Buckle Up for 2010 - Barrons.com

Buckle Up for 2010 - Barrons.com

There are some lingering questions when one puts one statement against another:

1. Private investors are dis-investing from the US market and putting the money offshore; [lots of foreign countries have lower taxes, labor costs, etc.]; "U.S. companies earn a third of their sales abroad"; and, the projection is for US companies to start investing back in the US to add jobs.

Answer: Isn't it more likely expansion by US companies will take place abroad (i.e. fewer jobs in the US)?

2. Everyone appears to look at past market precedents to come up with projections for 2010. But, are we not more like the 30's in terms of government policy than the 80's or 90's? In other words, the government makes no bones about plans to increase it's share of GDP from 20% to 30% (not unlike in the '30's).

Along with this shift in economic resources, we have higher taxes and higher borrowing. So, where can one look for something parallel to this (which is missing from this article)?

Answer: Isn't California a good example of what is more likely to happen to the US?

Just before Christmas the California governor states that he can't see how to close a $21 billion deficit. This comes from a state with some of the highest taxes. Sound familiar?

It would seem logical to correlate California with the US - just a few years or months down the road. California has an exodus of businesses and an eroding tax base, very high interest rates, etc.