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All of that said, Ritholtz is probably right that corporate tax cuts should benefit the stock market. Corporations and wealthy stock holders are precisely who the cuts are designed to help. The fact that the cuts are working in that regard shouldn't come as a surprise. They increase corporate profits after taxes by default. Yet whether the rally from the cuts is overdone at this point is another question entirely. Valuations matter too. And conflating the stock market's performance with the health of the overall economy is a gross distortion of the truth.As Greg Mankiw, a Harvard economics professor, explains in a summer 2010 edition of National Affairs magazine, Keynes believed that "extreme and sustained unemployment during a recession" is fundamentally the result of "a decline in overall (or aggregate) demand in the economy." The government can "help restore normalcy" by increasing demand through spending, writes Mankiw. "And because the influx of government spending drives businesses to hire and consumers to spend, its impact is multiplied."
According to classic Keynesian theory, government spending increases have a higher "multiplier" than tax cuts, because individuals might choose to save the money from tax cuts, rather than spend it.
Is there data to back up Keynes' -- and, by extension, Rachel Maddow's -- argument?
Yes, but there's also data that certain types of tax cuts can have a similar impact.
To start out, we turned to testimony by Mark Zandi before the Senate Finance Committee on April 14, 2010. Zandi is the chief economist for Moody's Economy.com and a former adviser to Republican Sen. John McCain during his 2008 presidential campaign. Page 5 of the testimony contains a table that summarizes Zandi's calculated "bang for the buck" for various fiscal stimulus programs. Spending $1 on unemployment insurance benefits, for example, increases the GDP -- the value of goods and services that the economy produces -- by $1.61 a year later, according to Zandi. (We found some counter-arguments in a previous Truth-O-Meter item checking New Hampshire Sen. Jeanne Shaheen's use of Zandi's data.) A temporary increase in food stamps has the biggest stimulative effect. For each dollar spent, GDP grows by $1.74 one year later. For spending increases as a whole, the "bang for the buck" ranges from $1.13 for the Low-Income Home Energy Assistance Program to $1.74 for food stamps.
The former economist for the GOP presidential candidate also looked at the stimulative effect of tax cuts. Making the Bush income tax cuts permanent has a multiplier of 0.32, which means that for every dollar the government cuts in taxes, GDP grows by $0.32. Cutting the corporate tax rate also has a multiplier of $0.32. According to the chart, the most stimulative tax cut initiative would be a job tax credit, which has a multiplier of $1.30.
So based on Zandi's research, Maddow is on solid ground. All but one of the spending programs that Zandi analyzed have a multiplier significantly higher than one. The highest multiplier for tax cuts is $1.30.
I think they did tell you. The prospectus supplement contains the usual boilerplate for liquidations:
But there's no rational basis to make a decision! How can a fund which holds equities maintain a constant price?
Unless it's gone to all cash.
In which case they should tell me.
It really seems strange to distribute cap gains right before a liquidation.
They said they'd go to cash. That cap gains distribution is what one might expect right after they sold off virtually all their securities.In anticipation of the liquidation of the Fund, the Adviser may manage the Fund in a manner intended to facilitate its orderly liquidation, such as by holding cash or making investments in other highly liquid assets. As a result, during this time, all or a portion of the Fund may not be invested in a manner consistent with its stated investment strategies, which may prevent the Fund from achieving its investment objective.
5) Pony up $3K to buy the A shares NTF, e.g. PONAX:So the small investors can:
1) put up the money for I class shares
2) go through an advisor
3) buy the loaded A shares (for the new investors, not the converted D share investors ).
4) buy the etf BOND which is a more tax efficient structure than the mutual fund.
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