Consequences of Stagnation

My near term bearishness in equity markets has been short-circuited, momentarily. U.S. Stock traders and fund managers returned from a three day weekend, facing a dramatic sell-off in worldwide stock markets.

A 75 basis point cut in key U.S. interest rates, a event last seen in 1984, with the promise of further cuts, combined with assurances an economic "stimulus" package was practically "guaranteed", stabilized markets after a rocky opening Tuesday morning.

This dramatic action has bought the governments around the globe some time, time, to figure out a game plan on how to deal with the inevitable consequences of reckless American property lending, distributed throughout the global financial system.

Say what you will about government policies or institutions, the only outcome more important to the Federal Reserve than economic stability, is economic survival.

Compare the example above, with the backwards thinking of Lake County politicians. The corpse that was the defeat of the 1% county income tax, wasn't even cold, before an apparently successful attempt to resuscitate it was initiated. The democrats can punt on this one, but they have just as big a stake in this tax as the state does in trying to initiate it.

As if that mind set wasn't bad enough, region democratic leaders quickly latched onto the idea of an additional .25% increase on the county tax for police and fire protection. That puts that total at 1.25% on the county tax, which less than a month ago, we all thought was dead.

At the same time, law makers want to spread out the beneficial effects of property tax reform. Phased in over the course of a couple years, it's intent is to reduce the stress on local government during the transition, while ultimately denying property owners the relief, many desperately need.

This would all be good and well, except for the disturbing fact there has been no discussion of cutting expenses or consolidating services. Is the mind set of the alleged patronage army in the city of Hammond (or Lake County) so provincial, that they don't believe they could compete and benefit in a revitalized Hammond?

Is there no stomach for dramatic action?