Comments on: Words from the Investment Wise 2.8.2009 http://www.ritholtz.com/blog/2009/02/words-from-the-investment-wise-282009/ Macro Perspective on the Capital Markets, Economy, Geopolitics, Technology, and Digital Media Tue, 14 Feb 2012 21:16:44 +0000 hourly 1 http://wordpress.org/?v=3.0.5 By: Rajesh http://www.ritholtz.com/blog/2009/02/words-from-the-investment-wise-282009/comment-page-1/#comment-144603 Rajesh Sun, 08 Feb 2009 17:11:02 +0000 http://www.ritholtz.com/blog/?p=18547#comment-144603 I am going to have to say this a thousand times: We don't need to invest in production. We have more productive capacity than we know what to do. That is why prices are falling. Tax cuts to convince businesses to produce more goods they can't sell are counter-productive. If anything we need to increase the tax on new investments so that only the most productive investments are worthwhile. The stimulus and bank rescue plan should not attempt to return us to the old borrow and spend economy. Any such attempt will be a failure. The purpose of these plans should be to cushion the transition to a more sustainable (and lower) level of economic activity. Once we are there, businesses can then judge correctly which investments are really productive. Investing in unproductive assets is stupidity squared. At the end, you don't have the money and you haven't enjoyed spending it either. I am going to have to say this a thousand times: We don’t need to invest in production. We have more productive capacity than we know what to do. That is why prices are falling. Tax cuts to convince businesses to produce more goods they can’t sell are counter-productive. If anything we need to increase the tax on new investments so that only the most productive investments are worthwhile.

The stimulus and bank rescue plan should not attempt to return us to the old borrow and spend economy. Any such attempt will be a failure. The purpose of these plans should be to cushion the transition to a more sustainable (and lower) level of economic activity. Once we are there, businesses can then judge correctly which investments are really productive.

Investing in unproductive assets is stupidity squared. At the end, you don’t have the money and you haven’t enjoyed spending it either.

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