Just Try to be Prudent!
I don't really have a good sense of the detailed magnitude of the national debt. I did read something yesterday in an article that said the interest we are paying way outstrips all other government programs. Will have to look into it.With the premise that the debt is outrageous and dangerous (which I believe but I don't take at face value, either), then it seems like Alaska and the USA are in similar straights.To run an effective government, we must fund it. We must allocate robust resources, including money, to the cause.So, both the USA and Alaska have politicians that don't like government, and want to cut their way out of it.To really succeed, both need to raise revenues and run relatively efficient governments. So, "cuts" and also raise revenues. Taxes.
I'm glad parts of Congress seem to be focused on the debt. They defied Trump on this most recent funding round. I didn't expect that.Trump wants to "cut" but he also wants to spend like a banshee, and he doesn't want to raise taxes. In fact, he wants to cut them, too. Spend more, tax less. Hmmmm? I'm not sure that will reduce the debt.
Dunleavy's mantra for six years (besides always focusing on giving away a big fat Permanent Fund Dividend) has been cut, cut, cut and no new substantial revenues (like a broad-based income tax or sales tax) until government gets properly lean, and efficient. (An aside: here's what that says: government employees, go out and do your job. We won't provide financial support until you do. Guaranteed losing proposition when it comes to results. Usually, when people have priorities, it involves dedicating resources instead of starving the priority of resources.)Anyway, it all comes down to both running and funding good government and governance, and cuts and reform where appropriate, and paying for it as well. And, to pay for it, society needs to raise the money to pay for it, which is through taxes.I am fearful Trump and his team will put us up on the rocks. They may not, which would be a great relief. But in case it all goes bad, I am setting aside cash. Hell, it seems like Warren Buffet is doing the same, so there's that. Worst case scenario, I will miss out on an unexpected decent economic performance and management. Oh well. Worst case, I'll have ammo ready if and when we have a similar situation as 2009-2010 and 2020 covid.Seems like low downside, opportunity cost, and high upside. Things never, ever go as planned, despite our projections and strategy. But anyway, it's good to be more right than wrong in terms of bigger trends, or, if wrong, to not suffer too much.Just trying to be prudent over here! Happy New Year.
(Note as to Context: I have recently sold a warehouse, and was thinking about where to place the money. I usually like to have roughly half of my net worth in equities, and half in real estate, which, besides my house, is all Anchorage commercial real estate. Lately, I’ve gotten too weighted in real estate. So, it was time to reinvest this money in equities. To even the balance, and also because I want to set it aside for my daughter going off to college in the fall of 2026. Real estate is too illiquid for the intermediate future, which is when those tuition bills will start coming due. And, I'm not so sure Trump and his team aren’t going to ruin the economy, similar to The Great Recession and also Covid times. So, this article was basically me thinking about how to handle a projection. In terms of current events, Trump is President-elect, about to take office with his select team, and there was a budget skirmish in which the House GOP basically defied Trump and Elon Musk in trying to get rid of the debt limit. Thus the thoughts about the national debt. All these topics are contextual factors and got rolled into this little thought exercise, which I originally posted one morning on Facebook.)
(Other side note: Alaska real estate, which for me is largely focused on Anchorage industrially-zoned real estate, is looking the best it has in the 17 years of my broker career so far. And, I think that Alaska is more likely to do better than the rest of the US, probably, even if the national economy gets wrecked. I just don’t want all of my money in the narrow band of Anchorage light industrial real estate. I need, and prefer, a little more of a more liquid asset class.)
Hugh
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