First let me state that I was amazed a few weeks ago when I saw American politicians in deadlock and wait to the very last minute before passing a treasury bill to ensure their debts would be paid on time. That i saw as being totally irresponsible on the part of all the legislators in their Congress...despite that I don't really understand their system. Then if media reports were correct...they went on holidays before passing a Bill to allow payment of wages for their Airport staff...another big confidence blooper.
Now it seems that Obama wants to increase taxes on the rich to help reduce deficits and pay for Medicare for the poorest in their society of which I would say the percentage would be substantial compared to Australia. Apparently there are many are ramifications for private insurers so i cant analyse the issues appropriately. My comments can only be a superficial analysis of cause and effect of taxing the rich.
The American politicians against increasing the taxes of the rich are actually assisting the rich in becoming poorer as we speak .... just as the Greek government in refusing to increase taxes has debased their own currency into default mode. Are the wealthy and middle classes richer or poorer when their stock market collapses and banks wont lend to them ?
The same applies in the USA .....the answer is to increase taxes of those that can pay so that will help keep the value of all their assets from collapsing to Nil. The ramifications are horrendous if the American politicians don't think outside the square and worry too much about their own political survival. The Congress members themselves should be able to explain the real wealth benefits of increasing income taxes to protect their constituents assets would be a compelling argument surely.
We get so many gloom and doom experts making so many predictions that the Australian property market will experience a massive collapse very soon similar to the USA market did..
My view is that the Australian property market is different than in USA because the USA is not so generous towards its own poor.
From a simplistic point of view there are possibly two main reasons why the property market could decline, the first being if the RBA decides to increase interest rates or keep them too high for too long or if any new incoming coalition of politicians decide to cut welfare and rent assistance for Centrelink clients. The USA does not appear to support its lower income or no income citizens in any way near as our generous politicians support of our people. Property prices are to some extent underpinned by several million government welfare recipients using their Centrelink benefits in true Keynesian style by renting housing and buying food and utilities.
Can you imagine the effects on the banks asset backing if we where to get a crazy government which would suddenly cut the rent assistance benefit in Australia. I dont believe those people including many of our politicians who own units and houses fully understand what would happen to the value of their assets if this were to occur.... each time they complain they are supporting the poor through their taxes..Their own wealth is underpinned by government welfare and they just dont get it.
The reality is the everybody rich and poor relies on government welfare to be maintained and not be fiddled with.
