% yearly rise in home inventory in San Francisco as residents are fleeing the city, and in New York, there are about 15,000 empty apartments now. The most popular landing places for the New York refugees are Florida, Utah, and Colorado, while Californians are moving primarily to Nevada and Texas. Because the people leaving include many small businesspeople and professionals, California and New York are watching much of their tax bases leave them. The governors and mayors of both states haven’t expressed any concern about it – but they do demand bailout money from Washington. As usual, the first to flee are the rich who make their money from investments and as-such are not geographically tied to a job. These things have happened many times. A couple of weeks before Macron took office in France, the mega-Yachts that had been docked in the south were gone. What else happens during such times ?: Primarily a staying of the course, unfortunately. The governments never admit they are the main problem, continue to spend everyone’s yet-to-earned money with no intention of ever paying any of it back, and they never capitulate until they have no choice.