“Think of the reluctance (ha! refusal is more like it) of those with liquid capital to invest in equities as capital going on strike.
Voting with their checkbooks that they will not take equity risks in the current environment where the government is an ever larger participant in the markets, determining who wins or loses based on political considerations, and promising to substantially raise taxes on those who are successful.
The ordinary equity premium to take market risk has to have greatly increased to include not only inflation risk, the risk of unknowable government actions to raise costs to companies, but also to take into account the higher taxes investors will pay on any dividends or gains.
Where is there an incentive to invest in anything other than tax free instruments and the traditional stores of value (gold, high end gemstones, etc.)? Talk about crowding out, it’s already happening, and with a vengeance.”
Comment from CP Minetti in the Wall Street Journal 2/23/09
MOLON LABE