Romney may say the right things, but will he really be able to affect change? And Obama says… and does… the wrong things, and he has no reason to change. Democrats complain that Romney has no sympathy for the unemployment problem.
Of course this is ironic since he has been hunting for a new job for the past year. In the recent debate, he stressed how he would work to improve the economy to help the middle class. He wants to cut out deductions, lower taxes, and simplify the tax code. Great idea, but that’s not how Washington politics work. With so many special interests, will he really be able to make the required changes? It doesn’t look good.
On the other hand, Obama wants to spend his way out of the problem. He gets the money from borrowing the same way overspending American citizens fund their personal largess. Instead of paying back debt that he racked up, Obama pays the minimum monthly balance. It’s like if you pay $50 on your $5,000 credit card debt. Based on the logic of Nobel Prize winning economist Paul Krugman, the President feels he can double the amount of debt since he’d only have to make $100 monthly payments (or, in the case of the United States debt, make that an increase from $30 billion per month in interest payments to $60 billion!). This system of borrowing money will probably continue to work until at least the election date, and maybe for a few more years. But at some point, that debt must be paid off.
On this week’s Goldstein on Gelt radio show, I asked former Chief Economist for the International Monetary Fund (IMF) and Harvard professor Ken Rogoff about the American Debt Crisis. He gave a great explanation.
Here’s part one of the show (below). Part two will be posted next week.
About the Author: Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd, a financial planning firm located in Jerusalem. He specializes in working with clients in New York, Florida, and Israel and is a licensed financial professional both in the U.S. and Israel. Securities are offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, SIFMA. Accounts held at Pershing LLC., Member NYSE/SIPC, a subsidiary of The Bank of New York Mellon Corporation. Neither Profile nor PRG gives tax or legal advice. Before immigrating to Israel, it is advisable to consult with a tax attorney who is knowledgeable about Israeli law. Doug’s newest book The Expatriates’ Guide to Handling Money and Taxes is available at www.expatguidetomoney.com. He hosts a weekly finance show, Goldstein on Gelt, on internet radio. Listen live or download podcasts. Toll-free from U.S. 1-888-327-6179, Jerusalem: (02) 624-2788. Follow on Twitter: @DougGoldstein or contact at email@example.com.
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