Tax Break Ahead for US Corporations Repatriating Capital?

I pointed out that the PIIGS were bad news for the idealized European welfare state. With these abysmal failures very evident and based on overspending, the American left can't honestly say that America should model itself after Europe any more.

A few readers wrote back, asserting, "You're wrong. The idea still works; look at Germany and Sweden." Sure, Germany and Sweden are still afloat - for now - but does this make my point invalid?

Let me put it like this: Suppose there's a new medicine on the market that can lower the chance of heart attacks by 20%. Sounds great, right? Oh wait, I left out one fact: half the time, the medicine kills the patient.

Yeah... it doesn't sound so great now, does it?

If one ignores all the possible negative outcomes, then everything sounds great. Personally, I don't want to touch policy prescriptions that resemble Russian roulette... Maybe things will turn out like Germany, or maybe like Greece. That doesn't exactly seem like a great plan to me.

I've seen this same logic with the war on terror. The pro-war crowd often says, "We haven't had a single terrorist attack since 9/11/01. So the strategy is working." I really don't understand this. It borders on certifiable insanity. If we ignore the 6,000 soldiers who have been murdered in Iraq and Afghanistan and the many more severely wounded, then it was great success. If we acknowledge those deaths - AKA reality - then it looks like two more 9/11s in the last decade.

So, what does this have to do with the price of tea in China - or in this case, the price of gold in London? In my opinion, market commentators use the exact same fallacy whenever they discuss gold. We've all seen the articles: "If interest rates go higher gold will crash"... "If the market recovers gold will crash"... "If the margins are raised gold will crash." Regardless of the story, it's the same pattern.

The authors take one single event that could negatively impact gold, and then they extrapolate it to mean the end of the "gold bubble." Furthermore, each time they ignore all the reasons gold has shot to the moon in the first place - the government's debt is getting worse, and the Fed is not slowing its printing of piles of US dollars.

This same pattern keeps captivating people because there's some truth to it - same as the war on terror comment and the German economy. If the market has a sudden, raging recovery, it probably wouldn't be the best thing in the world for gold, but I really doubt it would mean a 1980-style crash. The United States' fiscal and monetary situation is permanently messed up. None of these articles ever attack the main reason to invest in gold. I have yet to see an article stating, "Well, it looks like the Fed will become responsible, and US will pay all of its debts back.

Considering these actions, investors might want to exit gold." That article doesn't exist and probably never will.

Unless someone has a good case for the US reversing course, I'm not too worried about peripheral negative effects on gold. They might set prices back or momentarily slow the climb, but they won't break the commodity.