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Milton J. Madison - An American Refugee Now Living in China, Where Liberty is Ascending

Federalism, Free Markets and the Liberty To Let One's Mind Wander. I Am Very Worried About the Fate of Liberty in the USA, Where Government is Taking people's Lives ____________________________________________________________________________________________ "Extremism in defense of liberty is no vice. Tolerance in the face of tyranny is no virtue." -Barry Goldwater-

Friday, November 07, 2008

The Obama Swoon.....

So the Dow Jones Industrial average is down 10% over the 2 days since the Obamessiah was elected. I call it the Obama swoon. Its the effect of the promise of higher taxes on savers and earners where people now need to reprice assets lower. The way that this works is that investors want to get a certain after tax return and asset prices adjust to reflect these new realities. So one has to decide to invest in a hostile tax environment and the other choice is to eventually move assets offshore. Corporate taxes are lower and by deploying assets and hiring people offshore, one has a better return profile when considering taxes.

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