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I visited a Ford dealer Saturday with my youngest son. He traded a Honda Civic, which he had for three years without liking much, for a Ford Escape, which he seems, after a few days, to like quite well. I was there to assist with arranging the financing; it looks like his worst case is 3.99% with a $2,000 rebate and the best is 2.69% with the same rebate (a dealer-financing option). I’ll know by the time you read this which one wins the day. We did the calcs, and taking the rebate and borrowing at 3.99% is better than 1.9% and no rebate.

The thing is this: there were many folks at the Ford dealer, and more than a few were completing paperwork to buy automobiles. Given all the trouble in the economy, I find it remarkable that we consumer-citizens are buying big-ticket items.

It is clearer and clearer to me that the United States may continue to have relatively high unemployment and with increased productivity from the workers who have not lost their jobs. So, I guess maybe the 91% of us who are gainfully employed are still going to buy things, including new cars, Boeing airplanes and Caterpillar equipment.

As I keep writing, I’m bullish on the United States. I’m bearish on Washington, though, and pray that members of both houses of Congress and the executive branch are getting the message that spending needs to be cut. Yes, Mr. Buffett’s wish for increased taxes on the rich is fine, but — as Barron’s Monday edition points out — that only takes care of about 5% of what’s needed. What the United States really needs are spending cuts. Politicians always seem to promise that spending cuts will accompany tax increases, and they never do. The last increase had a promise of $2.50 of cuts for every $1 of increased taxes — did we ever get the $2.50 part? Of course not.

Have a great week and do terrific things (and you might write to your federal representatives).

For more on taxes and spending, see:

Tax-free planning… without the heartburn

Charles in charge

Boosting your clients’ tax efficiency

For more blogs from Richard Hoe, click here.

Readers may write to Richard Hoe at Richard Hoe Investments, LLC, 5801 East 41st Street, Suite 715, Tulsa, OK 74135-5629, or email him at [email protected]. Mr. Hoe, an investment professional for 42 years, is a member of Prosperity Network’s five-person investment team, as well as an investment advisor representative and registered representative. Paul Ewing’s Kansas City-based Prosperity Advisory Group has over $2 billion in AUM. Mr. Hoe has been writing professionally for more than 50 years and is a member of the adjunct faculty at the California Institute of Finance, a graduate school at California Lutheran University that offers an M.B.A. in financial planning. He holds five designations, including Chartered Financial Consultant, Chartered Life Underwriter and Accredited Estate Planner, and is a member of both the Society of Financial Service Professionals and the Financial Planning Association. He helps edit each edition of Andy Kilpatrick’s “Of Permanent Value,” a book about Warren Buffett and Berkshire Hathaway published yearly in advance of each shareholder meeting.

This information is intended for financial professionals only, not the general public. This is not a solicitation to buy or sell any specific security. Mr. Hoe may have positions in the securities or other investments discussed. Investments in securities do not offer a fixed rate of return. Principal, yield and/or share price will fluctuate with changes in market conditions, and when sold or redeemed, one may receive more or less than originally invested.

Evaluation copies of software and review copies of books are sometimes furnished by publishers without charge; however Mr. Hoe only reviews books and programs he feels will of value to LIS readers and avoids writing reviews he feels would be of little interest to financial professionals.


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