Please support Star Parker on her mission to free her people from the life of Government tryanny....
CURE Who are the realists and who are the ideologues?
Tuesday, September 28, 2010
Opt Out of Social Security
Given the deplorable fiscal condition of the Social Security Trust Fund, some forward-looking Americans are asking, “Why can’t I just opt out?” Even middle-aged members of the Baby Boom generation are wondering if there will be any Social Security left for them when the time comes…and if they wouldn’t be better off abandoning the government’s mandatory retirement plan.
Opt Out of Social Security
Opt Out of Social Security
A Historical Perspective of the Social Security Nightmare
There is a socialist part to this....security?
A Historical Perspective of the Social Security Nightmare
A Historical Perspective of the Social Security Nightmare
Sunday, September 26, 2010
Observations on the 2010 Republican primaries | Conservative Outpost
In 2004, the Radical Left started cleaning house in their primaries and drove many "concervative" Democrats out of office and in many cases out of the party. Well, the Tea Party movement is starting to do the same, we have driven many Big Government, Republicans out of office and replaced the with constitution-centric candidates. The establishment doesn't like this, but we must remember that they are the minority. All we need out of 2010 is to stop Obama/Pelosi/Reid from making things worse and keep up the heat on Obama and his unelected czars.
Capturing a majority of Governorships is in my opinion even more critical. Imagine 2/3 of the states passing an Arizona-like immigration law, or 2/3 of the states passing election laws that require a Presidential candidate to submit his long-form birth certificate in order to be allowed on the ballot. The Constitution was designed to prevent what we see happening now, we simply must use the power invested in the states to take back our country from the party of big government!
The real makeover begins in 2012
Observations on the 2010 Republican primaries | Conservative Outpost
Capturing a majority of Governorships is in my opinion even more critical. Imagine 2/3 of the states passing an Arizona-like immigration law, or 2/3 of the states passing election laws that require a Presidential candidate to submit his long-form birth certificate in order to be allowed on the ballot. The Constitution was designed to prevent what we see happening now, we simply must use the power invested in the states to take back our country from the party of big government!
The real makeover begins in 2012
Observations on the 2010 Republican primaries | Conservative Outpost
Friday, September 24, 2010
Wednesday, September 22, 2010
Sunday, September 19, 2010
Big Govt's War on Middle Class
A little lesson in history. Everyday, OBAMA! appoints another czar to circumvent the congress and impose his will on the people, is a scenario like this that far away. Many who grew up in the 70's will remember Price Control attempts that failed miserably to curb inflation.
Big Govt's War on Middle Class
Big Govt's War on Middle Class
Small Biz in America - CNBC.com
Great discussion by Bernie Marcus on how out of touch the leadershipin Washington is when it comes to small business and job creation. Very timely now that OBAMA! is touting his latest financial package aimed at "helping" small business....
Small Biz in America - CNBC.com
Small Biz in America - CNBC.com
Wednesday, September 15, 2010
Obama’s Plans to Help(?) Small Business - Forecasts & Trends - InvestorsInsight.com | Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
A thoughtful analysis on the nonsense of the Obama push to "help" small business. None of his proposals, none, can offset the damage of Obamacare and Frank-Dodd on the small business community.
Obama’s Plans to Help(?) Small Business - Forecasts & Trends - InvestorsInsight.com | Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
Obama’s Plans to Help(?) Small Business - Forecasts & Trends - InvestorsInsight.com | Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
Tuesday, September 14, 2010
Major Retailers Hurt By Collapse of Consumer Debt-Spending
Here is a sign to watch for as we continue to trudge forward.....
Major Retailers Hurt By Collapse of Consumer Debt-Spending
Major Retailers Hurt By Collapse of Consumer Debt-Spending
Monday, September 13, 2010
The Iraq War: “Mission accomplished”… for the Iranians
From the 5 Minute Forecast...
So… The “combat mission” is over in Iraq, the president declared last night. Just so there’s no confusion, that’s a separate thing from the “major combat operations” his predecessor declared were over in May 2003. Mission accomplished — again!
We’ve had “defining moments” like this before. Like the Paris Peace Accords that ended U.S. involvement in the Vietnam War in early 1973. Remember how that turned out a little over two years later?
We’re not saying this is how U.S. involvement in Iraq is going to end. The embassy in Baghdad is much bigger and better fortified. Still, the Iraq adventure has set in motion a series of events that could eventually end with oil north of $200 a barrel.
– Let’s review how we got to this point: Dick Cheney and friends figured on a quick war that would put an Iraqi exile buddy of theirs named Ahmed Chalabi in power. Chalabi was a successful banker educated at MIT and Chicago. If he couldn’t transform Iraq into a Jeffersonian democracy, at least he’d keep it in Washington’s corner.
Of course, ordinary Iraqis had their own ideas about who ought to run their country after Saddam Hussein. Since Shia Arabs make up about 60% of the population, we’ve since had a succession of Shia leaders. They have trouble getting along with each other, but the point here is that most of them are on friendly terms with Iran. Many lived in exile in Iran during the Saddam era.
And it turns out old Chalabi was funneling U.S. secrets to Iran himself. Thus, the supreme irony: A war started by U.S. leaders thoroughly hostile to Iran has empowered Iraqi leaders who are generally friendly with Iran.
Mission accomplished, for Iran.
For Washington, it’s a real pickle. Just yesterday in The Wall Street Journal, columnist Gerald Seib wrote that Obama’s policy in Iraq, Afghanistan and Israel-Palestine all aim to “clear the decks in order to concentrate more intensely on the paramount challenge posed by Iran and its Islamic extremist friends.”
– That’s what makes the news from Bahrain so interesting. Bahrain is an island state in the Persian Gulf, just 150 miles from Iran. It’s home to the U.S. 5th Fleet and Naval Forces Central Command.
It’s also home to a seething cauldron of Sunni-versus-Shia conflict — the ultimate dividing line in Islam, going back to the seventh century. The rulers are Sunni. The majority of the population is Shia. You can see how this might be a problem.
In recent weeks, the government’s been rounding up Shia opposition leaders. That could rile up the Shia majority. (The U.S. Embassy is advising Americans there to avoid parts of the capital city at certain times of the day.)
And it plays right into the hands of Shia Iran, which claimed Bahrain as its own territory as recently as 1970. “Politicians in Tehran still sometimes refer to the island as Iran's 14th province,” according to analyst Simon Henderson from the Washington Institute for Near East Policy. (Remember how Saddam Hussein called Kuwait Iraq’s “19th province?” Just sayin’.)
The pot gets stirred up even more next month when Bahrain holds elections. Think about it: A ruling Sunni minority propped up in power by Washington, versus a Shia majority sympathetic to Iran.
– Bahrain could actually be a fourth flash point in the “new war” Byron King sees shaping up between Shia and Sunni across the Middle East — spurred on by an Iran seeking to restore its Persian imperial luster.
“No Empire forgets its past glory,” Byron explains. “The Iranians resent losing theirs… But now they see a chance to get it back. The nuclear bomb? Tehran's crackpot leaders don't want it just to scare Israel. They want it so they can throw a dark shadow over their Sunni Arab neighbors, too.”
This is the setup for a “new war” in a region that sits atop 66% of the world’s key energy reserves. That would send oil as high as $220 and gasoline toward $8. Byron sees this coming in as little as 12-18 months.
So… The “combat mission” is over in Iraq, the president declared last night. Just so there’s no confusion, that’s a separate thing from the “major combat operations” his predecessor declared were over in May 2003. Mission accomplished — again!
We’ve had “defining moments” like this before. Like the Paris Peace Accords that ended U.S. involvement in the Vietnam War in early 1973. Remember how that turned out a little over two years later?
We’re not saying this is how U.S. involvement in Iraq is going to end. The embassy in Baghdad is much bigger and better fortified. Still, the Iraq adventure has set in motion a series of events that could eventually end with oil north of $200 a barrel.
– Let’s review how we got to this point: Dick Cheney and friends figured on a quick war that would put an Iraqi exile buddy of theirs named Ahmed Chalabi in power. Chalabi was a successful banker educated at MIT and Chicago. If he couldn’t transform Iraq into a Jeffersonian democracy, at least he’d keep it in Washington’s corner.
Of course, ordinary Iraqis had their own ideas about who ought to run their country after Saddam Hussein. Since Shia Arabs make up about 60% of the population, we’ve since had a succession of Shia leaders. They have trouble getting along with each other, but the point here is that most of them are on friendly terms with Iran. Many lived in exile in Iran during the Saddam era.
And it turns out old Chalabi was funneling U.S. secrets to Iran himself. Thus, the supreme irony: A war started by U.S. leaders thoroughly hostile to Iran has empowered Iraqi leaders who are generally friendly with Iran.
Mission accomplished, for Iran.
For Washington, it’s a real pickle. Just yesterday in The Wall Street Journal, columnist Gerald Seib wrote that Obama’s policy in Iraq, Afghanistan and Israel-Palestine all aim to “clear the decks in order to concentrate more intensely on the paramount challenge posed by Iran and its Islamic extremist friends.”
– That’s what makes the news from Bahrain so interesting. Bahrain is an island state in the Persian Gulf, just 150 miles from Iran. It’s home to the U.S. 5th Fleet and Naval Forces Central Command.
It’s also home to a seething cauldron of Sunni-versus-Shia conflict — the ultimate dividing line in Islam, going back to the seventh century. The rulers are Sunni. The majority of the population is Shia. You can see how this might be a problem.
In recent weeks, the government’s been rounding up Shia opposition leaders. That could rile up the Shia majority. (The U.S. Embassy is advising Americans there to avoid parts of the capital city at certain times of the day.)
And it plays right into the hands of Shia Iran, which claimed Bahrain as its own territory as recently as 1970. “Politicians in Tehran still sometimes refer to the island as Iran's 14th province,” according to analyst Simon Henderson from the Washington Institute for Near East Policy. (Remember how Saddam Hussein called Kuwait Iraq’s “19th province?” Just sayin’.)
The pot gets stirred up even more next month when Bahrain holds elections. Think about it: A ruling Sunni minority propped up in power by Washington, versus a Shia majority sympathetic to Iran.
– Bahrain could actually be a fourth flash point in the “new war” Byron King sees shaping up between Shia and Sunni across the Middle East — spurred on by an Iran seeking to restore its Persian imperial luster.
“No Empire forgets its past glory,” Byron explains. “The Iranians resent losing theirs… But now they see a chance to get it back. The nuclear bomb? Tehran's crackpot leaders don't want it just to scare Israel. They want it so they can throw a dark shadow over their Sunni Arab neighbors, too.”
This is the setup for a “new war” in a region that sits atop 66% of the world’s key energy reserves. That would send oil as high as $220 and gasoline toward $8. Byron sees this coming in as little as 12-18 months.
The War on Small Business: Washington’s long train of abuses against entrepreneurs
From the 5 minute forecast...
Today, we revisit a recurring theme: the assault on enterprise. It was the subject of our symposium in Vancouver in July. In this episode, we look at a particularly vulnerable segment of the economy: small businesses.
To help set the stage, let's look at some important stats from the Small Business Administration (SBA). Small businesses:
Represent 99.7% of all employer[s]
Employ just over half of all private-sector employees
Pay 44% of total U.S. private payroll
Have generated 64% of net new jobs over the past 15 years
Create more than half of the nonfarm private gross domestic product (GDP)
Hire 40% of high-tech workers (such as scientists, engineers and computer programmers)
Are 52% home-based and 2% franchises
Made up 97.3% of all identified exporters and produced 30.2% of the known export value in FY 2007.
Small firms produce 13 times more patents per employee than large patenting firms; these patents are twice as likely as large-firm patents to be among the 1% most cited.
Further, if you look to the Kauffman Foundation, startup firms are the "sole engine" of job creation in the U.S. economy.
Kauffman crunched a data set from the Census Bureau covering the years 1977-2005. In all but seven years during that period, existing businesses cut an average 1 million jobs… while firms in existence for a year or less created 3 million.
“Policymakers tend to focus on changes in the national or state unemployment rate, or on layoffs by existing companies,” explains Kauffman VP of Research and Policy Robert Litan. “But the data from this report suggest that growth would be best boosted by supporting startup firms.”
Instead, these small firms are being strangled. Let us count the ways...
According to the National Business Group on Health, the typical large business will see its health insurance costs rise 9% next year.
But for small businesses, the numbers are rising faster. Small employers in California are looking at increases of 12-23%, on average, according to the Los Angeles Times -- one got notice of a 76% increase.
It’s an acceleration of a long-standing trend…
The government has skewed health insurance costs in favor of larger businesses for decades… and now the “health reform” law signed this year is tilting the scales that much further.
Then there’s this nugget tucked into that other legislative monstrosity known as “financial reform”: Starting in 2012, every business must issue a Form 1099 to every vendor from whom it buys more than $600 in goods or services every year.
So if you’re a small businessperson and you order $601 in office supplies from Staples over the course of a year (better keep a running total), you must issue a 1099 to Staples.
26 million sole proprietorships alone will be caught up in this net. SMC Business Councils, a business networking group, reckons its typical member currently files about 10 1099s a year. Under the new rules, SMC estimates the number could reach 200.
The idea behind this requirement is to increase compliance with existing tax law. The unintended consequence is it will bury small businesses in paperwork.
Very small firms with fewer than 20 employees already spend 45% more per employee than larger firms to comply with federal regulations, according to the SBA.
And yet... right on cue... a study released by the pithily named Transactional Records Access Clearinghouse at Syracuse University shows the IRS has increased its audit hours of small businesses (those with less than $10 million in assets) by 30% over the last five years.
At the same time, large corporations’ audit hours are down 33%.
The average amount of “underreporting” found for each audit hour of a small- or midsized business was $1,025. For a large corporation, it was $9,354.
Hmmmn... that's a good trend if you’re a lawyer at a Fortune 500 firm. It's bad if you're trying to book a tee time or grow a small business.
Today, we revisit a recurring theme: the assault on enterprise. It was the subject of our symposium in Vancouver in July. In this episode, we look at a particularly vulnerable segment of the economy: small businesses.
To help set the stage, let's look at some important stats from the Small Business Administration (SBA). Small businesses:
Represent 99.7% of all employer[s]
Employ just over half of all private-sector employees
Pay 44% of total U.S. private payroll
Have generated 64% of net new jobs over the past 15 years
Create more than half of the nonfarm private gross domestic product (GDP)
Hire 40% of high-tech workers (such as scientists, engineers and computer programmers)
Are 52% home-based and 2% franchises
Made up 97.3% of all identified exporters and produced 30.2% of the known export value in FY 2007.
Small firms produce 13 times more patents per employee than large patenting firms; these patents are twice as likely as large-firm patents to be among the 1% most cited.
Further, if you look to the Kauffman Foundation, startup firms are the "sole engine" of job creation in the U.S. economy.
Kauffman crunched a data set from the Census Bureau covering the years 1977-2005. In all but seven years during that period, existing businesses cut an average 1 million jobs… while firms in existence for a year or less created 3 million.
“Policymakers tend to focus on changes in the national or state unemployment rate, or on layoffs by existing companies,” explains Kauffman VP of Research and Policy Robert Litan. “But the data from this report suggest that growth would be best boosted by supporting startup firms.”
Instead, these small firms are being strangled. Let us count the ways...
According to the National Business Group on Health, the typical large business will see its health insurance costs rise 9% next year.
But for small businesses, the numbers are rising faster. Small employers in California are looking at increases of 12-23%, on average, according to the Los Angeles Times -- one got notice of a 76% increase.
It’s an acceleration of a long-standing trend…
The government has skewed health insurance costs in favor of larger businesses for decades… and now the “health reform” law signed this year is tilting the scales that much further.
Then there’s this nugget tucked into that other legislative monstrosity known as “financial reform”: Starting in 2012, every business must issue a Form 1099 to every vendor from whom it buys more than $600 in goods or services every year.
So if you’re a small businessperson and you order $601 in office supplies from Staples over the course of a year (better keep a running total), you must issue a 1099 to Staples.
26 million sole proprietorships alone will be caught up in this net. SMC Business Councils, a business networking group, reckons its typical member currently files about 10 1099s a year. Under the new rules, SMC estimates the number could reach 200.
The idea behind this requirement is to increase compliance with existing tax law. The unintended consequence is it will bury small businesses in paperwork.
Very small firms with fewer than 20 employees already spend 45% more per employee than larger firms to comply with federal regulations, according to the SBA.
And yet... right on cue... a study released by the pithily named Transactional Records Access Clearinghouse at Syracuse University shows the IRS has increased its audit hours of small businesses (those with less than $10 million in assets) by 30% over the last five years.
At the same time, large corporations’ audit hours are down 33%.
The average amount of “underreporting” found for each audit hour of a small- or midsized business was $1,025. For a large corporation, it was $9,354.
Hmmmn... that's a good trend if you’re a lawyer at a Fortune 500 firm. It's bad if you're trying to book a tee time or grow a small business.
Sign of the Times,
From the 5 minute forecast
Federal bailout spending now exceeds the inflation-adjusted cost of World War II, according to our friends at the Independent Institute.
Senior Fellow William Shugart says World War II cost $3.6 trillion, but the bailouts now top $4 trillion. That’s actual money out of the taxpayer’s pocket, as opposed to the $12.8 trillion “lent, spent or guaranteed” figure you run across from time to time, a chunk of which might eventually be repaid.
And that’s just the direct cost. “As a result of keeping zombie businesses alive,” Shugart writes, “bailouts misallocate scarce productive resources away from more economically efficient (and profitable) uses elsewhere in the economy, alternatives that actually would promote growth and reduce unemployment.”
Can’t have that now, can we?
Federal bailout spending now exceeds the inflation-adjusted cost of World War II, according to our friends at the Independent Institute.
Senior Fellow William Shugart says World War II cost $3.6 trillion, but the bailouts now top $4 trillion. That’s actual money out of the taxpayer’s pocket, as opposed to the $12.8 trillion “lent, spent or guaranteed” figure you run across from time to time, a chunk of which might eventually be repaid.
And that’s just the direct cost. “As a result of keeping zombie businesses alive,” Shugart writes, “bailouts misallocate scarce productive resources away from more economically efficient (and profitable) uses elsewhere in the economy, alternatives that actually would promote growth and reduce unemployment.”
Can’t have that now, can we?
What crashed Greece's banks...
From the S&A Digest...
"If the law was enforced," the tax collector said, "every doctor in Greece would be in jail."
Michael Lewis wrote a great article on the Greek collapse in Vanity Fair. He traveled to Greece and interviewed government employees, tax collectors, and monks (explained in the article). Lewis wanted to know what caused Greece to crash so spectacularly. Unlike most of the world, Greece's banks didn't use the credit expansion to load up on subprime U.S. securities and other garbage. The cause for Greece's collapse is much simpler... It's socialism and good, old-fashioned government corruption. Greek banks took all of the new money and lent it to the government. And the government did what it does best... stole and squandered. As Lewis puts it, "In Greece, the banks didn't sink the country. The country sank the banks." In the excerpt below, Lewis notes the excesses in Greece's public sector...
The average government job pays almost three times the average private-sector job. The national railroad has annual revenues of 100 million euros against an annual wage bill of 400 million, plus 300 million euros in other expenses. The average state railroad employee earns 65,000 euros a year. Twenty years ago a successful businessman turned minister of finance named Stefanos Manos pointed out that it would be cheaper to put all Greece's rail passengers into taxicabs: it's still true...
The Greek public-school system is the site of breathtaking inefficiency: one of the lowest-ranked systems in Europe, it nonetheless employs four times as many teachers per pupil as the highest-ranked, Finland's. Greeks who send their children to public schools simply assume that they will need to hire private tutors to make sure they actually learn something. There are three government-owned defense companies: together they have billions of euros in debts, and mounting losses.
The retirement age for Greek jobs classified as "arduous" is as early as 55 for men and 50 for women. As this is also the moment when the state begins to shovel out generous pensions, more than 600 Greek professions somehow managed to get themselves classified as arduous: hairdressers, radio announcers, waiters, musicians, and on and on and on. The Greek public health-care system spends far more on supplies than the European average—and it is not uncommon, several Greeks tell me, to see nurses and doctors leaving the job with their arms filled with paper towels and diapers and whatever else they can plunder from the supply closets.
The excesses in Greece's liberal government pay policies are only rivaled by the government's inability to record costs. When Greek minister of finance, George Papaconstantinou, took his post last October (his job was to solve the mess), he discovered billions of dollars of government programs that were never accounted for. The G reek government never had a third-party verify its statements... That's one reason the news from Greece continually worsened... The government continually discovered it owed more and more money.
Greece is also particularly inept at collecting taxes. No self-employed citizens pay taxes because the government doesn't make them. One of the characters quoted in the article told Lewis: "It's become a cultural trait. The Greek people never learned to pay their taxes. And they never did because no one is punished. No one has ever been punished. It's a cavalier offense – like a gentleman not opening a door for a lady." To top things off, 2009 was an election year in Greece. During election years, politicians "pull the tax collectors off the streets." You can read Lewis' full article here.
"If the law was enforced," the tax collector said, "every doctor in Greece would be in jail."
Michael Lewis wrote a great article on the Greek collapse in Vanity Fair. He traveled to Greece and interviewed government employees, tax collectors, and monks (explained in the article). Lewis wanted to know what caused Greece to crash so spectacularly. Unlike most of the world, Greece's banks didn't use the credit expansion to load up on subprime U.S. securities and other garbage. The cause for Greece's collapse is much simpler... It's socialism and good, old-fashioned government corruption. Greek banks took all of the new money and lent it to the government. And the government did what it does best... stole and squandered. As Lewis puts it, "In Greece, the banks didn't sink the country. The country sank the banks." In the excerpt below, Lewis notes the excesses in Greece's public sector...
The average government job pays almost three times the average private-sector job. The national railroad has annual revenues of 100 million euros against an annual wage bill of 400 million, plus 300 million euros in other expenses. The average state railroad employee earns 65,000 euros a year. Twenty years ago a successful businessman turned minister of finance named Stefanos Manos pointed out that it would be cheaper to put all Greece's rail passengers into taxicabs: it's still true...
The Greek public-school system is the site of breathtaking inefficiency: one of the lowest-ranked systems in Europe, it nonetheless employs four times as many teachers per pupil as the highest-ranked, Finland's. Greeks who send their children to public schools simply assume that they will need to hire private tutors to make sure they actually learn something. There are three government-owned defense companies: together they have billions of euros in debts, and mounting losses.
The retirement age for Greek jobs classified as "arduous" is as early as 55 for men and 50 for women. As this is also the moment when the state begins to shovel out generous pensions, more than 600 Greek professions somehow managed to get themselves classified as arduous: hairdressers, radio announcers, waiters, musicians, and on and on and on. The Greek public health-care system spends far more on supplies than the European average—and it is not uncommon, several Greeks tell me, to see nurses and doctors leaving the job with their arms filled with paper towels and diapers and whatever else they can plunder from the supply closets.
The excesses in Greece's liberal government pay policies are only rivaled by the government's inability to record costs. When Greek minister of finance, George Papaconstantinou, took his post last October (his job was to solve the mess), he discovered billions of dollars of government programs that were never accounted for. The G reek government never had a third-party verify its statements... That's one reason the news from Greece continually worsened... The government continually discovered it owed more and more money.
Greece is also particularly inept at collecting taxes. No self-employed citizens pay taxes because the government doesn't make them. One of the characters quoted in the article told Lewis: "It's become a cultural trait. The Greek people never learned to pay their taxes. And they never did because no one is punished. No one has ever been punished. It's a cavalier offense – like a gentleman not opening a door for a lady." To top things off, 2009 was an election year in Greece. During election years, politicians "pull the tax collectors off the streets." You can read Lewis' full article here.
The Daily Reckoning Presents You say Obama; I say Ozawa! You say boom; I say ka-boom!
The Nobel Prize committee has never withdrawn a prize. It might want to consider it. In Tuesday's New York Times, prizewinner in economics, Paul Krugman reveals either that he knows nothing about economics...or that there is nothing worth knowing in it. We're beginning to think it's the latter.
"From an economic point of view," he writes, "World War II was, above all, a burst of deficit-financed government spending, on a scale that would never have been approved otherwise. Deficit spending created an economic boom - and the boom laid the foundation for long-run prosperity...."
In the 1938 US elections, voters showed what they thought of the New Deal; Democrats lost 70 seats in the House. Then as now, the public had lost faith in public spending, says Krugman. Nearly two out of three of those polled said they were opposed to stimulus efforts. Roosevelt buckled under the pressure; he drew back from further spending to fight the slump.
Thank God for WWII! No one opposes military spending in time of war. Krugman made his position clear in 2008 in his New York Times blog.
"The fact is that war is, in general, expansionary for the economy, at least in the short run. World War II, remember, ended the Great Depression."
According to this line of thinking, the best form of stimulus spending is money spent on the military. It creates consumer demand without creating consumer supply. Consumer prices rise; people spend. The slump is soon over.
But if WWII helped the US economy, think what it must have done for Japan; proportionally, its stimulus efforts dwarfed those of the US...and began much earlier. Just this week, Ichiro Ozawa, running for prime minister of Japan, vowed to take "every measure" to lower the yen and promised a stimulus package more than twice as big as the current program. He was just following in the footsteps of Japan's leaders from the '30s. It was "economic security" they said they were after. And they thought they could get it by central planning and government spending. Military spending rose from 31% of the budget in the early '30s to nearly 50% five years later. By the early '40s it was around 70% and nearly 100% later on. Deficits and debt soared.
Did that create a boom? You bet it did. Japan was the first nation to get out of the global slump. It boomed...and boomed...and ka-boomed. When it came to warships, planes, and soldiers, Japan was soon among the richest nations in the world. Yes, Americans had more electric fans, automobiles, central heating, aspirin, ice cream, and the rest of the paraphernalia of civilized life at the time. In the mid-'30s, the US produced 40 times as many autos per person as did Japan. Even during the Great Depression, the US out-produced Japan by a factor of 7 and its workers earned 10-times as much money.
Economists can't even measure real prosperity, let alone fiddle it. So they put on the GDP and employment numbers the way a bald man puts on a cheap wig. It makes him look ridiculous and fraudulent, but it's the best he can do. Unemployment disappears in a war economy. Japan put a million men in uniform. Two million more were part-time reservists. Those who weren't in the army were put to work building tanks and planes. By 1941, Japan could produce 10,000 planes a year. If you were a swallow you wouldn't want to build your nest in Japan's factory chimneys; they belched smoke night and day.
And talk about fiscal stimulus! Krugman would have loved it - stimulus unfettered by real money or even a casual regard for real prosperity. Takahashi Korekiyo was known as the "Japanese Keynes." Gillian Tett notes in The Financial Times that he was assassinated in 1936 after he came to his senses and tried to bring state finances under control. He was done in by army officers who did not want the stimulus to stop. Not that we're being judgmental about it. As far as we know, the quality of central banking could probably be improved by an occasional assassination.
Takahashi wasn't the first. Before him Junnosuke Inoue had held out for the gold standard and balanced budgets. He was out of office by 1931 and out of luck in 1932, when he was murdered. The gold-backed yen was abolished the day he left office. Then, public spending, deficits, central planning, debt, and inflation ran wild. By 1939, the Japanese were spending $5 million a day on their war with China - a huge sum for the Japanese at the time.
Was the economy improved by all this spending? No, it was perverted...hammered into a grotesque imposter - a parody of a real economy. Most of the nation's resources were put to work building things almost no one wanted. Then, after the attack on Pearl Harbor, the stimulus efforts were redoubled. Rations were reduced further. Working hours were extended. What few consumer items were available were three times as expensive at the end of the war as they had been when it began. Men were conscripted into factories and the army. Women were expected not only to make the tanks, but to join the home-guard and prepare themselves to repulse the American invaders with sharpened bamboo sticks. What a marvelous economy - operating at full capacity and full employment until General MacArthur finally put it out of its misery.
Regards,
Bill Bonner,
for The Daily Reckoning
"From an economic point of view," he writes, "World War II was, above all, a burst of deficit-financed government spending, on a scale that would never have been approved otherwise. Deficit spending created an economic boom - and the boom laid the foundation for long-run prosperity...."
In the 1938 US elections, voters showed what they thought of the New Deal; Democrats lost 70 seats in the House. Then as now, the public had lost faith in public spending, says Krugman. Nearly two out of three of those polled said they were opposed to stimulus efforts. Roosevelt buckled under the pressure; he drew back from further spending to fight the slump.
Thank God for WWII! No one opposes military spending in time of war. Krugman made his position clear in 2008 in his New York Times blog.
"The fact is that war is, in general, expansionary for the economy, at least in the short run. World War II, remember, ended the Great Depression."
According to this line of thinking, the best form of stimulus spending is money spent on the military. It creates consumer demand without creating consumer supply. Consumer prices rise; people spend. The slump is soon over.
But if WWII helped the US economy, think what it must have done for Japan; proportionally, its stimulus efforts dwarfed those of the US...and began much earlier. Just this week, Ichiro Ozawa, running for prime minister of Japan, vowed to take "every measure" to lower the yen and promised a stimulus package more than twice as big as the current program. He was just following in the footsteps of Japan's leaders from the '30s. It was "economic security" they said they were after. And they thought they could get it by central planning and government spending. Military spending rose from 31% of the budget in the early '30s to nearly 50% five years later. By the early '40s it was around 70% and nearly 100% later on. Deficits and debt soared.
Did that create a boom? You bet it did. Japan was the first nation to get out of the global slump. It boomed...and boomed...and ka-boomed. When it came to warships, planes, and soldiers, Japan was soon among the richest nations in the world. Yes, Americans had more electric fans, automobiles, central heating, aspirin, ice cream, and the rest of the paraphernalia of civilized life at the time. In the mid-'30s, the US produced 40 times as many autos per person as did Japan. Even during the Great Depression, the US out-produced Japan by a factor of 7 and its workers earned 10-times as much money.
Economists can't even measure real prosperity, let alone fiddle it. So they put on the GDP and employment numbers the way a bald man puts on a cheap wig. It makes him look ridiculous and fraudulent, but it's the best he can do. Unemployment disappears in a war economy. Japan put a million men in uniform. Two million more were part-time reservists. Those who weren't in the army were put to work building tanks and planes. By 1941, Japan could produce 10,000 planes a year. If you were a swallow you wouldn't want to build your nest in Japan's factory chimneys; they belched smoke night and day.
And talk about fiscal stimulus! Krugman would have loved it - stimulus unfettered by real money or even a casual regard for real prosperity. Takahashi Korekiyo was known as the "Japanese Keynes." Gillian Tett notes in The Financial Times that he was assassinated in 1936 after he came to his senses and tried to bring state finances under control. He was done in by army officers who did not want the stimulus to stop. Not that we're being judgmental about it. As far as we know, the quality of central banking could probably be improved by an occasional assassination.
Takahashi wasn't the first. Before him Junnosuke Inoue had held out for the gold standard and balanced budgets. He was out of office by 1931 and out of luck in 1932, when he was murdered. The gold-backed yen was abolished the day he left office. Then, public spending, deficits, central planning, debt, and inflation ran wild. By 1939, the Japanese were spending $5 million a day on their war with China - a huge sum for the Japanese at the time.
Was the economy improved by all this spending? No, it was perverted...hammered into a grotesque imposter - a parody of a real economy. Most of the nation's resources were put to work building things almost no one wanted. Then, after the attack on Pearl Harbor, the stimulus efforts were redoubled. Rations were reduced further. Working hours were extended. What few consumer items were available were three times as expensive at the end of the war as they had been when it began. Men were conscripted into factories and the army. Women were expected not only to make the tanks, but to join the home-guard and prepare themselves to repulse the American invaders with sharpened bamboo sticks. What a marvelous economy - operating at full capacity and full employment until General MacArthur finally put it out of its misery.
Regards,
Bill Bonner,
for The Daily Reckoning
Fidel Castro on the Futility of the Cuban Economic System
From the Daily Reckoning
Fidel Castro is back on the job. After a long illness, the man is back at work...running his island nation into the ground.
Fifty years ago, Cuba was the most prosperous, most fun-loving, most- likely-to-succeed nation in Latin America. But...uh oh...it had a dictator.
So, Fidel Castro and his band of sociopaths and incompetents took over. One of Fidel's first acts as the new dictator was to appoint Che Guevara to run the central bank. What a mistake that was. Che was no better banker than he was anything else...which is to say, he was terrible. Soon, the economy was a wreck. Fidel figured he should get rid of Che...so Che was packed off to begin a series of very stupid attempts to export revolution...first, with a criminal gang in Africa, which ended in disaster for everyone...and second, where at least Che could speak the language, in South America. That one ended in disaster for Che...which is to say, it was a plus for the rest of the world.
But El Presidente is no fool. And now he's come to see that his economic model doesn't work. Bloomberg reports:
Fidel Castro's comment to a visiting US journalist that Cuba's economic system doesn't work is the strongest signal yet that the communist island is looking to private enterprise and foreign investment to bolster growth.
"The Cuban model doesn't even work for us anymore," Castro told journalist Jeffrey Goldberg after being asked if he believed it was something still worth exporting, according to a post yesterday on The Atlantic magazine's website. Castro didn't elaborate on his comment, Goldberg said.
Since re-entering the public sphere in July following an illness that almost killed him, statements by the 84-year-old former president have focused on international affairs. His silence on domestic issues signals he is willing to allow his brother Raul to reduce state control of the economy, said Tomas Bilbao, executive director of the Washington-based Cuba Study Group, which promotes free-market overhaul of the Cuban economy.
"These are pragmatic admissions from an idealist," Bilbao said. "Ever since he came back he has stayed away from talking about domestic issues which in itself is the best thing he can do to support his brother's running of the country."
Raul Castro, 79, has initiated measures to open the economy since being handed power by his brother in 2006. The moves come as the economy suffers its worst slide since the former Soviet Union ended its support in the 1990s, Bilbao said.
In a speech to the National Assembly on Aug. 1, Raul said that the government will allow more citizens to work for themselves rather than for the state. He warned that some government workers will lose their jobs to reduce inefficiency.
Property Laws
That month, the government loosened controls that prohibited Cubans from selling their own fruit and vegetables. It also eased property laws, extending lease periods to 99 years from 50 years for foreign investors in an effort to build up a tourism infrastructure and draw more visitors to the Caribbean island of 11.4 million people.
Cubans can now run private taxi companies, own mobile phones and operate their own barbershops. The state still controls 90 percent of the economy, paying workers salaries of about $20 a month in addition to free rationed food staples and health care, and nearly free housing and transportation.
The island's economy is suffering after prices for exports such as sugar and seafood fell. Cuba, the world's seventh- biggest nickel exporter, has seen the price of that metal tumble 59 percent this year.
Raul said in July that one in five state workers may not be needed to keep the government running. The Cuban government employs 95 percent of the country's workforce.
Cuba now receives about 100,000 barrels of oil a day from Venezuela, which Cuba pays for by sending medical staff to work in the South American country's community clinics. Venezuela has suffered five consecutive quarters of economic contraction and Cuba is looking to diversify its trade partners, Bilbao said.
What surprises us is that anyone thought the Cuban model would ever work.
Regards,
Bill Bonner,
for The Daily Reckoning
Fidel Castro is back on the job. After a long illness, the man is back at work...running his island nation into the ground.
Fifty years ago, Cuba was the most prosperous, most fun-loving, most- likely-to-succeed nation in Latin America. But...uh oh...it had a dictator.
So, Fidel Castro and his band of sociopaths and incompetents took over. One of Fidel's first acts as the new dictator was to appoint Che Guevara to run the central bank. What a mistake that was. Che was no better banker than he was anything else...which is to say, he was terrible. Soon, the economy was a wreck. Fidel figured he should get rid of Che...so Che was packed off to begin a series of very stupid attempts to export revolution...first, with a criminal gang in Africa, which ended in disaster for everyone...and second, where at least Che could speak the language, in South America. That one ended in disaster for Che...which is to say, it was a plus for the rest of the world.
But El Presidente is no fool. And now he's come to see that his economic model doesn't work. Bloomberg reports:
Fidel Castro's comment to a visiting US journalist that Cuba's economic system doesn't work is the strongest signal yet that the communist island is looking to private enterprise and foreign investment to bolster growth.
"The Cuban model doesn't even work for us anymore," Castro told journalist Jeffrey Goldberg after being asked if he believed it was something still worth exporting, according to a post yesterday on The Atlantic magazine's website. Castro didn't elaborate on his comment, Goldberg said.
Since re-entering the public sphere in July following an illness that almost killed him, statements by the 84-year-old former president have focused on international affairs. His silence on domestic issues signals he is willing to allow his brother Raul to reduce state control of the economy, said Tomas Bilbao, executive director of the Washington-based Cuba Study Group, which promotes free-market overhaul of the Cuban economy.
"These are pragmatic admissions from an idealist," Bilbao said. "Ever since he came back he has stayed away from talking about domestic issues which in itself is the best thing he can do to support his brother's running of the country."
Raul Castro, 79, has initiated measures to open the economy since being handed power by his brother in 2006. The moves come as the economy suffers its worst slide since the former Soviet Union ended its support in the 1990s, Bilbao said.
In a speech to the National Assembly on Aug. 1, Raul said that the government will allow more citizens to work for themselves rather than for the state. He warned that some government workers will lose their jobs to reduce inefficiency.
Property Laws
That month, the government loosened controls that prohibited Cubans from selling their own fruit and vegetables. It also eased property laws, extending lease periods to 99 years from 50 years for foreign investors in an effort to build up a tourism infrastructure and draw more visitors to the Caribbean island of 11.4 million people.
Cubans can now run private taxi companies, own mobile phones and operate their own barbershops. The state still controls 90 percent of the economy, paying workers salaries of about $20 a month in addition to free rationed food staples and health care, and nearly free housing and transportation.
The island's economy is suffering after prices for exports such as sugar and seafood fell. Cuba, the world's seventh- biggest nickel exporter, has seen the price of that metal tumble 59 percent this year.
Raul said in July that one in five state workers may not be needed to keep the government running. The Cuban government employs 95 percent of the country's workforce.
Cuba now receives about 100,000 barrels of oil a day from Venezuela, which Cuba pays for by sending medical staff to work in the South American country's community clinics. Venezuela has suffered five consecutive quarters of economic contraction and Cuba is looking to diversify its trade partners, Bilbao said.
What surprises us is that anyone thought the Cuban model would ever work.
Regards,
Bill Bonner,
for The Daily Reckoning
Friday, September 10, 2010
Andy Xie: The Financial Industry Is A 'Gigantic Parasite' We Don't Need Anymore
Great piece around the concept of industrial obsolesence. Too often we assume that things must exist without asking why?
Andy Xie: The Financial Industry Is A 'Gigantic Parasite' We Don't Need Anymore
Andy Xie: The Financial Industry Is A 'Gigantic Parasite' We Don't Need Anymore
Join the Campaign for Liberty
I'm sharing this video from an organization that is gaining momentum and educating thousands about the true role of government. let's hope we can educate millions!
Campaign for Liberty - Federal Survey
Campaign for Liberty - Federal Survey
After a Year of Setbacks, U.N. Looks to Take Charge of World's Agenda
This article from Fox News will make your blood boil. The idea of these elitists is not to spread the wealth, but to spread the poverty while concentrating the wealth in a way that will keep them in power. Ask your congressman or Senator about where they stand on this issue.
FOXNews.com - EXCLUSIVE: After a Year of Setbacks, U.N. Looks to Take Charge of World's Agenda
Here was my response from Senator Herb Kohl when I asked him whether or not he would be willing to subject US citizens to the tyranny of the UN....
Dear Mr. Carpenter:
I am sorry to hear that you are unhappy with how your government is representing you. This is a difficult time in our history, and I share your concern that we need to get our country back on track. While we may not agree on every issue, I hope we can find common ground on the goal of getting the economy moving again.
Wisconsin is a state with a rich political history and diverse opinions, and it is an honor to represent the millions of people that live in our state. Please know that your opinion is very important to me. I hope that in the future I will have the opportunity to work on issues where we can find agreement.
Sincerely,
Herb Kohl
United States Senator
Please do not reply to this email. In order to ensure that email from my constituents receives highest priority, it must be sorted from out-of-state email through a webform. Please submit any additional comments here: http://kohl.senate.gov/contact.cfm
If you look up "empty suit" in the dictionary, you will see a picture of nearly 100 Senators and one current President...
FOXNews.com - EXCLUSIVE: After a Year of Setbacks, U.N. Looks to Take Charge of World's Agenda
Here was my response from Senator Herb Kohl when I asked him whether or not he would be willing to subject US citizens to the tyranny of the UN....
Dear Mr. Carpenter:
I am sorry to hear that you are unhappy with how your government is representing you. This is a difficult time in our history, and I share your concern that we need to get our country back on track. While we may not agree on every issue, I hope we can find common ground on the goal of getting the economy moving again.
Wisconsin is a state with a rich political history and diverse opinions, and it is an honor to represent the millions of people that live in our state. Please know that your opinion is very important to me. I hope that in the future I will have the opportunity to work on issues where we can find agreement.
Sincerely,
Herb Kohl
United States Senator
Please do not reply to this email. In order to ensure that email from my constituents receives highest priority, it must be sorted from out-of-state email through a webform. Please submit any additional comments here: http://kohl.senate.gov/contact.cfm
If you look up "empty suit" in the dictionary, you will see a picture of nearly 100 Senators and one current President...
Report: US must deal with domestic radical problem - Yahoo! News
Gee, ya think?
How long has it been reported about recruitment in federal prisons? The number 1 priority of the federal government is to protect it's citizens, where do you think that item falls on this administration's priority list?
Report: US must deal with domestic radical problem - Yahoo! News
How long has it been reported about recruitment in federal prisons? The number 1 priority of the federal government is to protect it's citizens, where do you think that item falls on this administration's priority list?
Report: US must deal with domestic radical problem - Yahoo! News
Wednesday, September 08, 2010
Has the Liberal Economic Experiment Failed? - Forecasts & Trends - InvestorsInsight.com | Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
While this article does explain what we are seeing today, it does not go into the real reasons that "capitalism" failed. The housing bubble was anything but a result of free-market capitalism. When the US government is threatening you to lend money to people who will never pay it back, that is not capitalism and it is exactly what took place under the Community Reinvestment Act.....
Has the Liberal Economic Experiment Failed? - Forecasts & Trends - InvestorsInsight.com | Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
Has the Liberal Economic Experiment Failed? - Forecasts & Trends - InvestorsInsight.com | Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
Tuesday, September 07, 2010
What Bernanke Doesn’t Understand - John Mauldin's Outside the Box - InvestorsInsight.com | Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
Great article explaining what is really happening in the economy and why the growth of the last 2 decades really wasn't.....
What Bernanke Doesn’t Understand - John Mauldin's Outside the Box - InvestorsInsight.com | Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
What Bernanke Doesn’t Understand - John Mauldin's Outside the Box - InvestorsInsight.com | Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
Wednesday, September 01, 2010
Crushing Deficits - Who is to Blame?
The Washington Post babbled again today about Obama inheriting a huge deficit from Bush. Amazingly enough,..... a lot of people swallow this nonsense. So once more, a short civics lesson.
Budgets do NOT come from the White House. They come from Congress, and the party that controlled Congress since January 2007 is the Democratic Party. They controlled the budget process for FY 2008 and FY 2009, as well as FY 2010 and FY 2011. In that first year, they had to contend with George Bush, which caused them to compromise on spending, when Bush somewhat belatedly got tough on spending increases.
For FY 2009 though, Nancy Pelosi and Harry Reid by-passed George Bush entirely, passing continuing resolutions to keep government running until Barack Obama could take office. At that time, they passed a massive omnibus spending bill to complete the FY 2009 budgets.
And where was Barack Obama during this time? He was a member of that very Congress that passed all of these massive spending bills, and he signed the omnibus bill as President to complete FY 2009. Let's remember what the deficits looked like during that period: (below)
If the Democrats inherited any deficit, it was the FY 2007 deficit, the last of the Republican budgets. That deficit was the lowest in five years, and the fourth straight decline in deficit spending. After that, Democrats in Congress took control of spending, and that includes Barack Obama, who voted for the budgets. If Obama inherited anything, he inherited it from himself.
In a nutshell, what Obama is saying is - I inherited a deficit that I voted for and I voted to expand the deficit four-fold since January 20th.
So Who Do We Blame Now??
Budgets do NOT come from the White House. They come from Congress, and the party that controlled Congress since January 2007 is the Democratic Party. They controlled the budget process for FY 2008 and FY 2009, as well as FY 2010 and FY 2011. In that first year, they had to contend with George Bush, which caused them to compromise on spending, when Bush somewhat belatedly got tough on spending increases.
For FY 2009 though, Nancy Pelosi and Harry Reid by-passed George Bush entirely, passing continuing resolutions to keep government running until Barack Obama could take office. At that time, they passed a massive omnibus spending bill to complete the FY 2009 budgets.
And where was Barack Obama during this time? He was a member of that very Congress that passed all of these massive spending bills, and he signed the omnibus bill as President to complete FY 2009. Let's remember what the deficits looked like during that period: (below)
If the Democrats inherited any deficit, it was the FY 2007 deficit, the last of the Republican budgets. That deficit was the lowest in five years, and the fourth straight decline in deficit spending. After that, Democrats in Congress took control of spending, and that includes Barack Obama, who voted for the budgets. If Obama inherited anything, he inherited it from himself.
In a nutshell, what Obama is saying is - I inherited a deficit that I voted for and I voted to expand the deficit four-fold since January 20th.
So Who Do We Blame Now??
Start saving for higher taxes next year, it's coming in 3 waves
From Kiplinger:
In six months, on January 1, 2011, the largest tax hikes in the history of America will take effect.
They will hit families and small businesses in three great waves.
On January 1, 2011, here’s what happens... (read it to the end, so you see all three waves)...
First Wave:
Expiration of 2001 and 2003 Tax Relief
In 2001 and 2003, the GOP Congress enacted several tax cuts for investors, small business owners, and families.
These will all expire on January 1, 2011.
Personal income tax rates will rise.
The top income tax rate will rise from 35 to 39.6 percent (this is also the rate at which two-thirds of small business profits are taxed).
The lowest rate will rise from 10 to 15 percent.
All the rates in between will also rise.
Itemized deductions and personal exemptions will again phase out, which has the same mathematical effect as higher marginal tax rates.
The full list of marginal rate hikes is below:
The 10% bracket rises to an expanded 15%
The 25% bracket rises to 28%
The 28% bracket rises to 31%
The 33% bracket rises to 36%
The 35% bracket rises to 39.6%
Higher taxes on marriage and family.
The "marriage penalty" (narrower tax brackets for married couples) will return from the first dollar of income.
The child tax credit will be cut in half from $1000 to $500 per child.
The standard deduction will no longer be doubled for married couples relative to the single level.
The dependent care and adoption tax credits will be cut.
The return of the Death Tax.
This year only, there is no death tax. (It’s a quirk!) For those dying on or after January 1, 2011, there is a 55 percent
top death tax rate on estates over $1 million. A person leaving behind two homes, a business, a retirement account, could easily pass along a death tax bill to their loved ones. Think of the farmers who don’t make much money, but their land, which they purchased years ago with after-tax dollars, is now worth a lot of money. Their children will have to sell the farm, which may be their livelihood, just to pay the estate tax if they don’t have the cash sitting around to pay the tax. Think about your own family’s assets. Maybe your family owns real estate, or a business that doesn’t make much money, but the building and equipment are worth $1 million. Upon their death, you can inherit the $1 million business tax free, but if they own a home, stock, cash worth $500K on top of the $1 million business, then you will owe the government $275,000 cash! That’s 55% of the value of the assets over $1 million! Do you have that kind of cash sitting around waiting to pay the estate tax?
Higher tax rates on savers and investors.
The capital gains tax will rise from 15 percent this year to 20 percent in 2011.
The dividends tax will rise from 15 percent this year to 39.6 percent in 2011.
These rates will rise another 3.8 percent in 2013.
Second Wave:
Obamacare
There are over twenty new or higher taxes in Obamacare. Several will first go into effect on January 1, 2011. They include:
The "Medicine Cabinet Tax"
Thanks to Obamacare, Americans will no longer be able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin).
The "Special Needs Kids Tax"
This provision of Obamacare imposes a cap on flexible spending accounts (FSAs) of $2500 (Currently, there is no federal government limit). There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children.
There are thousands of families with special needs children in the United States , and many of them use FSAs to pay for special needs education.
Tuition rates at one leading school that teaches special needs children in Washington , D.C. ( National Child Research Center ) can easily exceed $14,000 per year.
Under tax rules, FSA dollars can not be used to pay for this type of special needs education.
The HSA (Health Savings Account) Withdrawal Tax Hike.
This provision of Obamacare increases the additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent.
Third Wave:
The Alternative Minimum Tax (AMT) and Employer Tax Hikes
When Americans prepare to file their tax returns in January of 2011, they'll be in for a nasty surprise-the AMT won't be held harmless, and many tax relief provisions will have expired.
The major items include:
The AMT will ensnare over 28 million families, up from 4 million last year.
According to the left-leaning Tax Policy Center , Congress' failure to index the AMT will lead to an explosion of AMT taxpaying families-rising from 4 million last year to 28.5 million. These families will have to calculate their tax burdens twice, and pay taxes at the higher level. The AMT was created in 1969 to ensnare a handful of taxpayers.
Small business expensing will be slashed and 50% expensing will disappear.
Small businesses can normally expense (rather than slowly-deduct, or "depreciate") equipment purchases up to $250,000.
This will be cut all the way down to $25,000. Larger businesses can currently expense half of their purchases of equipment.
In January of 2011, all of it will have to be "depreciated."
Taxes will be raised on all types of businesses.
There are literally scores of tax hikes on business that will take place. The biggest is the loss of the "research and experimentation tax credit," but there are many, many others. Combining high marginal tax rates with the loss of this tax relief will cost jobs.
Tax Benefits for Education and Teaching Reduced.
The deduction for tuition and fees will not be available.
Tax credits for education will be limited.
Teachers will no longer be able to deduct classroom expenses.
Coverdell Education Savings Accounts will be cut.
Employer-provided educational assistance is curtailed.
The student loan interest deduction will be disallowed for hundreds of thousands of families.
Charitable Contributions from IRAs no longer allowed.
Under current law, a retired person with an IRA can contribute up to $100,000 per year directly to a charity from their IRA.
This contribution also counts toward an annual "required minimum distribution." This ability will no longer be there.
PDF Version Read more: <;; http://www.atr.org/six-months-untilbr-largest-tax-hikes-a5171#%23ixzz0sY8waPq1
And worse yet?
Now, your insurance will be INCOME on your W2's!
One of the surprises we'll find come next year, is what follows - - a little "surprise" that 99% of us had no idea was included in the"new and improved" healthcare legislation . . . the dupes, er, dopes, who backed this administration will be astonished!
Starting in 2011, (next year folks), your W-2 tax form sent by your employer will be increased to show the value of whatever health insurance you are given by the company. It does not matter if that's a private concern or governmental body of some sort.
If you're retired? So what... your gross will go up by the amount of insurance you get.
You will be required to pay taxes on a large sum of money that you have never seen. Take your tax form you just finished and see what $15,000 or $20,000 additional gross does to your tax debt. That's what you'll pay next year.
For many, it also puts you into a new higher bracket so it's even worse.
This is how the government is going to buy insurance for the15% that don't have insurance and it's only part of the tax increases.
Not believing this??? Here is a research of the summaries.....
On page 25 of 29: TITLE IX REVENUE PROVISIONS- SUBTITLE A: REVENUE OFFSET PROVISIONS-(sec. 9001,
as modified by sec. 10901) Sec.9002 "requires employers to include in the W-2 form of each employee the aggregate cost ofapplicable employer sponsored group health coverage that is excludable from the employees gross income."
- Joan Pryde is the senior tax editor for the Kiplinger letters.
- Go to Kiplingers and read about 13 tax changes that could affect you. Number 3 is what is above.
In six months, on January 1, 2011, the largest tax hikes in the history of America will take effect.
They will hit families and small businesses in three great waves.
On January 1, 2011, here’s what happens... (read it to the end, so you see all three waves)...
First Wave:
Expiration of 2001 and 2003 Tax Relief
In 2001 and 2003, the GOP Congress enacted several tax cuts for investors, small business owners, and families.
These will all expire on January 1, 2011.
Personal income tax rates will rise.
The top income tax rate will rise from 35 to 39.6 percent (this is also the rate at which two-thirds of small business profits are taxed).
The lowest rate will rise from 10 to 15 percent.
All the rates in between will also rise.
Itemized deductions and personal exemptions will again phase out, which has the same mathematical effect as higher marginal tax rates.
The full list of marginal rate hikes is below:
The 10% bracket rises to an expanded 15%
The 25% bracket rises to 28%
The 28% bracket rises to 31%
The 33% bracket rises to 36%
The 35% bracket rises to 39.6%
Higher taxes on marriage and family.
The "marriage penalty" (narrower tax brackets for married couples) will return from the first dollar of income.
The child tax credit will be cut in half from $1000 to $500 per child.
The standard deduction will no longer be doubled for married couples relative to the single level.
The dependent care and adoption tax credits will be cut.
The return of the Death Tax.
This year only, there is no death tax. (It’s a quirk!) For those dying on or after January 1, 2011, there is a 55 percent
top death tax rate on estates over $1 million. A person leaving behind two homes, a business, a retirement account, could easily pass along a death tax bill to their loved ones. Think of the farmers who don’t make much money, but their land, which they purchased years ago with after-tax dollars, is now worth a lot of money. Their children will have to sell the farm, which may be their livelihood, just to pay the estate tax if they don’t have the cash sitting around to pay the tax. Think about your own family’s assets. Maybe your family owns real estate, or a business that doesn’t make much money, but the building and equipment are worth $1 million. Upon their death, you can inherit the $1 million business tax free, but if they own a home, stock, cash worth $500K on top of the $1 million business, then you will owe the government $275,000 cash! That’s 55% of the value of the assets over $1 million! Do you have that kind of cash sitting around waiting to pay the estate tax?
Higher tax rates on savers and investors.
The capital gains tax will rise from 15 percent this year to 20 percent in 2011.
The dividends tax will rise from 15 percent this year to 39.6 percent in 2011.
These rates will rise another 3.8 percent in 2013.
Second Wave:
Obamacare
There are over twenty new or higher taxes in Obamacare. Several will first go into effect on January 1, 2011. They include:
The "Medicine Cabinet Tax"
Thanks to Obamacare, Americans will no longer be able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin).
The "Special Needs Kids Tax"
This provision of Obamacare imposes a cap on flexible spending accounts (FSAs) of $2500 (Currently, there is no federal government limit). There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children.
There are thousands of families with special needs children in the United States , and many of them use FSAs to pay for special needs education.
Tuition rates at one leading school that teaches special needs children in Washington , D.C. ( National Child Research Center ) can easily exceed $14,000 per year.
Under tax rules, FSA dollars can not be used to pay for this type of special needs education.
The HSA (Health Savings Account) Withdrawal Tax Hike.
This provision of Obamacare increases the additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent.
Third Wave:
The Alternative Minimum Tax (AMT) and Employer Tax Hikes
When Americans prepare to file their tax returns in January of 2011, they'll be in for a nasty surprise-the AMT won't be held harmless, and many tax relief provisions will have expired.
The major items include:
The AMT will ensnare over 28 million families, up from 4 million last year.
According to the left-leaning Tax Policy Center , Congress' failure to index the AMT will lead to an explosion of AMT taxpaying families-rising from 4 million last year to 28.5 million. These families will have to calculate their tax burdens twice, and pay taxes at the higher level. The AMT was created in 1969 to ensnare a handful of taxpayers.
Small business expensing will be slashed and 50% expensing will disappear.
Small businesses can normally expense (rather than slowly-deduct, or "depreciate") equipment purchases up to $250,000.
This will be cut all the way down to $25,000. Larger businesses can currently expense half of their purchases of equipment.
In January of 2011, all of it will have to be "depreciated."
Taxes will be raised on all types of businesses.
There are literally scores of tax hikes on business that will take place. The biggest is the loss of the "research and experimentation tax credit," but there are many, many others. Combining high marginal tax rates with the loss of this tax relief will cost jobs.
Tax Benefits for Education and Teaching Reduced.
The deduction for tuition and fees will not be available.
Tax credits for education will be limited.
Teachers will no longer be able to deduct classroom expenses.
Coverdell Education Savings Accounts will be cut.
Employer-provided educational assistance is curtailed.
The student loan interest deduction will be disallowed for hundreds of thousands of families.
Charitable Contributions from IRAs no longer allowed.
Under current law, a retired person with an IRA can contribute up to $100,000 per year directly to a charity from their IRA.
This contribution also counts toward an annual "required minimum distribution." This ability will no longer be there.
PDF Version Read more: <;; http://www.atr.org/six-months-untilbr-largest-tax-hikes-a5171#%23ixzz0sY8waPq1
And worse yet?
Now, your insurance will be INCOME on your W2's!
One of the surprises we'll find come next year, is what follows - - a little "surprise" that 99% of us had no idea was included in the"new and improved" healthcare legislation . . . the dupes, er, dopes, who backed this administration will be astonished!
Starting in 2011, (next year folks), your W-2 tax form sent by your employer will be increased to show the value of whatever health insurance you are given by the company. It does not matter if that's a private concern or governmental body of some sort.
If you're retired? So what... your gross will go up by the amount of insurance you get.
You will be required to pay taxes on a large sum of money that you have never seen. Take your tax form you just finished and see what $15,000 or $20,000 additional gross does to your tax debt. That's what you'll pay next year.
For many, it also puts you into a new higher bracket so it's even worse.
This is how the government is going to buy insurance for the15% that don't have insurance and it's only part of the tax increases.
Not believing this??? Here is a research of the summaries.....
On page 25 of 29: TITLE IX REVENUE PROVISIONS- SUBTITLE A: REVENUE OFFSET PROVISIONS-(sec. 9001,
as modified by sec. 10901) Sec.9002 "requires employers to include in the W-2 form of each employee the aggregate cost ofapplicable employer sponsored group health coverage that is excludable from the employees gross income."
- Joan Pryde is the senior tax editor for the Kiplinger letters.
- Go to Kiplingers and read about 13 tax changes that could affect you. Number 3 is what is above.
Your Family Could Survive the Fall if You Do This
From Whiskey and Gunpowder:
“Must Do” #5: Educate Your Family.
Share what you read with each other. Watch documentaries like The Fall of America together.
Those who don’t understand the past are doomed to repeat the mistakes of those who came before them. Back in the 60s, when I hit the enlightened age of 18, I couldn’t legally drink, nor could I vote. But I could be drafted and sent to Vietnam. I was making the minimum wage of $2.35 an hour. My two-bedroom apartment in Boston cost $120 a month. Gas was 19 cents a gallon and a cheeseburger at McDonalds cost 29 cents. Cigarettes were under a buck and a six-pack of Rolling Rock beer was 99 cents. My first new car was a Fiat 850 Spyder, which cost less than my current annual car insurance bill of $1500. A three-minute phone call from Boston to Hawaii cost over $10.
And this is why it’s important to understand history. The Republican recession of the early 70s featured gas lines where you could only buy gas on odd or even days. What never got covered in news stories about the gas lines was that in addition to ending up paying a higher price at the pump, the octane level was lowered…the gasoline was diluted. A lot like a coke dealer stepping on the product to get more income for the same amount of product. I know because my Fiat 850 was a high-strung sports car that only ran on 97-octane premium gasoline. Suddenly, the octane level for premium dropped to 93 and the car was never the same.
There was a lot of press on the gas shortages and the resulting price jumps in the cost of gasoline. There was not one article on the watering down of gasoline, which also increased profits for the gas companies. It was a classic case of misdirection, while the left hand was busy screwing us with higher gas prices, we never saw the right hand screwing us with diluted product. The point being, unless you educate yourself you’ll never recognize when you’re being screwed — you certainly can’t rely on the press to do this work for you.
Last week we railed against wasting your time watching TV when you could be reading and learning. Fundamentally, reading is learning on an individual level. We advise you to hold weekly discussions amongst your friends and family to share what you learned. But there’s another way to learn collectively.
First, let’s point out that not all TV is bad for you. When used properly TV can offer an incredible learning experience on a group level — it’s the perfect media to learn things together as a family. Here are two things we feel worth watching on TV.
The first is “Ayn Rand: A Sense of Life,” (You might want to read her two famous novels The Fountainhead and Atlas Shrugged before you watch this documentary. Personally, I’d also recommend reading her play, Night of January 16th.) Written and directed by Michael Paxton, the documentary is less about her work and more about her life. Having previously read her books, you can now draw your own conclusions on how and why she developed her life style/philosophy of Objectivism.
A personal side note here. During the summer between my junior and senior years in high school I was working on campus at the media center. One day, my soon to be senior English teacher walked into the lab to get some copies made. She asked me what books I had read for summer reading. I proclaimed “The Fountainhead and Atlas Shrugged.” She responded with “I hate Ayn Rand.” From that point on my teacher and I clashed in every conceivable way. I failed to make the honor roll because of her for the first time in my academic life. The saving grace was that I had already been accepted to College in my junior year, so short of flunking my senior year nothing she did could adversely affect me. And since I was in advanced placement English, the lowest grade she was allowed to give me was a C-. There’s a clue here. Anything that stirs such a passionate response (“I hate Ayn Rand” followed by a year-long vendetta qualifies as a passionate response) is worth studying. It doesn’t matter if you’re for or against, if you love Ayn Rand or hate Ayn Rand — anything that can provoke such a visceral response is something you need to make yourself aware of.
We’d be remiss if we didn’t include The Fall of America and the Western World in our recommended TV viewing. You wouldn’t be receiving these newsletters if it weren’t for this stellar documentary. With the stakes rising daily in our struggle to survive the economic nightmare we find ourselves in, our best weapon is to be informed. The Fall of America and The Western World contains over eight hours of critical information, information that teaches, information that is practical, information that is life changing, information that very well may be crucial to your survival.
Regards,
Henry Daniels
“Must Do” #5: Educate Your Family.
Share what you read with each other. Watch documentaries like The Fall of America together.
Those who don’t understand the past are doomed to repeat the mistakes of those who came before them. Back in the 60s, when I hit the enlightened age of 18, I couldn’t legally drink, nor could I vote. But I could be drafted and sent to Vietnam. I was making the minimum wage of $2.35 an hour. My two-bedroom apartment in Boston cost $120 a month. Gas was 19 cents a gallon and a cheeseburger at McDonalds cost 29 cents. Cigarettes were under a buck and a six-pack of Rolling Rock beer was 99 cents. My first new car was a Fiat 850 Spyder, which cost less than my current annual car insurance bill of $1500. A three-minute phone call from Boston to Hawaii cost over $10.
And this is why it’s important to understand history. The Republican recession of the early 70s featured gas lines where you could only buy gas on odd or even days. What never got covered in news stories about the gas lines was that in addition to ending up paying a higher price at the pump, the octane level was lowered…the gasoline was diluted. A lot like a coke dealer stepping on the product to get more income for the same amount of product. I know because my Fiat 850 was a high-strung sports car that only ran on 97-octane premium gasoline. Suddenly, the octane level for premium dropped to 93 and the car was never the same.
There was a lot of press on the gas shortages and the resulting price jumps in the cost of gasoline. There was not one article on the watering down of gasoline, which also increased profits for the gas companies. It was a classic case of misdirection, while the left hand was busy screwing us with higher gas prices, we never saw the right hand screwing us with diluted product. The point being, unless you educate yourself you’ll never recognize when you’re being screwed — you certainly can’t rely on the press to do this work for you.
Last week we railed against wasting your time watching TV when you could be reading and learning. Fundamentally, reading is learning on an individual level. We advise you to hold weekly discussions amongst your friends and family to share what you learned. But there’s another way to learn collectively.
First, let’s point out that not all TV is bad for you. When used properly TV can offer an incredible learning experience on a group level — it’s the perfect media to learn things together as a family. Here are two things we feel worth watching on TV.
The first is “Ayn Rand: A Sense of Life,” (You might want to read her two famous novels The Fountainhead and Atlas Shrugged before you watch this documentary. Personally, I’d also recommend reading her play, Night of January 16th.) Written and directed by Michael Paxton, the documentary is less about her work and more about her life. Having previously read her books, you can now draw your own conclusions on how and why she developed her life style/philosophy of Objectivism.
A personal side note here. During the summer between my junior and senior years in high school I was working on campus at the media center. One day, my soon to be senior English teacher walked into the lab to get some copies made. She asked me what books I had read for summer reading. I proclaimed “The Fountainhead and Atlas Shrugged.” She responded with “I hate Ayn Rand.” From that point on my teacher and I clashed in every conceivable way. I failed to make the honor roll because of her for the first time in my academic life. The saving grace was that I had already been accepted to College in my junior year, so short of flunking my senior year nothing she did could adversely affect me. And since I was in advanced placement English, the lowest grade she was allowed to give me was a C-. There’s a clue here. Anything that stirs such a passionate response (“I hate Ayn Rand” followed by a year-long vendetta qualifies as a passionate response) is worth studying. It doesn’t matter if you’re for or against, if you love Ayn Rand or hate Ayn Rand — anything that can provoke such a visceral response is something you need to make yourself aware of.
We’d be remiss if we didn’t include The Fall of America and the Western World in our recommended TV viewing. You wouldn’t be receiving these newsletters if it weren’t for this stellar documentary. With the stakes rising daily in our struggle to survive the economic nightmare we find ourselves in, our best weapon is to be informed. The Fall of America and The Western World contains over eight hours of critical information, information that teaches, information that is practical, information that is life changing, information that very well may be crucial to your survival.
Regards,
Henry Daniels
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