U.S. Turmoil

Hers and extract from the Business Spectator………………..

Robert Gottliebsen

Getting what it deserves


When a country elects bad politicians it deserves a recession. It’s the only way to knock some sense into its constituents. That’s the current situation in the US, but unfortunately the whole world will suffer

Let me illustrate this with two sickening examples. One of the deepest causes of division in Congress is that fact that Fannie Mae and Freddie Mac have been big contributors to the Democratic Party, and particularly Barrack Obama who chose their key executives to advise him on mortgages.

A few years ago Republicans in Congress discovered major problems in the structures of Fannie Mae and Freddie Mac and demanded proper regulation. The Democrats, given their close monetary and other ties with the mortgage insurers, rejected the demands.

The Republicans were absolutely right – strong opposition from the Democrats was a big factor in determining the need to bail out the two mortgage insurers. It has left a very nasty taste in everyone’s mouth. John McCain has run television commercials on the subject but his voice on this matter has been washed out by the noise surrounding the bail out.

But one of the most bizarre events that has ever happened in a democratically elected parliament anywhere in the world is taking place right now in the US.

While Congress is debating a make-or-break decision for the US, they find the need to add on a series of crazy pork barrel amendments that have nothing to do with the bailout crisis. In other words, votes are being secured on the basis of support for pet causes that have nothing to do with the bailout.

There are a number of these causes, but Lisa Zagaroli of McClatchy Newspapers describes the silliest – a tax break for NASCAR racetracks and other motor-sports facilities.

She says: “The Senate-passed bill includes an array of so-called ‘tax extenders’. One extends for two years a tax policy that had been allowed to expire in December that lets motor sports facilities be treated the same as amusement parks and other entertainment complexes for tax purposes.

“That break allowed them to write off their capital investments over a seven-year period. The motor sports industry feared that without a specific legal clarification, motor sports facilities would be required to depreciate their capital over 15 years or longer because of a recent Internal Revenue Service inquiry into the matter. That would make repaved tracks and new concession stands more expensive in the short term,” Zagaroli writes.

She reveals that the bill to extend the tax treatment has been proposed by two House of Representative members who opposed the bailout in last week’s bill.

It reminds me of the Roman Empire.

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