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US Election 2012 News: If paul ryan and mitt romney win, how it will impact your investments

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US Election 2012 News, With the recent move by Mitt Romney to choose Paul Ryan as his running mate for the upcoming election

US Election 2012 News, With the recent move by Mitt Romney to choose Paul Ryan as his running mate for the upcoming election

Published in: News & Politics

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  • 1. Article Source http://www.investmentcontrarians.com/u-s-dollar/how-a-paul-ryan-and-mitt-romney-win-will-impact-your-investments/520/If Paul Ryan and Mitt Romney Win, HowIt Will Impact Your InvestmentsWith the recent move by Mitt Romney to choose Paul Ryan as his running mate for theupcoming election, I believe this sends a strong message to the American people and therest of the world that the U.S. is finally going back to its roots by getting on the path toreducing the budget deficit and preventing a financial crisis.A financial crisis usually stems from a lack of confidence. If the lenders feel that aborrower can’t pay, they sell their securities and refuse to lend unless the rates areextremely high. This is how the financial crisis in Europe is unfolding, as the budgetdeficit for many nations remains high. They are continuing to spend more money thanthey earn. Running a budget deficit for a short period of time might be okay, if a surplusis eventually generated to reduce the overall debt. This has not occurred for many yearsin dozens of nations, including the U.S.Ryan understands that the real victims are the American people if a budget deficit iscontinually generated. This puts the country at greater risk of a financial crisis, asinvestors begin to lose credibility in the nation as a whole. The U.S. is fortunate that somany other nations are also poorly managed, running up a huge budget deficit andcresting on the edge of a financial crisis.One of Ryan’s ideas is reducing government spending by 2015 to 20% of gross domesticproduct (GDP) and a long-term target of 15% of GDP. Reducing governmentexpenditures is a needed step in reducing the budget deficit. Such a move will surely beseen by international investors as a further sign of confidence in the U.S. and the dollar asthe world standard. If you were an institutional investor, would you lend money toEuropean nations that continue to run a high budget deficit and with no end to thefinancial crisis, or to a nation that has put its foot down on runaway governmentspending? I think the answer is quite obvious.An idea, which I think is great, is simplifying the tax code. By eliminating a lot of theloopholes that the wealthy use and using only two basic tax rates, 10% and 25%, one ofRyan’s earlier proposals provides a basic foundation for less tax evasion. In addition,eliminating capital gains taxes results in one thing—more money being used forinvestments. It’s a basic law of the universe; the more you tax something, the more you’llsee people come up with ways to avoid the tax.Of course, not all of these policies will be enacted. Politics is all about creating adiscussion with the public over what issues are important. I think with the financial crisis
  • 2. erupting in Europe, America needs to get serious about the looming budget deficitsituation.What does this mean for your investments? Assuming some of these policies are enacted,we would be dealing with a short-term stock market that might have some headwinds, asthe adjustment process involved in reducing the budget deficit hits the government sector.But as fears erode of a financial crisis erupting in America, this will increase foreigninvestments over the long term.Having a stable base from which an economy can grow has always been the key forinvestors. This also means that the U.S. dollar will gain strength, reducing prices incommodities like gold. Government sectors would be hit, but the long-term policies thatwould create an environment of economic strength would also decrease the budget deficitand reduce the chances of a financial crisis from hitting America’s shores. This would bequite bullish over the next decade for America.http://www.investmentcontrarians.com/u-s-dollar/how-a-paul-ryan-and-mitt-romney-win-will-impact-your-investments/520/ http://www.investmentcontrarians.com