So we now have the much anticipated Barack Obama economic plan with the centerpiece being wealth redistribution. Taking from the rich and giving to the poor, or maybe we could say it’s not allowing one to become rich and making people stay poor. Haven’t we tried this before and seen disastrous results. Throw in a little capital gains tax and we have a recipe for a continued economic slowdown.

My last post about how investors are spooked about the prospect of an Obama victory sure seems even more plausible after hearing about his proposal. Taxing capital gains, increasing taxes for the so-called rich, and giving tax credits to those who don’t even pay taxes to begin with sounds like a rehash of European economic policy for the last few decades and look at their situation.

While the tax raise is troublesome enough, the most scandalous part of his plan is to raise death taxes across the board to 45%. What a scam. We are about to enter into the biggest generational wealth transfer in the history of the world and Obama wants to take 45% of it? Where is the outcry? Why should the government see a penny of inheritance money? Hasn’t it already been taxed multiple times? Everyone speaks about how Obama is all about justice; well where is the justice in taxing already taxed money?

If he gets elected this plan will come back and bite the very same people he is trying to help. Inheritance as well as letting workers keep more money of what the earn is the way to increase individual prosperity. If you were to confiscate all the joint net worth of both Bill Gates and Warren Buffett, and you would distribute it evenly among all Americans how much would they end up getting? A couple of bucks at best. What kind of difference will that make to anyone.

This plan is outrageous, and will do nothing to help grow the economy. But heck, Barack, if you are in the giving mood, how about sharing some of the millions you made on your book?

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Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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With global markets reeling and investors completely having lost faith in the financial system, the question needs to be raised whether Israel will turn into safe haven for investors fleeing financial turmoil. The Shekel continues to strengthen against the USD and many Israelis have been sending money back to Israel in droves.

But I can’t imagine that in this era of a truly global economy with global interdependence, Israel will remain largely unaffected by the surrounding turmoil. It just doesn’t make sense. It’s important to note that the Israeli banks have had some exposure to sub-prime as well as both Lehman Brothers and Wamu. While Israeli banks are know for their stinginess in lending money to ‘main street’, they tend to lend money no questions asked to the 10 powerful families the control the local economy. The question is how will these families be able to weather the storm. I hate to think of what will happen if they are unable to pay back their loans. We have started to see that with tycoon Arkady Gaydamak, basically offering his businesses at fire-sale prices in order to raise cash, and one local bank, Mizrachi, actually made a credit call on him.

According to Globes, Former PM and current opposition leader Benjamin Netanyahu, says that Israel needs to take strong steps to avoid falling into economic slowdown. The article says, “We must prepare for a severe slowdown.” He goes on to detail some measures that could be taken to avoid the meltdown. “In order to create rapid growth and use the crisis to strengthen the Israeli economy, we must cut taxes, implement economic reforms, and streamline government work. If we do this, when the global economy recovers, Israel will be in better shape.”

Investors should keep an eye on how the local government reacts to the growing nervousness over the economy. Any missteps could send Israel into an economic downturn that rivals what we see in Europe and the US.

Please see our Disclaimer HERE.

Aaron Katsman is Managing Editor of the Israel Opportunity Investor newsletter. He is lead portfolio manager for the Israel Growth Portfolio and Managing Director of America Israel Investment Associates, LLC. For more information, go to www.israelnewsletter.com or call 1-888-327-6179, or email aaron@profile-financial.com.

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