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
Monday, September 13, 2010
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
Sunday, August 29, 2010
What Are Your Sins of Omission?
Alexander Green is a brilliant investment director and I have followed his recommendations for years, but as he gains success in the markets, he is beginning to seek a higher level of success. Here is his latest thought:
What Are Your Sins of Omission?
I recently viewed the History Channel’s series on the Seven Deadly Sins http://www.amazon.com/Seven-Deadly-Sins-History-Channel/dp/B001NNTGF8/ref=sr_1_1?ie=UTF8&s=dvd&qid=1282901277&sr=8-1
– that 1,600-year-old inventory of our universal shortcomings: pride, anger, envy, greed, gluttony, sloth, and lust.
I was surprised to learn that most philosophers and theologians consider sloth the single most insidious vice.
I’ve always thought sloth was one of the more amiable weaknesses. Does sitting in front of ESPN with a bag of Doritos really constitute a great moral failure?
But the spiritual meaning of sloth is not laziness. It’s apathy, hardness of heart, moral indifference, blindness, complacency, and “smallness of soul.” Poverty, injustice and suffering exist, in part, because we don’t act. Sloth is the category that encompasses everything we should do but don’t.
That’s a big one.
Few of us spend time reflecting on the ethics of inaction. We are interested in all sorts of things – friends, family, work, Angelina Jolie. But our personal moral failings? Not so much.
We already know it’s wrong to lie, cheat, kill, or conk a woman on the head and run off with her purse. Sins of commission are easy to identify. But sins of omission? That’s trickier.
For example, it’s clearly wrong to drown someone. But our legal system will not prosecute you for letting someone drown. Killing a child elicits universal condemnation. But permitting thousands of children to die each day from starvation is different.
Or is it?
As Dennis Ford writes in Sins of Omission, “Every three days, more people die from malnutrition and disease than from the bombing of Hiroshima. Every year, more people die from preventable hunger than died in the Holocaust. Somewhere along the line, moral reflection and outrage have lost their audience.”
I’m one of those missing in action. Most days I go about my business, do my work, chip away at my problems and hardly give a thought about the rest of the world’s.
But does our failure to act make us morally culpable? Is the misery of others ever the product of our own indifference? Is doing “too little” morally reprehensible? And why is it uncomfortable to even consider these questions?
No doubt it’s partly because the world is so full of problems that we’re wary of letting them drag us down. Ayn Rand once received a letter from a reader who was inspired by her writings but found the world such a mess he said he didn’t know where to begin to change it. Rand responded that if a doctor showed up at a battlefield and hundreds of soldiers lay wounded and dying, he wouldn’t despair that he couldn’t save them all and drive off. He’d identify the most urgent situation and get to work.
Yet whether the issue is feeding the poor, protecting the environment or caring for the elderly, few of us are committed enough to inconvenience ourselves for change.
Why are we unmoved? How do we sustain and legitimize our apathy?
I recently put these questions to Dr. Craig Shealy, a Professor of Graduate Psychology at James Madison University and the Executive Director of the International Beliefs and Values Institute, a non-profit organization that studies ethics and how they are linked to actions and practices around the globe.
His research reveals that our decisions about whether to act are based on a combination of upbringing, personal values and culture.
Western culture, in particular, provides a significant headwind. With Madison Avenue bombarding us daily with countless messages about what to wear, where to eat and what to drive, even the most eloquent pleas for helping others can sound shrill or preachy.
In our do-your-own-thing society, we don’t want anyone laying a guilt trip on us. Moralizing or sanctimonious appeals from “do-gooders” invariably backfire, motivating us to feel irritation and resentment, not compassion.
Ours is a culture of individualism. We come into this world with a self-centered perspective and quickly learn that we can best pursue our advantage by figuring out what is best for us, not what is best for everyone. And it works. Individual initiative and hard work generally lead to economic, material and social rewards.
As a nation of individualists, freedom is our highest ideal. But it can also mean the freedom to bully the weak, shun the disadvantaged, despoil the environment, ignore the suffering of animals, or turn our backs on the oppressed, the sick and the dying.
Our indifference is reinforced by the popular perception that “people get what they deserve.” We like Horacio Alger stories, tales of individuals rising from humble circumstances to overcome adversity and make a great success of their lives.
But that isn’t always possible. In some parts of the world, the odds are stacked against you. (And if you believe everyone in the U.S. starts out with an equal opportunity, I strongly suggest you rent the movie “Precious.” Boot-strappers will find it particularly eye-opening.)
Even if you’ve achieved your success through a lifetime of education, persistence and hard work, you may owe a bigger debt of gratitude than you realize. Nobel Prize-winning economist and social scientist Herbert Simon estimates that “social capital” is responsible for at least 90% of what people earn in wealthy societies.
Sounds far-fetched? Consider living in a society without modern infrastructure, communications or a reliable power supply. Imagine there is no free-market system to incentivize you, no police force to protect you, no court system to enforce contracts or protect your rights. As Warren Buffett remarked, “If you stick me down in the middle of Bangladesh or Peru, you’ll find out how much this talent is going to produce in the wrong kind of soil.”
Fortunately, we don’t have to sacrifice every day to survive. The beauty of capitalism is that it promotes the general welfare when we pursue our self-interest. (We get what we want when we deliver the goods and services others want.) But excellence at moneymaking doesn’t necessarily translate into excellence of character.
Like you, perhaps, I’m vaguely haunted by the feeling that I don’t give enough, do enough, engage enough. I suspect that I have a deplorable lack of empathy. Yet my behavior is largely unchanged. Now that’s sloth.
What’s the solution? I’m not sure there is one. However, Dr. Shealy offers this bit of advice to activists and fundraisers who would encourage the rest of us to lend a hand:
1.Understand that everyone, depending on his or her personal beliefs and background, interprets a plea for help differently.
1.Recognize that getting someone involved generally requires you to touch an emotional center, not just an intellectual one.
1.When you offer donors the possibility of making a contribution, give them the space to reflect on what you’re asking them to do. Allow them the opportunity to respond from a deep place, not just a sense of obligation.
There’s probably no cure for dyed-in-the-wool moral indifference. (At least, not one that doesn’t involve trampling people’s freedoms or making yourself obnoxious.)
It would be nice to believe that we only need someone to tickle our conscience and our behavior will change. But I’m not so sure.
Immanuel Kant said two things filled him with awe: the stars above and the moral universe within.
Yet the stars are always there.
Carpe Diem,
Alex
What Are Your Sins of Omission?
I recently viewed the History Channel’s series on the Seven Deadly Sins http://www.amazon.com/Seven-Deadly-Sins-History-Channel/dp/B001NNTGF8/ref=sr_1_1?ie=UTF8&s=dvd&qid=1282901277&sr=8-1
– that 1,600-year-old inventory of our universal shortcomings: pride, anger, envy, greed, gluttony, sloth, and lust.
I was surprised to learn that most philosophers and theologians consider sloth the single most insidious vice.
I’ve always thought sloth was one of the more amiable weaknesses. Does sitting in front of ESPN with a bag of Doritos really constitute a great moral failure?
But the spiritual meaning of sloth is not laziness. It’s apathy, hardness of heart, moral indifference, blindness, complacency, and “smallness of soul.” Poverty, injustice and suffering exist, in part, because we don’t act. Sloth is the category that encompasses everything we should do but don’t.
That’s a big one.
Few of us spend time reflecting on the ethics of inaction. We are interested in all sorts of things – friends, family, work, Angelina Jolie. But our personal moral failings? Not so much.
We already know it’s wrong to lie, cheat, kill, or conk a woman on the head and run off with her purse. Sins of commission are easy to identify. But sins of omission? That’s trickier.
For example, it’s clearly wrong to drown someone. But our legal system will not prosecute you for letting someone drown. Killing a child elicits universal condemnation. But permitting thousands of children to die each day from starvation is different.
Or is it?
As Dennis Ford writes in Sins of Omission, “Every three days, more people die from malnutrition and disease than from the bombing of Hiroshima. Every year, more people die from preventable hunger than died in the Holocaust. Somewhere along the line, moral reflection and outrage have lost their audience.”
I’m one of those missing in action. Most days I go about my business, do my work, chip away at my problems and hardly give a thought about the rest of the world’s.
But does our failure to act make us morally culpable? Is the misery of others ever the product of our own indifference? Is doing “too little” morally reprehensible? And why is it uncomfortable to even consider these questions?
No doubt it’s partly because the world is so full of problems that we’re wary of letting them drag us down. Ayn Rand once received a letter from a reader who was inspired by her writings but found the world such a mess he said he didn’t know where to begin to change it. Rand responded that if a doctor showed up at a battlefield and hundreds of soldiers lay wounded and dying, he wouldn’t despair that he couldn’t save them all and drive off. He’d identify the most urgent situation and get to work.
Yet whether the issue is feeding the poor, protecting the environment or caring for the elderly, few of us are committed enough to inconvenience ourselves for change.
Why are we unmoved? How do we sustain and legitimize our apathy?
I recently put these questions to Dr. Craig Shealy, a Professor of Graduate Psychology at James Madison University and the Executive Director of the International Beliefs and Values Institute, a non-profit organization that studies ethics and how they are linked to actions and practices around the globe.
His research reveals that our decisions about whether to act are based on a combination of upbringing, personal values and culture.
Western culture, in particular, provides a significant headwind. With Madison Avenue bombarding us daily with countless messages about what to wear, where to eat and what to drive, even the most eloquent pleas for helping others can sound shrill or preachy.
In our do-your-own-thing society, we don’t want anyone laying a guilt trip on us. Moralizing or sanctimonious appeals from “do-gooders” invariably backfire, motivating us to feel irritation and resentment, not compassion.
Ours is a culture of individualism. We come into this world with a self-centered perspective and quickly learn that we can best pursue our advantage by figuring out what is best for us, not what is best for everyone. And it works. Individual initiative and hard work generally lead to economic, material and social rewards.
As a nation of individualists, freedom is our highest ideal. But it can also mean the freedom to bully the weak, shun the disadvantaged, despoil the environment, ignore the suffering of animals, or turn our backs on the oppressed, the sick and the dying.
Our indifference is reinforced by the popular perception that “people get what they deserve.” We like Horacio Alger stories, tales of individuals rising from humble circumstances to overcome adversity and make a great success of their lives.
But that isn’t always possible. In some parts of the world, the odds are stacked against you. (And if you believe everyone in the U.S. starts out with an equal opportunity, I strongly suggest you rent the movie “Precious.” Boot-strappers will find it particularly eye-opening.)
Even if you’ve achieved your success through a lifetime of education, persistence and hard work, you may owe a bigger debt of gratitude than you realize. Nobel Prize-winning economist and social scientist Herbert Simon estimates that “social capital” is responsible for at least 90% of what people earn in wealthy societies.
Sounds far-fetched? Consider living in a society without modern infrastructure, communications or a reliable power supply. Imagine there is no free-market system to incentivize you, no police force to protect you, no court system to enforce contracts or protect your rights. As Warren Buffett remarked, “If you stick me down in the middle of Bangladesh or Peru, you’ll find out how much this talent is going to produce in the wrong kind of soil.”
Fortunately, we don’t have to sacrifice every day to survive. The beauty of capitalism is that it promotes the general welfare when we pursue our self-interest. (We get what we want when we deliver the goods and services others want.) But excellence at moneymaking doesn’t necessarily translate into excellence of character.
Like you, perhaps, I’m vaguely haunted by the feeling that I don’t give enough, do enough, engage enough. I suspect that I have a deplorable lack of empathy. Yet my behavior is largely unchanged. Now that’s sloth.
What’s the solution? I’m not sure there is one. However, Dr. Shealy offers this bit of advice to activists and fundraisers who would encourage the rest of us to lend a hand:
1.Understand that everyone, depending on his or her personal beliefs and background, interprets a plea for help differently.
1.Recognize that getting someone involved generally requires you to touch an emotional center, not just an intellectual one.
1.When you offer donors the possibility of making a contribution, give them the space to reflect on what you’re asking them to do. Allow them the opportunity to respond from a deep place, not just a sense of obligation.
There’s probably no cure for dyed-in-the-wool moral indifference. (At least, not one that doesn’t involve trampling people’s freedoms or making yourself obnoxious.)
It would be nice to believe that we only need someone to tickle our conscience and our behavior will change. But I’m not so sure.
Immanuel Kant said two things filled him with awe: the stars above and the moral universe within.
Yet the stars are always there.
Carpe Diem,
Alex
Friday, August 27, 2010
Tuesday, August 24, 2010
Addicted to Debt? Where Do We Go From Here?
Earnings Aren't What They Used to Be
Dan Amoss
The Daily Reckoning
As Wall Street's big money players return from the Hamptons in the coming weeks, they will have to reassess the earnings power of their portfolio companies. Last week, Staples confirmed the message we heard from Office Depot and Office Max: the small business sector as a whole isn't very healthy. Disappointing earnings from Dell dampen the mood even further.
The recent economic data adds to the case that the economy is slowing rapidly. It turns out that Obama stimulus plans didn't stimulate much of anything except the budget deficit.
Yet despite all we've been through, most policymakers and commentators remain confused and frustrated because they've misdiagnosed the root causes of the financial crisis. The seeds of today's economy were sown in the credit bubble of 2000s, which, thanks to government policies and central banks, grew far bigger than it ever could have grown if a free market truly existed.
We'll hear a lot more from policymakers about how the economy is approaching "stall speed," implying that it needs another shot of stimulus fuel. They haven't taken the time to consider how the original stimulus plan might have undermined the economy's foundational strength. The economy is not a machine to be tinkered with, but a complex, uncontrollable entity that seeks to allocate capital to its most needed uses.
The endless stream of Washington's tone-deaf policies makes it almost impossible to plan. Growing regulatory burdens for small businesses is a huge problem for the labor market. I've heard from a half dozen sources in the past few weeks about soaring premiums as health insurance plans come up for renewal. Thanks to the mandates in the newly signed healthcare law, premiums will keep rising. The law had the effect of increasing the cost of hiring new employees, so we shouldn't be surprised that layoffs still exceeding new hiring - even this far into "the recovery."
As much as I'd prefer a return to smaller government - for the sake of our economy's long-run health and competitiveness - here's what I expect to happen: further weakness in GDP, employment, and the stock market will reduce the political momentum behind fiscal responsibility, and sometime in 2011, we'll have another stimulus plan. Maybe it'll come in the form of extension of the Bush tax cuts, with a political compromise resulting in rebate checks or payroll tax holidays for working class voters who aren't paying much, if any tax as it is.
Perhaps, as a flanking maneuver in its war on deflation, the Fed will finance these checks with the printing press. Further quantitative easing in the bond markets to suppress the long end of the yield curve is nothing but a giveaway to the big banks' trading desks and a subsidy for government borrowing costs. So the Fed is probably thinking about ways to more effectively get newly printed money into the hands of consumers. But the Fed needs to be very careful about such novel, creative ways to steal from savers. It could spark a crash in confidence in the US dollar. It's a giant game of chicken, and it's dangerous.
But I doubt there will be much political support for these tactics until conditions in risk assets - stocks, corporate bonds, and housing prices - get much worse. I doubt that the average voter realizes what the economy would look like without the federal deficit running continuously at 10% of GDP, like it will this year. On the other hand, a slashed deficit would be extremely painful for every single household and business - even those that have behaved responsibly - because it would translate into less business sales, less desire to hire, and lower household income.
This is why you shouldn't get the economy addicted to harebrained schemes cooked up by economics professors in the first place. The professors espousing Keynesian stimulus are like street corner drug dealers, and they have the economy hooked to their product: stimulus injections.
As a result, the economy is still unable to produce legitimate economic growth or sustainable job creation. US stocks remain a very risky asset.
Dan Amoss
The Daily Reckoning
As Wall Street's big money players return from the Hamptons in the coming weeks, they will have to reassess the earnings power of their portfolio companies. Last week, Staples confirmed the message we heard from Office Depot and Office Max: the small business sector as a whole isn't very healthy. Disappointing earnings from Dell dampen the mood even further.
The recent economic data adds to the case that the economy is slowing rapidly. It turns out that Obama stimulus plans didn't stimulate much of anything except the budget deficit.
Yet despite all we've been through, most policymakers and commentators remain confused and frustrated because they've misdiagnosed the root causes of the financial crisis. The seeds of today's economy were sown in the credit bubble of 2000s, which, thanks to government policies and central banks, grew far bigger than it ever could have grown if a free market truly existed.
We'll hear a lot more from policymakers about how the economy is approaching "stall speed," implying that it needs another shot of stimulus fuel. They haven't taken the time to consider how the original stimulus plan might have undermined the economy's foundational strength. The economy is not a machine to be tinkered with, but a complex, uncontrollable entity that seeks to allocate capital to its most needed uses.
The endless stream of Washington's tone-deaf policies makes it almost impossible to plan. Growing regulatory burdens for small businesses is a huge problem for the labor market. I've heard from a half dozen sources in the past few weeks about soaring premiums as health insurance plans come up for renewal. Thanks to the mandates in the newly signed healthcare law, premiums will keep rising. The law had the effect of increasing the cost of hiring new employees, so we shouldn't be surprised that layoffs still exceeding new hiring - even this far into "the recovery."
As much as I'd prefer a return to smaller government - for the sake of our economy's long-run health and competitiveness - here's what I expect to happen: further weakness in GDP, employment, and the stock market will reduce the political momentum behind fiscal responsibility, and sometime in 2011, we'll have another stimulus plan. Maybe it'll come in the form of extension of the Bush tax cuts, with a political compromise resulting in rebate checks or payroll tax holidays for working class voters who aren't paying much, if any tax as it is.
Perhaps, as a flanking maneuver in its war on deflation, the Fed will finance these checks with the printing press. Further quantitative easing in the bond markets to suppress the long end of the yield curve is nothing but a giveaway to the big banks' trading desks and a subsidy for government borrowing costs. So the Fed is probably thinking about ways to more effectively get newly printed money into the hands of consumers. But the Fed needs to be very careful about such novel, creative ways to steal from savers. It could spark a crash in confidence in the US dollar. It's a giant game of chicken, and it's dangerous.
But I doubt there will be much political support for these tactics until conditions in risk assets - stocks, corporate bonds, and housing prices - get much worse. I doubt that the average voter realizes what the economy would look like without the federal deficit running continuously at 10% of GDP, like it will this year. On the other hand, a slashed deficit would be extremely painful for every single household and business - even those that have behaved responsibly - because it would translate into less business sales, less desire to hire, and lower household income.
This is why you shouldn't get the economy addicted to harebrained schemes cooked up by economics professors in the first place. The professors espousing Keynesian stimulus are like street corner drug dealers, and they have the economy hooked to their product: stimulus injections.
As a result, the economy is still unable to produce legitimate economic growth or sustainable job creation. US stocks remain a very risky asset.
Sunday, August 22, 2010
Cost of Government Highest Ever in 2010
From Newsmax:
American workers spent the first 231 days of this year toiling to pay off the costs of state, local, and federal governments, leaving just 4 1/2 months to provide for themselves and their families.
Each year, the Americans for Tax Reform Foundation and its Center for Fiscal Accountability calculate the day on which average Americans have paid off their share of the cost of government spending and regulations. This year that day fell on Aug. 19, eight days later than last year and the latest Cost of Government Day ever recorded, according to Mattie Corrao, government affairs manager for Americans for Tax Reform.
"The fact that Cost of Government Day falls in the later part of August is alarming enough. It is even more harrowing that the 2010 Cost of Government Day constitutes a 34-day jump from COGD just two short years ago, when it fell on July 16," said Grover Norquist, president of Americans for Tax Reform.
"This illustrates the ballooning growth of government, and should be of serious concern to taxpayers who are footing the ever-expanding bill."
The growing insolvency of state budgets, “coupled with exploding wages and benefits for government workers, continues to push the costs of state and local governments higher,” Corrao wrote for the Budget & Tax News website. “Across the nation, state taxes were raised by a net of $23.9 billion” in fiscal year 2010.
Between 1998 and 2008, the 10 states with the highest tax burdens — California, New York, New Jersey, Connecticut, Vermont, Ohio, Maryland, Hawaii, Wisconsin, and Pennsylvania — lost more than 3 million residents, who took with them $92 billion in income.
During the same period, the nine states with no income tax — Florida, Nevada, Alaska, Texas, New Hampshire, Tennessee, Washington, South Dakota, and Wyoming — gained 2.3 million new residents and $92 billion in wealth.
Corrao concludes: “Public pay and benefits remain unsustainable in many states, and spending will have to be limited if these states are to compete for the best and most productive individuals.”
American workers spent the first 231 days of this year toiling to pay off the costs of state, local, and federal governments, leaving just 4 1/2 months to provide for themselves and their families.
Each year, the Americans for Tax Reform Foundation and its Center for Fiscal Accountability calculate the day on which average Americans have paid off their share of the cost of government spending and regulations. This year that day fell on Aug. 19, eight days later than last year and the latest Cost of Government Day ever recorded, according to Mattie Corrao, government affairs manager for Americans for Tax Reform.
"The fact that Cost of Government Day falls in the later part of August is alarming enough. It is even more harrowing that the 2010 Cost of Government Day constitutes a 34-day jump from COGD just two short years ago, when it fell on July 16," said Grover Norquist, president of Americans for Tax Reform.
"This illustrates the ballooning growth of government, and should be of serious concern to taxpayers who are footing the ever-expanding bill."
The growing insolvency of state budgets, “coupled with exploding wages and benefits for government workers, continues to push the costs of state and local governments higher,” Corrao wrote for the Budget & Tax News website. “Across the nation, state taxes were raised by a net of $23.9 billion” in fiscal year 2010.
Between 1998 and 2008, the 10 states with the highest tax burdens — California, New York, New Jersey, Connecticut, Vermont, Ohio, Maryland, Hawaii, Wisconsin, and Pennsylvania — lost more than 3 million residents, who took with them $92 billion in income.
During the same period, the nine states with no income tax — Florida, Nevada, Alaska, Texas, New Hampshire, Tennessee, Washington, South Dakota, and Wyoming — gained 2.3 million new residents and $92 billion in wealth.
Corrao concludes: “Public pay and benefits remain unsustainable in many states, and spending will have to be limited if these states are to compete for the best and most productive individuals.”
Saturday, August 21, 2010
This Sums up the Economic Situation in the U.S
From the S&A Digest -
If the unemployment claims figure was not bad enough, the Philly Fed survey was even worse... I thought it was a misprint! – Legendary trader Dennis Gartman in the August 20 issue of The Gartman Letter.
The much-touted, government-led recovery seems to be stalling. The Philly Fed index measures manufacturing conditions in the Mid-Atlantic states. The index is set between +100 and -100. It has been as low as -40 at the depths of the recession and should be registering positive numbers based on the consensus view that the economy is recovering.
Instead, the print on the report read -7.7. Meanwhile, unemployment claims rose to 500,000, a level not seen since the fall of 2009. In short, the economy seems to be weakening again, despite all the stimulus... or perhaps because of it...
One more obvious sign of a weakening U.S. economy: the energy complex. Take a look at the chart (below) of the Dynamic Energy PowerShares ETF. This fund invests in a broad range of leading U.S. energy companies – everything from natural gas pipelines to Schlumberger.
Demand for energy is perfectly correlated with economic activity. Thus, watching these stocks gives us a window into the market's expectations of future demand. After rallying steadily off its lows in early 2009, this ETF fell off a cliff in early May. Interestingly, that's the exact point in time most of the government's tax credits for new homebuyers expired. I know from sources in the industry that foot traffic at new home sales centers came to a complete halt at the same time.
The cockroaches in Washington now face an interesting dilemma. The economy seems unwilling to move forward on the basis of private business. Corporations are hoarding cash. They're not hiring. And wealthy individuals are leaving the United States in record numbers – more than 700 people renounced their citizenship last year, up from 235 in 2008.
However, all of the government's efforts to spend its way out of this downturn have failed. We would have pointed out to them that bailing out the banks that got us into trouble and giving tax credits to build still more houses might not have been the best idea. We have yet to find a credit bubble in history that was repaired by borrowing more money or planting more tulips...
What will the government do? We're pretty sure it won't do the right things. Nobody seems to be in favor of vastly cutting taxes, government spending, or regulations. In fact, nobody seems to care that taxes are set to soar next year for the very people whom we need most if we're going to grow our way out of this serious economic crisis: small-business owners. Nobody seems to care that allowing capital gains and dividend taxes to soar next year will drive up the cost of capital needed to expand businesses. And nobody seems to have even noticed that adding a 55% estate tax onto the average entrepreneur's list of taxes makes it nearly impossible for most successful small businesses to be left in control of the founder's family.
Ask yourself the obvious question: Why would anyone take the risk of starting (or growing) a business when the government is going to take a total of 70% of the upside and leave you holding the bag if it doesn't work out? Why would anyone be surprised more businesses than ever are moving jobs overseas and taking the best and brightest of this country with them? If you want the rest of America to look like Detroit, just keep on trying to tax and spend our way out of this recession.
I'm concerned about these problems for one reason: There's almost no chance any of the proper policies can be passed by Congress. No one is going to vote for sensible policies because more than half of all Americans no longer pay any federal taxes on a net basis. The mob is now living at the expense of the Treasury.
That's a big problem in a democracy. America is becoming a new type of fascist state, where government employees, unions, and everyone else on the dole constitutes the largest voting block. It's not communism because the government doesn't directly control the means of production. But true private property doesn't exist in America anymore. If you don't pay taxes on it, you don't own it. And if the government decides you're not using your property the right way, it'll take it away from you. I don't know what to call this kind of regime... but I know damn well where it will lead.
If the unemployment claims figure was not bad enough, the Philly Fed survey was even worse... I thought it was a misprint! – Legendary trader Dennis Gartman in the August 20 issue of The Gartman Letter.
The much-touted, government-led recovery seems to be stalling. The Philly Fed index measures manufacturing conditions in the Mid-Atlantic states. The index is set between +100 and -100. It has been as low as -40 at the depths of the recession and should be registering positive numbers based on the consensus view that the economy is recovering.
Instead, the print on the report read -7.7. Meanwhile, unemployment claims rose to 500,000, a level not seen since the fall of 2009. In short, the economy seems to be weakening again, despite all the stimulus... or perhaps because of it...
One more obvious sign of a weakening U.S. economy: the energy complex. Take a look at the chart (below) of the Dynamic Energy PowerShares ETF. This fund invests in a broad range of leading U.S. energy companies – everything from natural gas pipelines to Schlumberger.
Demand for energy is perfectly correlated with economic activity. Thus, watching these stocks gives us a window into the market's expectations of future demand. After rallying steadily off its lows in early 2009, this ETF fell off a cliff in early May. Interestingly, that's the exact point in time most of the government's tax credits for new homebuyers expired. I know from sources in the industry that foot traffic at new home sales centers came to a complete halt at the same time.
The cockroaches in Washington now face an interesting dilemma. The economy seems unwilling to move forward on the basis of private business. Corporations are hoarding cash. They're not hiring. And wealthy individuals are leaving the United States in record numbers – more than 700 people renounced their citizenship last year, up from 235 in 2008.
However, all of the government's efforts to spend its way out of this downturn have failed. We would have pointed out to them that bailing out the banks that got us into trouble and giving tax credits to build still more houses might not have been the best idea. We have yet to find a credit bubble in history that was repaired by borrowing more money or planting more tulips...
What will the government do? We're pretty sure it won't do the right things. Nobody seems to be in favor of vastly cutting taxes, government spending, or regulations. In fact, nobody seems to care that taxes are set to soar next year for the very people whom we need most if we're going to grow our way out of this serious economic crisis: small-business owners. Nobody seems to care that allowing capital gains and dividend taxes to soar next year will drive up the cost of capital needed to expand businesses. And nobody seems to have even noticed that adding a 55% estate tax onto the average entrepreneur's list of taxes makes it nearly impossible for most successful small businesses to be left in control of the founder's family.
Ask yourself the obvious question: Why would anyone take the risk of starting (or growing) a business when the government is going to take a total of 70% of the upside and leave you holding the bag if it doesn't work out? Why would anyone be surprised more businesses than ever are moving jobs overseas and taking the best and brightest of this country with them? If you want the rest of America to look like Detroit, just keep on trying to tax and spend our way out of this recession.
I'm concerned about these problems for one reason: There's almost no chance any of the proper policies can be passed by Congress. No one is going to vote for sensible policies because more than half of all Americans no longer pay any federal taxes on a net basis. The mob is now living at the expense of the Treasury.
That's a big problem in a democracy. America is becoming a new type of fascist state, where government employees, unions, and everyone else on the dole constitutes the largest voting block. It's not communism because the government doesn't directly control the means of production. But true private property doesn't exist in America anymore. If you don't pay taxes on it, you don't own it. And if the government decides you're not using your property the right way, it'll take it away from you. I don't know what to call this kind of regime... but I know damn well where it will lead.
ObamaCare: the Burden on Small Business
Michael F. Cannon is director of health policy studies at the Cato Institute and co-author of Healthy Competition: What’s Holding Back Health Care and How to Free It.
Glenn Beck - Current Events & Politics - ObamaCare: the Burden on Small Business
Glenn Beck - Current Events & Politics - ObamaCare: the Burden on Small Business
Financial Reform or Government Takeover - Forecasts & Trends - InvestorsInsight.com | Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
While I very much agree that we need serious financial regulatory reforms, I don’t believe we need a huge new government bureaucracy with over-reaching authority, in addition to the maze of regulatory agencies we already have. The agencies we have now just need to do their jobs!
Financial Reform or Government Takeover - Forecasts & Trends - InvestorsInsight.com | Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
Financial Reform or Government Takeover - Forecasts & Trends - InvestorsInsight.com | Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
A Nation of Financial Illiterates - Forecasts & Trends - InvestorsInsight.com | Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
A major part in making over America was the dumbing down of the masses. How else could one sell such completely wrong ideas in an election and actually win?
A Nation of Financial Illiterates - Forecasts & Trends - InvestorsInsight.com | Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
A Nation of Financial Illiterates - Forecasts & Trends - InvestorsInsight.com | Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
Keep Your Healthcare Plan? Probably Not! - Forecasts & Trends - InvestorsInsight.com | Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
During the 2008 presidential campaign, candidate Barack Obama promised that, if elected, he would press for some form of nationalized healthcare. Time after time, he assured Americans: “If you like your healthcare plan, you can keep it; if you like your doctor, you can keep your doctor.” Many in Congress promised the same thing as they crafted the sweeping healthcare legislation that ultimately passed in March.
Yet on June 14 the Obama administration released an 83-page document which indicates that over half of all employer-provided health insurance plans will be effectively eliminated between now and 2014 because of the new healthcare law. For small businesses, it’s even worse. The Obama administration’s own estimates indicate that 66% or more of small businesses will abandon their healthcare insurance plans by the time ObamaCare kicks in on January 1, 2014.
Angry yet? Read on!
Keep Your Healthcare Plan? Probably Not! - Forecasts & Trends - InvestorsInsight.com | Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
Yet on June 14 the Obama administration released an 83-page document which indicates that over half of all employer-provided health insurance plans will be effectively eliminated between now and 2014 because of the new healthcare law. For small businesses, it’s even worse. The Obama administration’s own estimates indicate that 66% or more of small businesses will abandon their healthcare insurance plans by the time ObamaCare kicks in on January 1, 2014.
Angry yet? Read on!
Keep Your Healthcare Plan? Probably Not! - Forecasts & Trends - InvestorsInsight.com | Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
Why It's Too Darn Hot by Alan Caruba
Thankfully (?) the Mosque and the lack of jobs has drawn attention away from the temperatures this summer, but there are rumors of a kamikaze attack by the Dem's during their lame duck session in December to push through every last "promise" they made to their constituents, including the Carbon Dioxide tax.....
Why It's Too Darn Hot by Alan Caruba
Why It's Too Darn Hot by Alan Caruba
Friday, August 20, 2010
How Washington Should Handle the Bush Tax Cuts
This is a fairly straight foward piece on what the impact of different scenarios will be...
How Washington Should Handle the Bush Tax Cuts
How Washington Should Handle the Bush Tax Cuts
Wednesday, August 18, 2010
Is This What You Want to Get From Your Vote in November
I just received an email stating the platform for "conservative" candidates in November, does this resonate with you when you think about elected officials?
Balance the Budget — Congress must be forced to cut spending. SCF candidates will support a constitutional amendment to balance the federal budget without raising taxes.
Repeal ObamaCare — President Obama's health care takeover is set to destroy American medicine and bankrupt our country. SCF candidates will support legislation to repeal it.
Stop Government Bailouts — Bailouts for taxpayers to reward failure and punish success. SCF candidates will stop bailouts altogether and force corporations to compete.
Ban Earmarks — Congressional earmarks are a gateway drug to higher spending. SCF candidates will ban earmarks and break Washington's addiction to pork.
Secure the Borders — The federal government has failed to enforce our nation's immigration laws. SCF candidates will seal the borders and oppose all forms of amnesty.
Defend the 2nd Amendment — The 2nd Amendment protects our ability to keep and bear arms. SCF candidates will oppose all efforts to eliminate or restrict this right.
Protect Human Life — Human life is precious and it must be protected. SCF candidates will stop all taxpayer funding for abortion.
Establish Term Limits — Our country is being destroyed by career politicians. SCF candidates will support a constitutional amendment establishing congressional term limits.
Are these principles or are they actions? There is nothing here about upholding the Commerce Clause or the 10th Amendment. Do we need more Constitution, or do we need to follow what has been written?
Balance the Budget — Congress must be forced to cut spending. SCF candidates will support a constitutional amendment to balance the federal budget without raising taxes.
Repeal ObamaCare — President Obama's health care takeover is set to destroy American medicine and bankrupt our country. SCF candidates will support legislation to repeal it.
Stop Government Bailouts — Bailouts for taxpayers to reward failure and punish success. SCF candidates will stop bailouts altogether and force corporations to compete.
Ban Earmarks — Congressional earmarks are a gateway drug to higher spending. SCF candidates will ban earmarks and break Washington's addiction to pork.
Secure the Borders — The federal government has failed to enforce our nation's immigration laws. SCF candidates will seal the borders and oppose all forms of amnesty.
Defend the 2nd Amendment — The 2nd Amendment protects our ability to keep and bear arms. SCF candidates will oppose all efforts to eliminate or restrict this right.
Protect Human Life — Human life is precious and it must be protected. SCF candidates will stop all taxpayer funding for abortion.
Establish Term Limits — Our country is being destroyed by career politicians. SCF candidates will support a constitutional amendment establishing congressional term limits.
Are these principles or are they actions? There is nothing here about upholding the Commerce Clause or the 10th Amendment. Do we need more Constitution, or do we need to follow what has been written?
Federal Workers Make Twice That of Private Sector - Forecasts & Trends - InvestorsInsight.com | Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
Aside from the military (understanding that police, fire fighters and teachers are State workers). How many of these jobs are really necessary for our society to exist?
Federal Workers Make Twice That of Private Sector - Forecasts & Trends - InvestorsInsight.com | Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
Federal Workers Make Twice That of Private Sector - Forecasts & Trends - InvestorsInsight.com | Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
Tuesday, August 17, 2010
The Stimulus is Dead - Long Live the Stimulus
Signs of a failure are everywhere, look at the 4G IPhone and compare those actions to the Fed's....
The Stimulus is Dead - Long Live the Stimulus
The Stimulus is Dead - Long Live the Stimulus
The Gulf Oil Spill Disaster - Thoughts From The Frontline - InvestorsInsight.com | Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
Whether you think it was intentional to further an agenda or just plain incompetence, this is another clear example of why the decision making must be kept as close to the source of the transaction as possible. Whether it is health care, education or dealing with a disaster, the further removed the decision-making body is from the problem, the greater the liklihood of absolute failure. The founders knew it, we must wake up to it...
The Gulf Oil Spill Disaster - Thoughts From The Frontline - InvestorsInsight.com | Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
The Gulf Oil Spill Disaster - Thoughts From The Frontline - InvestorsInsight.com | Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
Monday, August 16, 2010
Doug Casey - MUST read bit from Doug Casey on unemployment
From Conversations With Casey:
The government is saying the unemployment is around 10%, but that’s a fraud.
They don’t count things the same way as they did then, not even as they did in the recession of 1982. Furthermore, they should count many government employees among the unemployed, since relatively few of them produce anything that anyone would voluntarily pay for.
I’m not talking about police, garbage collectors, judges, and the like. The market would employ many of them in their current jobs even if the state were to disappear. But many of the apparatchiks filling offices not only don’t serve any useful purpose, but they actively destroy, and prevent the creation of, wealth. These people are worse than just unemployed...
Doug Casey - MUST read bit from Doug Casey on unemployment
The government is saying the unemployment is around 10%, but that’s a fraud.
They don’t count things the same way as they did then, not even as they did in the recession of 1982. Furthermore, they should count many government employees among the unemployed, since relatively few of them produce anything that anyone would voluntarily pay for.
I’m not talking about police, garbage collectors, judges, and the like. The market would employ many of them in their current jobs even if the state were to disappear. But many of the apparatchiks filling offices not only don’t serve any useful purpose, but they actively destroy, and prevent the creation of, wealth. These people are worse than just unemployed...
Doug Casey - MUST read bit from Doug Casey on unemployment
THIS IS NOT THE 1930′S | PRAGMATIC CAPITALISM
Note in the chart provided in the article, as Big Government progresses, the job creation post recession becomes flatter and flatter. When I tell people that we have taxed and regulated the good economuy boosting jobs out of the economy, I get the eye roll....well people, if the government makes it to expensive to do business in Amerika, this is what you get...
THIS IS NOT THE 1930′S | PRAGMATIC CAPITALISM
THIS IS NOT THE 1930′S | PRAGMATIC CAPITALISM
America Via Erica
An incredibly well written speech by someone who obviously refused to drink the Kool-Aid for 17 years.....
Her parents should be proud and the left should be very afraid.....
America Via Erica
Her parents should be proud and the left should be very afraid.....
America Via Erica
Wednesday, August 11, 2010
ICE Agents Vote 'No Confidence' in Leaders, Say Amnesty Coming
Here is a shock, the people that have to deal with the Fed's policy think it stinks....
ICE Agents Vote 'No Confidence' in Leaders, Say Amnesty Coming
ICE Agents Vote 'No Confidence' in Leaders, Say Amnesty Coming
Sunday, August 08, 2010
The Problem with Pensions - Thoughts From The Frontline - InvestorsInsight.com | Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
Government employees cannot simply expect that their retirement income will come out of future taxes that are supposed to be paid for current year obligations......everyone must contribute to their own nest eggs or the system will collapse under it's own weight.....
The Problem with Pensions - Thoughts From The Frontline - InvestorsInsight.com | Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
The Problem with Pensions - Thoughts From The Frontline - InvestorsInsight.com | Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
An August Surprise from Obama? | Analysis & Opinion |
You may want to sit down and have a stiff drink before you read this. Then apologize to your children for doing nothing while their futures are robbed blind.....
An August Surprise from Obama? | Analysis & Opinion |
An August Surprise from Obama? | Analysis & Opinion |
Ready to Say ‘Adios’ to the U.S.?
Expatriation: Not Just for the
Ultra-Rich Anymore
From the Soveriegn Society...
Treasury Secretary Tim Geithner said in a speech this week that keeping current tax levels -- even on a short-term basis -- “would hurt economic recovery by undermining confidence that we are prepared to make a commitment today to bring down our future deficits.”
The U.S. Treasury estimates that allowing the Bush tax cuts for the wealthy to expire could add nearly $700 billion to the economy over the next decade.
But at what cost, in the meantime, as the country stands to lose more and more of its high-income earners and investors who are seeking refuge outside the United States?
What Will YOUR Next Tax Bill Look Like?
“Soak the Rich” is the theme du jour. From the United States to Athens, big-spender governments are scraping for tax dollars. And they’re looking to “New Deal- style taxation to fill in the deficits.
America’s rich are facing their biggest tax hikes in history come Jan. 1, 2011.
But that’s not all…
We’re also looking at an assault on the middle class.
Average Joes struggling to pay increasingly unaffordable mortgages on homes worth less than they owe … unable to save for a rainy day or kids’ college funds … concerned they may not have a job tomorrow … are also facing their biggest tax hikes in history.
Soak the Rich;
Squeeze the Middle Class
If the “Bush tax cuts” expire at the end of the year, tax rates for every bracket will increase. It’s not just the wealthy who will be impacted -- the middle class will find itself being squeezed as well.
Tax on dividends will jump from 15% to 39.6%. Capital gains, 15% to 20%. And the death tax will be given new life at 55%.
The child credit shrinks and the marriage penalty gets worse -- war on the average American family?
If you work hard -- whether you’re a billionaire, a small-business owner, or a cashier -- the U.S. government wants to squeeze everything it can out of you.
At worst everyone will suffer tax increases.
And at best, they’ll extend the cuts for households earning less than $250,000 per year but let the cuts expire for those earning more. And this is still an assault on your average middle- to upper-middle class family.
If you run a small business earning $250,001, you’re taxed the same as a movie star making $25 million a film!
There’s just no difference between the hard-working middle- to upper-middle class family and the very rich in the eyes of your government.
So what’s an average American to do?
Fair Weather Patriots
Well, I know that many Americans are scandalized at the thought of anyone surrendering their U.S. citizenship – that’s unpatriotic, they say.
If you’ve been a reader for long, you know there are very substantial tax savings for wealthy U.S. citizens who are prepared to end their citizenship.
In 1962, the late John Templeton, respected international investor, businessman and philanthropist, surrendered his U.S. citizenship to become a citizen of The Bahamas. This saved him more than US$100 million when he sold the well-known international investment fund that still bears his name, not to mention millions more in U.S. estate taxes.
But increasingly, regular folks are choosing to make this move as well, and not just for tax purposes.
I know from experience that many Americans see ending U.S. citizenship status as the means to escape government tyranny. Tyranny in the form of unconstitutional violations of our rights, constant surveillance, destruction of personal and financial privacy.
And certainly, increasing taxes to finance bankrupt spending policies and the welfare state is now a more compelling reason than ever.
Adios, America!
According to a recent Financial Times article, the U.S. Embassy in London has a large and growing waiting list of Americans wishing to relinquish their citizenship. They are seeking shelter from the IRS.
The waiting list has Americans on hold until February, when the earliest appointment is available. This is because an unprecedented number of Americans living in the UK are looking to end their U.S. tax responsibilities abroad once and for all, ahead of the huge tax hikes now in the works.
But it’s not just the U.K. Embassies across the globe are swarmed with Americans hoping to begin the same process.
Taxation Without Representation?
We all know the phrase. A slogan that originated during the 1750s and 1760s and one of the main causes of the American Revolution. Americans believed that a distant government taxing them from afar was unconstitutional. You still see it on the license plates in Washington, D.C.
Now, almost alone among the nations of the world, American tax law imposes income taxes on U.S. citizens and resident aliens ("green card holders") no matter where in the world they actually live and without regard to where their income is earned.
The United States is unlike most countries which enjoy territorial tax systems -- meaning taxes are imposed only on income earned within their national borders. Thus a Canadian or an Englishman can move out of their home country and legally avoid most domestic taxes.
That underscores a major point we repeatedly explain here at The Sovereign Society – the only legal method by which U.S. citizens and permanent resident aliens (green card holders) can end their U.S. tax obligations is to end their status as U.S. persons – a process called expatriation.
What About You?
Whether you are in the highest tax bracket, or somewhere in the middle, your government is planning to squeeze you for all that they can.
You can fight back. But there’s only one legal way to do it.
If you think expatriation could be for you, the first step is to choose a new jurisdiction and apply for citizenship. There are a number of ways one can gain citizenship. You can contact the embassy of your country of choice, or check out my Passport Book, a complete guide to each citizenship option for 80 desirable countries.
If you don’t like the ever-increasing tax rates that big government is forcing upon you, you can join the many Americans who are voicing their opinions loud and clear by voting with their feet.
Adios!!
Ultra-Rich Anymore
From the Soveriegn Society...
Treasury Secretary Tim Geithner said in a speech this week that keeping current tax levels -- even on a short-term basis -- “would hurt economic recovery by undermining confidence that we are prepared to make a commitment today to bring down our future deficits.”
The U.S. Treasury estimates that allowing the Bush tax cuts for the wealthy to expire could add nearly $700 billion to the economy over the next decade.
But at what cost, in the meantime, as the country stands to lose more and more of its high-income earners and investors who are seeking refuge outside the United States?
What Will YOUR Next Tax Bill Look Like?
“Soak the Rich” is the theme du jour. From the United States to Athens, big-spender governments are scraping for tax dollars. And they’re looking to “New Deal- style taxation to fill in the deficits.
America’s rich are facing their biggest tax hikes in history come Jan. 1, 2011.
But that’s not all…
We’re also looking at an assault on the middle class.
Average Joes struggling to pay increasingly unaffordable mortgages on homes worth less than they owe … unable to save for a rainy day or kids’ college funds … concerned they may not have a job tomorrow … are also facing their biggest tax hikes in history.
Soak the Rich;
Squeeze the Middle Class
If the “Bush tax cuts” expire at the end of the year, tax rates for every bracket will increase. It’s not just the wealthy who will be impacted -- the middle class will find itself being squeezed as well.
Tax on dividends will jump from 15% to 39.6%. Capital gains, 15% to 20%. And the death tax will be given new life at 55%.
The child credit shrinks and the marriage penalty gets worse -- war on the average American family?
If you work hard -- whether you’re a billionaire, a small-business owner, or a cashier -- the U.S. government wants to squeeze everything it can out of you.
At worst everyone will suffer tax increases.
And at best, they’ll extend the cuts for households earning less than $250,000 per year but let the cuts expire for those earning more. And this is still an assault on your average middle- to upper-middle class family.
If you run a small business earning $250,001, you’re taxed the same as a movie star making $25 million a film!
There’s just no difference between the hard-working middle- to upper-middle class family and the very rich in the eyes of your government.
So what’s an average American to do?
Fair Weather Patriots
Well, I know that many Americans are scandalized at the thought of anyone surrendering their U.S. citizenship – that’s unpatriotic, they say.
If you’ve been a reader for long, you know there are very substantial tax savings for wealthy U.S. citizens who are prepared to end their citizenship.
In 1962, the late John Templeton, respected international investor, businessman and philanthropist, surrendered his U.S. citizenship to become a citizen of The Bahamas. This saved him more than US$100 million when he sold the well-known international investment fund that still bears his name, not to mention millions more in U.S. estate taxes.
But increasingly, regular folks are choosing to make this move as well, and not just for tax purposes.
I know from experience that many Americans see ending U.S. citizenship status as the means to escape government tyranny. Tyranny in the form of unconstitutional violations of our rights, constant surveillance, destruction of personal and financial privacy.
And certainly, increasing taxes to finance bankrupt spending policies and the welfare state is now a more compelling reason than ever.
Adios, America!
According to a recent Financial Times article, the U.S. Embassy in London has a large and growing waiting list of Americans wishing to relinquish their citizenship. They are seeking shelter from the IRS.
The waiting list has Americans on hold until February, when the earliest appointment is available. This is because an unprecedented number of Americans living in the UK are looking to end their U.S. tax responsibilities abroad once and for all, ahead of the huge tax hikes now in the works.
But it’s not just the U.K. Embassies across the globe are swarmed with Americans hoping to begin the same process.
Taxation Without Representation?
We all know the phrase. A slogan that originated during the 1750s and 1760s and one of the main causes of the American Revolution. Americans believed that a distant government taxing them from afar was unconstitutional. You still see it on the license plates in Washington, D.C.
Now, almost alone among the nations of the world, American tax law imposes income taxes on U.S. citizens and resident aliens ("green card holders") no matter where in the world they actually live and without regard to where their income is earned.
The United States is unlike most countries which enjoy territorial tax systems -- meaning taxes are imposed only on income earned within their national borders. Thus a Canadian or an Englishman can move out of their home country and legally avoid most domestic taxes.
That underscores a major point we repeatedly explain here at The Sovereign Society – the only legal method by which U.S. citizens and permanent resident aliens (green card holders) can end their U.S. tax obligations is to end their status as U.S. persons – a process called expatriation.
What About You?
Whether you are in the highest tax bracket, or somewhere in the middle, your government is planning to squeeze you for all that they can.
You can fight back. But there’s only one legal way to do it.
If you think expatriation could be for you, the first step is to choose a new jurisdiction and apply for citizenship. There are a number of ways one can gain citizenship. You can contact the embassy of your country of choice, or check out my Passport Book, a complete guide to each citizenship option for 80 desirable countries.
If you don’t like the ever-increasing tax rates that big government is forcing upon you, you can join the many Americans who are voicing their opinions loud and clear by voting with their feet.
Adios!!
Five Most Crime-Ridden Court Districts All on Mexican Border
From Newsmax
The five U.S. judicial districts where the most criminal defendants were charged with federal crimes last year are the five districts that border Mexico.
There are 94 federal judicial districts covering the 50 states and U.S. possessions, including the South District of Texas, which covers a stretch of border from Brownsville past Laredo. The U.S. attorney’s office filed criminal charges against 8,801 individuals in fiscal 2009, the most for any district, according to an annual report released by the Justice Department.
That number is more than four times higher than the 1,959 persons charged in the Southern District of New York, which includes Manhattan and the Bronx, CNSNews.com Editor-in-Chief Terry Jeffrey notes.
The second most crime-ridden district is the Western District of Texas, which covers the rest of the border. U.S. attorneys filed charges against 8,435 individuals there last year.
Completing the top five are the Southern California District — which includes the San Diego border area but not Los Angeles — where 5,554 defendants were charged, and the districts for the border states of Arizona (5,155) and New Mexico (3,769).
In comparison, the district covering the entire state of Colorado charged 585 defendants, and New Jersey charged 910.
The Justice Department report is “just more evidence that our government is not doing its job of defending our nation’s border with Mexico,” Jeffrey observes.
“According to the Justice Department’s own numbers, federal crime is dramatically disproportionate along that border compared to the rest of the United States.”
The report also discloses that 33 percent of all federal convictions last year were in immigration cases.
The five U.S. judicial districts where the most criminal defendants were charged with federal crimes last year are the five districts that border Mexico.
There are 94 federal judicial districts covering the 50 states and U.S. possessions, including the South District of Texas, which covers a stretch of border from Brownsville past Laredo. The U.S. attorney’s office filed criminal charges against 8,801 individuals in fiscal 2009, the most for any district, according to an annual report released by the Justice Department.
That number is more than four times higher than the 1,959 persons charged in the Southern District of New York, which includes Manhattan and the Bronx, CNSNews.com Editor-in-Chief Terry Jeffrey notes.
The second most crime-ridden district is the Western District of Texas, which covers the rest of the border. U.S. attorneys filed charges against 8,435 individuals there last year.
Completing the top five are the Southern California District — which includes the San Diego border area but not Los Angeles — where 5,554 defendants were charged, and the districts for the border states of Arizona (5,155) and New Mexico (3,769).
In comparison, the district covering the entire state of Colorado charged 585 defendants, and New Jersey charged 910.
The Justice Department report is “just more evidence that our government is not doing its job of defending our nation’s border with Mexico,” Jeffrey observes.
“According to the Justice Department’s own numbers, federal crime is dramatically disproportionate along that border compared to the rest of the United States.”
The report also discloses that 33 percent of all federal convictions last year were in immigration cases.
Security Going Broke This Year
So my first question after reading the following is.......is it "fair" to expect someone who has squandered all of their money and is only able to use social security in retirement to be forced to work until the age of 73, or later....? Or should those of us who worked hard and saved be forced to subsidize an early retirement for them? Think carefully about your answer, why try to accumulate wealth if it is simply going to be taken away from you and given to the less responsible?
By Dan Weil
The Social Security system will pay out more in benefits than it gathers in tax receipts this year for the first time since 1983, according to a new report from the Social Security Board of Trustees.
The deficit is estimated at $41 billion.
The program will remain in the red through next year, go back into the black for 2012-14, and then return to deficit territory every year until the Social Security trust fund is exhausted in 2037, the report estimates.
While experts have been foretelling the downfall of Social Security for years, the Great Recession that began in December 2007 hastened the process.
The recession has put millions of people out of work, thus cutting the revenue from Social Security payroll taxes.
Workers pay a 6.2 percent payroll tax on their wages below $106,800, and then that total is matched by employers.
“The impact of the current economic downturn continues to be felt by the Social Security Trust Funds,” Michael Astrue, commissioner of Social Security, said in a statement accompanying the report.
“The fact that the costs for the program will likely exceed tax revenue this year is not a cause for panic, but it does send a strong message that it’s time for us to make the tough choices that we know we need to make.”
Treasury Secretary Timothy Geithner said, “We must continue to make progress addressing the financing challenges," referring to both Medicare and Social Security.
The retirement of 78 million baby boomers will keep pressure on Social Security, as these people will stop paying into the system and start taking money out.
After 2015, the government will have to dip into its Social Security trust fund to dole out the difference between benefits owed and taxes paid, the report says.
The trust fund consists of bonds backed by the government’s “full faith and credit” but not by any assets. Already some of the bonds have been used for other areas of government in past years, leaving the trust fund at $2.5 trillion.
To actually redeem the trust fund bonds for cash, the government will have to borrow money through the bond market, just as it does when issuing Treasury securities.
Doing so will deplete the entire trust fund by 2037, the trustees say. To be sure, at that point enough money will still be coming in from Social Security payroll taxes to fund 78 percent of retirement benefits, the report says.
More than 53 million people receive Social Security, and retirement benefits average $1,100 a month.
President Barack Obama has created a bipartisan commission to come up with recommendations on government finances, including Social Security.
Experts have proposed a wide range of remedies, from increasing the retirement age, to giving less Social Security benefits to the wealthy, to imposing payroll taxes on wages above the current $106,800 limit.
Those who favor an increase in the retirement age from 66 say it is justified by our lengthening life spans.
"The full retirement age would have to increase to 73 for adults to have the same expected years of remaining life in retirement today as in 1940," Urban Institute senior research associate Melissa Favreault and senior fellow Richard Johnson wrote in a recent report.
By Dan Weil
The Social Security system will pay out more in benefits than it gathers in tax receipts this year for the first time since 1983, according to a new report from the Social Security Board of Trustees.
The deficit is estimated at $41 billion.
The program will remain in the red through next year, go back into the black for 2012-14, and then return to deficit territory every year until the Social Security trust fund is exhausted in 2037, the report estimates.
While experts have been foretelling the downfall of Social Security for years, the Great Recession that began in December 2007 hastened the process.
The recession has put millions of people out of work, thus cutting the revenue from Social Security payroll taxes.
Workers pay a 6.2 percent payroll tax on their wages below $106,800, and then that total is matched by employers.
“The impact of the current economic downturn continues to be felt by the Social Security Trust Funds,” Michael Astrue, commissioner of Social Security, said in a statement accompanying the report.
“The fact that the costs for the program will likely exceed tax revenue this year is not a cause for panic, but it does send a strong message that it’s time for us to make the tough choices that we know we need to make.”
Treasury Secretary Timothy Geithner said, “We must continue to make progress addressing the financing challenges," referring to both Medicare and Social Security.
The retirement of 78 million baby boomers will keep pressure on Social Security, as these people will stop paying into the system and start taking money out.
After 2015, the government will have to dip into its Social Security trust fund to dole out the difference between benefits owed and taxes paid, the report says.
The trust fund consists of bonds backed by the government’s “full faith and credit” but not by any assets. Already some of the bonds have been used for other areas of government in past years, leaving the trust fund at $2.5 trillion.
To actually redeem the trust fund bonds for cash, the government will have to borrow money through the bond market, just as it does when issuing Treasury securities.
Doing so will deplete the entire trust fund by 2037, the trustees say. To be sure, at that point enough money will still be coming in from Social Security payroll taxes to fund 78 percent of retirement benefits, the report says.
More than 53 million people receive Social Security, and retirement benefits average $1,100 a month.
President Barack Obama has created a bipartisan commission to come up with recommendations on government finances, including Social Security.
Experts have proposed a wide range of remedies, from increasing the retirement age, to giving less Social Security benefits to the wealthy, to imposing payroll taxes on wages above the current $106,800 limit.
Those who favor an increase in the retirement age from 66 say it is justified by our lengthening life spans.
"The full retirement age would have to increase to 73 for adults to have the same expected years of remaining life in retirement today as in 1940," Urban Institute senior research associate Melissa Favreault and senior fellow Richard Johnson wrote in a recent report.
Saturday, August 07, 2010
Defeat and Replace the Left Wing Radicals
Not a big Gingrich fan, but he makes several good points here...
http://www.youtube.com/watch_popup?v=qtjfMjjce2Y
http://www.youtube.com/watch_popup?v=qtjfMjjce2Y
Do You Believe We're In Recovery?
John Edwards was correct when he spoke of two America's. While Edward's intent was to divide the middle class against itself, the truth is that the other America, which he is part of has now bestowed upon themselves trillions of dollars of taxpayer money. Pelosi and Co. are even coming back from August recess to try and grab a few more billion while everyone else is busy trying to wrap up their last days of summer.
At what point is blantant theft and embezzlement my our elected officials a criminal act?
Do You Believe We're In Recovery?
At what point is blantant theft and embezzlement my our elected officials a criminal act?
Do You Believe We're In Recovery?
Turbo Timmy’s Christmas Eve Coup
Fannie Mae just registered another quarterly loss -- three straight years of losses, if you’re keeping score at home. Thus, Fannie is headed back to the well at Treasury for another $1.5 billion in aid. Make that $86.1 billion in total aid that Fannie has vacuumed up from the U.S. taxpayer to date.
There is little evidence the money Treasury is pumping into Fannie is accomplishing anything. It won’t repair or rebuild a single home. It won’t help a strapped homeowner avoid foreclosure. It won’t help a solvent homeowner build equity.
The Fannie bailout is like a neutron bomb -- destroying paper wealth, but leaving physical structures intact. You want some bigger black hole numbers?
• AIG has sucked up $118 billion so far -- with another $64 billion to go
• General Motors got a $49 billion bailout .
All told, the Fed and the U.S. government have lent, spent or guaranteed $8.2 trillion in taxpayer money to keep the financial system on life-support. They could have cleaned up ‘the worst oil spill in history’ over 254 times with the money that’s been spent on bailouts, backstops and boondoggles. BP, a publicly traded company, is, as they should, promising to take responsibility and foot the whole bill.
Turbo Timmy’s Christmas Eve Coup
There is little evidence the money Treasury is pumping into Fannie is accomplishing anything. It won’t repair or rebuild a single home. It won’t help a strapped homeowner avoid foreclosure. It won’t help a solvent homeowner build equity.
The Fannie bailout is like a neutron bomb -- destroying paper wealth, but leaving physical structures intact. You want some bigger black hole numbers?
• AIG has sucked up $118 billion so far -- with another $64 billion to go
• General Motors got a $49 billion bailout .
All told, the Fed and the U.S. government have lent, spent or guaranteed $8.2 trillion in taxpayer money to keep the financial system on life-support. They could have cleaned up ‘the worst oil spill in history’ over 254 times with the money that’s been spent on bailouts, backstops and boondoggles. BP, a publicly traded company, is, as they should, promising to take responsibility and foot the whole bill.
Turbo Timmy’s Christmas Eve Coup
Friday, August 06, 2010
"Too Big to Jail" - How Big Banks Are Turning Mexico Into Colombia
"As if the megabanks hadn't done enough, fresh evidence shows their hand in making Mexico a narco-state."
http://www.taipanpublishinggroup.com/tpg/taipan-daily/taipan-daily-080410.html
http://www.taipanpublishinggroup.com/tpg/taipan-daily/taipan-daily-080410.html
Gov't outrage: White House admits healthcare bill is a "tax"
Hopefully this will be viral by November, we must elect people who will repeal this obamanation ....
http://georgewashington2.blogspot.com/2010/07/government-admits-health-care-bill-is.html
http://georgewashington2.blogspot.com/2010/07/government-admits-health-care-bill-is.html
Healthcare - "Democrats have launched America on the most reckless policy experiment in its history"
From Bloomberg - I wonder if they checked with the Mayor of NY before publishing this.....
Healthcare - "Democrats have launched America on the most reckless policy experiment in its history"
Healthcare - "Democrats have launched America on the most reckless policy experiment in its history"
Mother Nature just doing her thing....
From the Agora 5 Minute Forecast -
According to the feds, 74% of all the oil leaked into the Gulf has already been removed. “Much of the rest,” The New York Times summarizes a government report released today, “is so diluted that it does not seem to pose much additional risk of harm.”
Nearly half -- 41% -- of the oil simply “evaporated, dissolved or dispersed” -- taken care of by Mother Nature herself. That’s a larger share of spill containment than all of BP’s burning, skimming, recovery, dispersing and plugging efforts… combined.
The report estimates about a million barrels of crude oil remains floating in the Gulf.
Of course, it's not good to blow out your oil wells, but we can be thankful that nature has oil-eating bacteria out there. Add oil to the seawater, with heat from the sun, and sunlight, and stir it up with wind and wave and you see that the oil is going away faster than many people expected.
“In a normal environment, oil-eating bacteria are in equilibrium with their surroundings. If there's not much oil in the water, the bacteria are few and far between. But if you add oil to the mix, the bacteria bloom.
“As the bloom progresses, more bacteria eat more and more of the oil. They eat the oil until it's mostly gone. When the ‘oil food’ is gone, the bacteria die off. The result is much less oil, and much more microscopic biomass in the water.”
So the question you have to ask is....if the environment can deal with the worst oil spill in the history of the planet, then why don't we believe that the environment will deal with "excessive CO2" with equal effectiveness? Answer - because if we believed that, we couldn't be taxed for the air we breath and Washington wouldn't be able to keep it's boot on our throats!
According to the feds, 74% of all the oil leaked into the Gulf has already been removed. “Much of the rest,” The New York Times summarizes a government report released today, “is so diluted that it does not seem to pose much additional risk of harm.”
Nearly half -- 41% -- of the oil simply “evaporated, dissolved or dispersed” -- taken care of by Mother Nature herself. That’s a larger share of spill containment than all of BP’s burning, skimming, recovery, dispersing and plugging efforts… combined.
The report estimates about a million barrels of crude oil remains floating in the Gulf.
Of course, it's not good to blow out your oil wells, but we can be thankful that nature has oil-eating bacteria out there. Add oil to the seawater, with heat from the sun, and sunlight, and stir it up with wind and wave and you see that the oil is going away faster than many people expected.
“In a normal environment, oil-eating bacteria are in equilibrium with their surroundings. If there's not much oil in the water, the bacteria are few and far between. But if you add oil to the mix, the bacteria bloom.
“As the bloom progresses, more bacteria eat more and more of the oil. They eat the oil until it's mostly gone. When the ‘oil food’ is gone, the bacteria die off. The result is much less oil, and much more microscopic biomass in the water.”
So the question you have to ask is....if the environment can deal with the worst oil spill in the history of the planet, then why don't we believe that the environment will deal with "excessive CO2" with equal effectiveness? Answer - because if we believed that, we couldn't be taxed for the air we breath and Washington wouldn't be able to keep it's boot on our throats!
Arizona, Borderlands and U.S.-Mexican Relations - John Mauldin's Outside the Box - InvestorsInsight.com | Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
A very interesting history of Mexican-American relations.....
Arizona, Borderlands and U.S.-Mexican Relations - John Mauldin's Outside the Box - InvestorsInsight.com | Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
Arizona, Borderlands and U.S.-Mexican Relations - John Mauldin's Outside the Box - InvestorsInsight.com | Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
It's Time to Keep America From Becoming Just Another Banana Republic
We are at a cross road and they path we choose will determine the future for our kids and grandkids. Once the disease of an elite oligarch is entrenched, it will become almost impossible to remove peacefully. We must take action to prevent such a horrible situation.
It’s Time to Keep America From Becoming Just Another Banana Republic
It’s Time to Keep America From Becoming Just Another Banana Republic
Tuesday, August 03, 2010
Friday, July 30, 2010
Sunday, July 25, 2010
Doug Casey - Sun, June 27, 2010 7:20:19 AMThese popular myths are bringing the U.S. to its knees...
By David Galland, Managing Director, Casey Research
Scanning through a local newspaper this week, I came across a letter to the editor that speaks volumes about the popular misconceptions that are dragging this country, and the world, to its knees.
The letter writer, a retired public school teacher, unleashed a litany of solutions for making America's children better citizens. Summarizing his list (the exclamation points are his, too):
Give parents a livable wage!
Provide excellent subsidized childcare!
Guarantee parental leave with full pay and wage protection.
Institute a single-payer health care system.
Regrettably, the gentleman's perfect-world vision of how things should work is not his alone, but is widely shared. Unfortunately for him and his demanding ilk, it is a vision now made obsolete by the facts on the ground.
Simply, the nation – and most of the so-called developed world – is broke. As is the model that these modern-day economies have been built on – a model that foolishly assumed that politicians could be trusted to manage a currency in a responsible fashion.
Consider, in the 1940s central bank reserves were 70% gold. Today, official reserves are only about 10% gold, even though the price of gold is far higher. The balance of those reserves, for all intents and purposes, is nothing more than IOUs.
Out of a justifiable fear of being repetitious, I'm not going to belabor the point. But I am going to comment that it's time for people to grow up… to get real about the situation we are in.
To believe that a government that produces nothing can paper over every crisis, as well as provide succor and sustenance to meet every human desire, and can do so infinitely and without a serious consequence, is to believe in tooth fairies and magical beasts that dance through distant woods.
Even so, like the letter writer, there is still a large block of Americans who persist in believing in such a fantastical world – a world where government's largess should be extended even further. From this crowd you would get rousing cheers to the suggestion that the state should also provide a free and top-notch education to all, quality foodstuffs for both the domestic and foreign needy, high-quality computers (and free Internet connectivity) to every young student, housing subsidies, and open-ended unemployment benefits. And that's just the short-list.
Back in the real world, the declarative statement "I want" has to now be followed with "and here's how I'll be able to save up for it." That's because even a casual glance at the nation's finances confirms that the government's fiscal, monetary, and social policies have been an abject failure… an unmitigated disaster.
While I could illustrate that contention with enough citations to fill a large book, in the interest of brevity I'll point only to an excerpt from a Globe & Mail article on the dire state of California's finances, a fast-moving crisis that can be considered the off-Broadway version of the larger drama now playing out in these United States…
California on 'verge of system failure'
Los Angeles — Arnella Sims has seen a lot in her 34 years as a Los Angeles County court reporter, but nothing like this.
Case files piling up by the thousands, phones ringing off the hook, forced midweek courthouse closings and occasional brawls as frustrated citizens queue for hours to pay parking fines.
"People think we're becoming a Third World country," said Ms. Sims, 55. "They don't understand."
It's a story that's being repeated all across California – and throughout the United States – as cash-strapped state and local governments grapple with collapsed tax revenues and swelling budget gaps. Mass layoffs, slashed health and welfare services, closed parks, crumbling superhighways and ever-larger public school class sizes are all part of the new normal.
California's fiscal hole is now so large that the state would have to liberate 168,000 prison inmates and permanently shutter 240 university and community college campuses to balance its budget in the fiscal year that begins July 1.
Think of California as Greece on the Pacific: bankrupt and desperately needing a bailout.
"We are on the verge of system failure," warned Jean Ross, executive director of the California Budget Project, an independent think tank based in Sacramento.
None of this would matter much to anyone outside the not-so-Golden State except that California's budget crisis is a harbinger of a grim dilemma that all Americans will soon confront. The country has built an elaborate and costly government machine, tied to a regressive tax system that can't generate enough revenue to pay for it all.
Full story here.
Naturally, we want to think of America as America the beautiful. Taking off the rose-tinted glasses, however, presents a different image altogether… that of a bankrupt, highly militarized, and hair-triggered socialist empire that is daily finding new ways to tax its struggling citizenry and tramp all over the Constitution.
Not to be overly dramatic, but the real face of America is increasingly like that of an early-middle-aged woman I saw the other day. She was wheelchair bound, with only one leg, her overweight body covered in poorly rendered tattoos. With a cigarette hanging from the corner of her mouth, she rolled out of a liquor store, a telling brown paper bag in her lap. In other words, the very picture of a life dominated by bad decisions.
While America hasn't yet been laid so low, it would be a mistake to think it can't – and won't – happen. If its leaders and a majority of the population persist in their ignorance of the causes and effects of economic failure, it is all but certain.
And it's not just economics. Over the weekend I re-read both the Declaration of Independence and the Bill of Rights, and it struck me that if the Founding Fathers were alive today, they would be considered terrorists and rounded up. Furthermore, because the Bill of Rights has been all but voided at this point, they might be dropped into the equivalent of a dark hole with no right to a speedy trial, or any trial at all, for that matter.
Trading our freedoms for security is a bad decision because, in the end, the nation will be neither free nor secure. Much in the same way that, to paraphrase one sage, a government that habitually saves all fools from their bad decisions, ultimately creates a nation of fools.
Fools that, like the letter writer, are clearly not self-made but rather look to the coddling nanny-state to guarantee an agreeable lifestyle. By virtue of the massive wealth that its post-WWII hegemony provided the United States, the nation's finances could support – for a time – an increasing crowd of moochers. But that wealth is now gone, leaving in its place the world's largest debtor.
And so it is that in the world now emerging, one where reality trumps fantasy, when talk turns to further stimulus, the conversation should no longer revolve around the ways that the government can prime the economic pumps with yet more borrowing and spending. That's how we got here in the first place, and a sure road map to an even worse catastrophe.
The continued failures of the government's misguided efforts can be seen in the latest bad news on the housing market – bad news we warned subscribers to The Casey Report to expect for months now.
Sales of U.S. New Homes Plunged to Record Low in May
June 23 (Bloomberg) – Purchases of new homes in the U.S. fell in May to a record low as a tax credit expired, showing the market remains dependent on government support.
Sales collapsed a record 33 percent to an annual pace of 300,000 last month from April, less than the median estimate of economists surveyed by Bloomberg News and the fewest in data going back to 1963, figures from the Commerce Department showed today in Washington. Demand in prior months was revised down.
In the new world, the conversation should – must – turn to the proven ways that government can stimulate the economy; mostly by removing itself and its tax and regulatory burdens from as many areas of the economy as possible.
The world is only going to get more competitive – witness Russia's decision to eliminate capital gains taxes on foreign investment in that country – and an America dominated by a government lacking all fiscal restraint, urged on by a populace without even a basic understanding of economics, has little chance at remaining in contention. The situation is only made worse by a weakening of the rule of law, concurrent with a regulatory jungle that is only growing more tangled by the day.
Unfortunately, Paul Krugman, reigning champion of the crowd calling for saving the economy by pumping out yet more unbacked government stimulus, is now being trotted out as a possible replacement for the soon-to-be-vacated job of White House budget director. If he secures the position, then all may not be lost, but it soon will be
Scanning through a local newspaper this week, I came across a letter to the editor that speaks volumes about the popular misconceptions that are dragging this country, and the world, to its knees.
The letter writer, a retired public school teacher, unleashed a litany of solutions for making America's children better citizens. Summarizing his list (the exclamation points are his, too):
Give parents a livable wage!
Provide excellent subsidized childcare!
Guarantee parental leave with full pay and wage protection.
Institute a single-payer health care system.
Regrettably, the gentleman's perfect-world vision of how things should work is not his alone, but is widely shared. Unfortunately for him and his demanding ilk, it is a vision now made obsolete by the facts on the ground.
Simply, the nation – and most of the so-called developed world – is broke. As is the model that these modern-day economies have been built on – a model that foolishly assumed that politicians could be trusted to manage a currency in a responsible fashion.
Consider, in the 1940s central bank reserves were 70% gold. Today, official reserves are only about 10% gold, even though the price of gold is far higher. The balance of those reserves, for all intents and purposes, is nothing more than IOUs.
Out of a justifiable fear of being repetitious, I'm not going to belabor the point. But I am going to comment that it's time for people to grow up… to get real about the situation we are in.
To believe that a government that produces nothing can paper over every crisis, as well as provide succor and sustenance to meet every human desire, and can do so infinitely and without a serious consequence, is to believe in tooth fairies and magical beasts that dance through distant woods.
Even so, like the letter writer, there is still a large block of Americans who persist in believing in such a fantastical world – a world where government's largess should be extended even further. From this crowd you would get rousing cheers to the suggestion that the state should also provide a free and top-notch education to all, quality foodstuffs for both the domestic and foreign needy, high-quality computers (and free Internet connectivity) to every young student, housing subsidies, and open-ended unemployment benefits. And that's just the short-list.
Back in the real world, the declarative statement "I want" has to now be followed with "and here's how I'll be able to save up for it." That's because even a casual glance at the nation's finances confirms that the government's fiscal, monetary, and social policies have been an abject failure… an unmitigated disaster.
While I could illustrate that contention with enough citations to fill a large book, in the interest of brevity I'll point only to an excerpt from a Globe & Mail article on the dire state of California's finances, a fast-moving crisis that can be considered the off-Broadway version of the larger drama now playing out in these United States…
California on 'verge of system failure'
Los Angeles — Arnella Sims has seen a lot in her 34 years as a Los Angeles County court reporter, but nothing like this.
Case files piling up by the thousands, phones ringing off the hook, forced midweek courthouse closings and occasional brawls as frustrated citizens queue for hours to pay parking fines.
"People think we're becoming a Third World country," said Ms. Sims, 55. "They don't understand."
It's a story that's being repeated all across California – and throughout the United States – as cash-strapped state and local governments grapple with collapsed tax revenues and swelling budget gaps. Mass layoffs, slashed health and welfare services, closed parks, crumbling superhighways and ever-larger public school class sizes are all part of the new normal.
California's fiscal hole is now so large that the state would have to liberate 168,000 prison inmates and permanently shutter 240 university and community college campuses to balance its budget in the fiscal year that begins July 1.
Think of California as Greece on the Pacific: bankrupt and desperately needing a bailout.
"We are on the verge of system failure," warned Jean Ross, executive director of the California Budget Project, an independent think tank based in Sacramento.
None of this would matter much to anyone outside the not-so-Golden State except that California's budget crisis is a harbinger of a grim dilemma that all Americans will soon confront. The country has built an elaborate and costly government machine, tied to a regressive tax system that can't generate enough revenue to pay for it all.
Full story here.
Naturally, we want to think of America as America the beautiful. Taking off the rose-tinted glasses, however, presents a different image altogether… that of a bankrupt, highly militarized, and hair-triggered socialist empire that is daily finding new ways to tax its struggling citizenry and tramp all over the Constitution.
Not to be overly dramatic, but the real face of America is increasingly like that of an early-middle-aged woman I saw the other day. She was wheelchair bound, with only one leg, her overweight body covered in poorly rendered tattoos. With a cigarette hanging from the corner of her mouth, she rolled out of a liquor store, a telling brown paper bag in her lap. In other words, the very picture of a life dominated by bad decisions.
While America hasn't yet been laid so low, it would be a mistake to think it can't – and won't – happen. If its leaders and a majority of the population persist in their ignorance of the causes and effects of economic failure, it is all but certain.
And it's not just economics. Over the weekend I re-read both the Declaration of Independence and the Bill of Rights, and it struck me that if the Founding Fathers were alive today, they would be considered terrorists and rounded up. Furthermore, because the Bill of Rights has been all but voided at this point, they might be dropped into the equivalent of a dark hole with no right to a speedy trial, or any trial at all, for that matter.
Trading our freedoms for security is a bad decision because, in the end, the nation will be neither free nor secure. Much in the same way that, to paraphrase one sage, a government that habitually saves all fools from their bad decisions, ultimately creates a nation of fools.
Fools that, like the letter writer, are clearly not self-made but rather look to the coddling nanny-state to guarantee an agreeable lifestyle. By virtue of the massive wealth that its post-WWII hegemony provided the United States, the nation's finances could support – for a time – an increasing crowd of moochers. But that wealth is now gone, leaving in its place the world's largest debtor.
And so it is that in the world now emerging, one where reality trumps fantasy, when talk turns to further stimulus, the conversation should no longer revolve around the ways that the government can prime the economic pumps with yet more borrowing and spending. That's how we got here in the first place, and a sure road map to an even worse catastrophe.
The continued failures of the government's misguided efforts can be seen in the latest bad news on the housing market – bad news we warned subscribers to The Casey Report to expect for months now.
Sales of U.S. New Homes Plunged to Record Low in May
June 23 (Bloomberg) – Purchases of new homes in the U.S. fell in May to a record low as a tax credit expired, showing the market remains dependent on government support.
Sales collapsed a record 33 percent to an annual pace of 300,000 last month from April, less than the median estimate of economists surveyed by Bloomberg News and the fewest in data going back to 1963, figures from the Commerce Department showed today in Washington. Demand in prior months was revised down.
In the new world, the conversation should – must – turn to the proven ways that government can stimulate the economy; mostly by removing itself and its tax and regulatory burdens from as many areas of the economy as possible.
The world is only going to get more competitive – witness Russia's decision to eliminate capital gains taxes on foreign investment in that country – and an America dominated by a government lacking all fiscal restraint, urged on by a populace without even a basic understanding of economics, has little chance at remaining in contention. The situation is only made worse by a weakening of the rule of law, concurrent with a regulatory jungle that is only growing more tangled by the day.
Unfortunately, Paul Krugman, reigning champion of the crowd calling for saving the economy by pumping out yet more unbacked government stimulus, is now being trotted out as a possible replacement for the soon-to-be-vacated job of White House budget director. If he secures the position, then all may not be lost, but it soon will be
Socialst Pigs
From The Daily Reckoning:
Capitalism produces. Socialism distributes. The two systems do not coexist comfortably with one another. In fact, they are inimical.
Some of the most celebrated champions of socialism have coined terms like “greedy capitalist” or “capitalist pig.” By implication, a socialist is neither greedy nor a pig. But economic history suggests that socialists are just as porcine as their capitalist counterparts…maybe even more so.
One need only look to the recent goings on in Australia, your editor’s country of birth, for a glimpse into the real world outcomes of this ideological struggle. Kevin Rudd was last week ousted from Prime Ministership after a botched attempt to impose a “super profits” tax on the most productive sector of the Australian economy – the mighty mining sector. We provided a few details in Thursday’s issue:
“The story is a classic ‘producer vs. parasite’ tale…Rudd, like any other socialist bully would do, attempted to sell the tax to the Australian public under the familiar ‘fair share’ slogan.
“‘The infrastructure needs of this state are vast and on the existing tax base cannot be funded,’ Rudd told Australian reporters while on a recent visit to Western Australia, the nation’s largest mining state. ‘We say the sector of the economy most able to share a greater part of the burden for funding our infrastructure needs for the future is in fact our most profitable mining companies.’
“If this sounds like thinly veiled Marxist rhetoric,” we remarked, “that's because it is. As the founder of that ill fated, though persistently insidious ideology himself famously noted: ‘From each according to his ability, to each according to his need.’”
One might be forgiven for thinking that, after Rudd’s spectacular political decapitation, replacement Prime Minister, Julia Gillard, would think twice before trying to kill the goose laying all of Australia’s golden eggs. Alas, it was out with one parasite, in with another.
Ms. Gillard is certainly aware of the research released by the Western Australia Chamber of Commerce and Industry that suggests the “super profits” tax, as it stands, would have erased $4.4 billion and 17,000 jobs from the West Australian economy next year - before the tax was even scheduled to be implemented in 2012. The study further predicts the cost to the state’s economy would have risen each year to total $60 billion and 100,000 jobs lost by 2020.
And yet…Gilliard revealed her parasitic DNA within hours of nabbing the Prime Minister’s post.
“I want to make sure Australians get a fair share of our mineral wealth,” she declared, “But we want to genuinely negotiate…”
Gillard is widely expected to push for a slightly diluted version of the “super profits” tax. “I am throwing open the door to the mining industry,” she said just last week, “and I ask that in return, the mining industry throws open its mind.”
As warm and fuzzy as those sentiments may be, the fact remains that such featherweight idealisms invariably end up weighing a stone…and that is a burden the strongest, most able members of society are usually expected to shoulder. But theft is still theft…even if it is watered down a tad. Don’t expect the industrialists to take her play-nice politico-doublespeak lying down.
Although he welcomed the new leadership’s change of tack, Atlas Iron chief executive, David Flanagan, was unequivocal in his assertion that tax must be axed.
“We’ve been screaming blue murder to anyone who will listen about what the problems are with this tax,” he told The Australian this week.
Australians have been getting a pretty “fair share” of the local mineral wealth for some time now anyway. Those who risked their capital and bought even a single share of BHP Billiton, Rio Tinto, Fortescue Metals, Atlas Iron et al., were richly rewarded over the past decade as the geologic and geographic blessings of the “Lucky Country” and, more importantly, the efforts and initiative of its mining companies, paid off handsomely. (Of course, China and India’s voracious appetite didn’t hurt, either.)
In addition to capital appreciation and regular dividends for shareholders, ordinary, working Australians have also exacted what might be seen as a “fair share” of the local resource wealth. Through compulsory contributions to Australia’s Superannuation Fund – a scheme not entirely dissimilar to America’s Social Security, though decidedly healthier…at this point, anyway – working Australians have a large, indirect holding in the nation’s mining giants. Working Australians, therefore, saw the value of their retirement savings appreciate, more or less, alongside the rise and rise of the very companies the “super profits” tax sought to penalize. [Those same workers, not coincidentally, were among the first to see the value of their retirement nest egg shrink as the share prices of the nation’s mining companies collapsed after the proposed tax was first run up the national flagpole.]
Of course, all this is to say nothing of the tens of thousands of hard-working individuals who actually spend their days and nights thousands of feet below Australia’s rusty red surface actually digging the stuff up…and the carpenters, plumbers and electricians who build and service lodgings to house them…and the local businesses that profit from an influx of workers to the region…ect., etc., etc… (Not to mention the exorbitant taxes each and every link in this value chain already pay!)
After all, a barrel of oil or a ton of coal is worth nothing until it is first brought to market. Invariably, that process takes an immense amount of capital, the expertise to extract said resources and the gumption to actually get one’s hands dirty doing the job.
At the end of the day, those who deserved a “fair share” of the resource wealth got exactly what they deserved: a share commensurate to the effort they put in. By contrast, those who don’t work, don’t pay into Superannuation, don’t build or service mining towns in some way, don’t risk their capital by investing in those “conspicuously productive” companies; those who don’t actually contribute anything to the process of bringing the product to market at all, get exactly what they deserve: nothing.
People seem to think that just because they have an emu and a big red kangaroo on their passport they are somehow entitled to a bounty of riches…riches someone else must earn for them, no less. They define a “fair share” as a Divine Right handed down to them the moment they were born – coincidentally – in a resource rich land.
People of such a mind should consider asking how their poor brothers and sisters are faring in Venezuela, or Mexico, or Iran, or Nigeria or, for that matter, just about anywhere else on the African continent. These lands all enjoy an abundance of natural riches…and an abundance of government involvement in “distributing” the profits. And yet, curiously enough, the people living under these supposedly benevolent regimes are among the most repressed and impoverished on earth. Hmmm…
Socialist maxims may score high marks for eloquence and pathos; but they score very low marks for economic wisdom. Capitalism produces. Socialism distributes. Without capitalism, socialism cannot function. In other words; socialism needs capitalism.
Intriguingly, the inverse is not also true. Capitalism has no need of socialism whatsoever. Capitalism distributes wealth by creating opportunity, forged in the crucible of open competition. Capitalism amasses the capital that invests in the enterprises that enable others to advance their financial conditions. Capitalism does not confiscate wealth and redistribute it. Capitalism multiplies wealth…and in the process redistributes opportunity.
Of course, productivity and wealth creation does not come from penalizing the most productive members of society. It comes from standing aside and allowing them to do what they do best, be that excavating minerals, building cars or growing bananas.
Left alone, the free market operates as a kind of evolutionary arms race. Companies compete to offer the same product at a better price, or a better product at the same price. Those that cannot keep pace eventually whither and die. Through this “survival of the fittest” process, prices are over time driven down and the quality of goods and services forced higher. In this fashion, those at the lower end of the socio-economic spectrum benefit most from the toils of companies competing to capture their business. And, the best part is that nobody has to steal a penny to pay for it. The “capitalist pigs” will finance the whole operation themselves…if only the safety-net socialists would get out of the way and let them.
Cheers,
Joel Bowman,
for The Daily Reckoning
Capitalism produces. Socialism distributes. The two systems do not coexist comfortably with one another. In fact, they are inimical.
Some of the most celebrated champions of socialism have coined terms like “greedy capitalist” or “capitalist pig.” By implication, a socialist is neither greedy nor a pig. But economic history suggests that socialists are just as porcine as their capitalist counterparts…maybe even more so.
One need only look to the recent goings on in Australia, your editor’s country of birth, for a glimpse into the real world outcomes of this ideological struggle. Kevin Rudd was last week ousted from Prime Ministership after a botched attempt to impose a “super profits” tax on the most productive sector of the Australian economy – the mighty mining sector. We provided a few details in Thursday’s issue:
“The story is a classic ‘producer vs. parasite’ tale…Rudd, like any other socialist bully would do, attempted to sell the tax to the Australian public under the familiar ‘fair share’ slogan.
“‘The infrastructure needs of this state are vast and on the existing tax base cannot be funded,’ Rudd told Australian reporters while on a recent visit to Western Australia, the nation’s largest mining state. ‘We say the sector of the economy most able to share a greater part of the burden for funding our infrastructure needs for the future is in fact our most profitable mining companies.’
“If this sounds like thinly veiled Marxist rhetoric,” we remarked, “that's because it is. As the founder of that ill fated, though persistently insidious ideology himself famously noted: ‘From each according to his ability, to each according to his need.’”
One might be forgiven for thinking that, after Rudd’s spectacular political decapitation, replacement Prime Minister, Julia Gillard, would think twice before trying to kill the goose laying all of Australia’s golden eggs. Alas, it was out with one parasite, in with another.
Ms. Gillard is certainly aware of the research released by the Western Australia Chamber of Commerce and Industry that suggests the “super profits” tax, as it stands, would have erased $4.4 billion and 17,000 jobs from the West Australian economy next year - before the tax was even scheduled to be implemented in 2012. The study further predicts the cost to the state’s economy would have risen each year to total $60 billion and 100,000 jobs lost by 2020.
And yet…Gilliard revealed her parasitic DNA within hours of nabbing the Prime Minister’s post.
“I want to make sure Australians get a fair share of our mineral wealth,” she declared, “But we want to genuinely negotiate…”
Gillard is widely expected to push for a slightly diluted version of the “super profits” tax. “I am throwing open the door to the mining industry,” she said just last week, “and I ask that in return, the mining industry throws open its mind.”
As warm and fuzzy as those sentiments may be, the fact remains that such featherweight idealisms invariably end up weighing a stone…and that is a burden the strongest, most able members of society are usually expected to shoulder. But theft is still theft…even if it is watered down a tad. Don’t expect the industrialists to take her play-nice politico-doublespeak lying down.
Although he welcomed the new leadership’s change of tack, Atlas Iron chief executive, David Flanagan, was unequivocal in his assertion that tax must be axed.
“We’ve been screaming blue murder to anyone who will listen about what the problems are with this tax,” he told The Australian this week.
Australians have been getting a pretty “fair share” of the local mineral wealth for some time now anyway. Those who risked their capital and bought even a single share of BHP Billiton, Rio Tinto, Fortescue Metals, Atlas Iron et al., were richly rewarded over the past decade as the geologic and geographic blessings of the “Lucky Country” and, more importantly, the efforts and initiative of its mining companies, paid off handsomely. (Of course, China and India’s voracious appetite didn’t hurt, either.)
In addition to capital appreciation and regular dividends for shareholders, ordinary, working Australians have also exacted what might be seen as a “fair share” of the local resource wealth. Through compulsory contributions to Australia’s Superannuation Fund – a scheme not entirely dissimilar to America’s Social Security, though decidedly healthier…at this point, anyway – working Australians have a large, indirect holding in the nation’s mining giants. Working Australians, therefore, saw the value of their retirement savings appreciate, more or less, alongside the rise and rise of the very companies the “super profits” tax sought to penalize. [Those same workers, not coincidentally, were among the first to see the value of their retirement nest egg shrink as the share prices of the nation’s mining companies collapsed after the proposed tax was first run up the national flagpole.]
Of course, all this is to say nothing of the tens of thousands of hard-working individuals who actually spend their days and nights thousands of feet below Australia’s rusty red surface actually digging the stuff up…and the carpenters, plumbers and electricians who build and service lodgings to house them…and the local businesses that profit from an influx of workers to the region…ect., etc., etc… (Not to mention the exorbitant taxes each and every link in this value chain already pay!)
After all, a barrel of oil or a ton of coal is worth nothing until it is first brought to market. Invariably, that process takes an immense amount of capital, the expertise to extract said resources and the gumption to actually get one’s hands dirty doing the job.
At the end of the day, those who deserved a “fair share” of the resource wealth got exactly what they deserved: a share commensurate to the effort they put in. By contrast, those who don’t work, don’t pay into Superannuation, don’t build or service mining towns in some way, don’t risk their capital by investing in those “conspicuously productive” companies; those who don’t actually contribute anything to the process of bringing the product to market at all, get exactly what they deserve: nothing.
People seem to think that just because they have an emu and a big red kangaroo on their passport they are somehow entitled to a bounty of riches…riches someone else must earn for them, no less. They define a “fair share” as a Divine Right handed down to them the moment they were born – coincidentally – in a resource rich land.
People of such a mind should consider asking how their poor brothers and sisters are faring in Venezuela, or Mexico, or Iran, or Nigeria or, for that matter, just about anywhere else on the African continent. These lands all enjoy an abundance of natural riches…and an abundance of government involvement in “distributing” the profits. And yet, curiously enough, the people living under these supposedly benevolent regimes are among the most repressed and impoverished on earth. Hmmm…
Socialist maxims may score high marks for eloquence and pathos; but they score very low marks for economic wisdom. Capitalism produces. Socialism distributes. Without capitalism, socialism cannot function. In other words; socialism needs capitalism.
Intriguingly, the inverse is not also true. Capitalism has no need of socialism whatsoever. Capitalism distributes wealth by creating opportunity, forged in the crucible of open competition. Capitalism amasses the capital that invests in the enterprises that enable others to advance their financial conditions. Capitalism does not confiscate wealth and redistribute it. Capitalism multiplies wealth…and in the process redistributes opportunity.
Of course, productivity and wealth creation does not come from penalizing the most productive members of society. It comes from standing aside and allowing them to do what they do best, be that excavating minerals, building cars or growing bananas.
Left alone, the free market operates as a kind of evolutionary arms race. Companies compete to offer the same product at a better price, or a better product at the same price. Those that cannot keep pace eventually whither and die. Through this “survival of the fittest” process, prices are over time driven down and the quality of goods and services forced higher. In this fashion, those at the lower end of the socio-economic spectrum benefit most from the toils of companies competing to capture their business. And, the best part is that nobody has to steal a penny to pay for it. The “capitalist pigs” will finance the whole operation themselves…if only the safety-net socialists would get out of the way and let them.
Cheers,
Joel Bowman,
for The Daily Reckoning
Do You Make As Much as a Government Worker?
From Heritage .org
Federal employees are often called civil servants because their work is considered a "sacrifice" on their part to "serve" the public.
But for many of Uncle Sam's employees, it's not really that much of a sacrifice to work for the government.
Recent findings reveal that, on average, federal employees receive much higher pay, better compensation and more job security compared to their private sector counterparts, forcing a real sacrifice on the part of taxpayers to fund these elaborate benefits.
Heritage Foundation labor expert James Sherk has just released a study analyzing data from the Bureau of Labor Statistics' Current Population Survey for 2006 through 2009. He found that "the federal pay system gives the average federal employee hourly cash earnings 22 percent above the average private worker's, controlling for observable skills and characteristics." This translates to about $28.64 an hour for Uncle Sam's workers versus $18.27 an hour for those in the private sector.
But it's not simply better take-home pay. Federal workers also enjoy far better benefits. "The average private sector employer pays $9,882 per employee in annual benefits, while federal government pays an average of $32,115 per employee," writes Sherk. When factoring in these non-cash benefits, which include the coveted Federal Employees Health Benefit Program, federal employees are earning approximately 30 to 40 percent more in total compensation.
This all adds up. Sherk found that if federal employee compensation mirrored that of their private sector counterparts, federal spending would be reduced by $47 billion in 2011 alone.
That's right, that's $47 billion in savings if federal workers were paid like those in the private sector.
And this cost will only increase as the federal government adds more workers to its payroll. Unemployment currently stands at 9.5 percent and the economy continues to shed private sector jobs, but the government has added almost 200,000 jobs since the recession began. And these new hires, along with older ones, receive unmatched job security – a priceless commodity in today's market. Once hired, Sherk notes, feds "keep their jobs unless their supervisor works through an arduous process of exhaustively documenting their performance and working through a complex appeal process."
This imposes an enormous burden on taxpayers. As Heritage President Ed Feulner writes on Townhall.com, "federal over-compensation sends the wrong message, encouraging people to work for the government even though most federal jobs don't contribute much to overall economic growth."
Something has to be done. And Heritage Foundation experts have prepared common-sense solutions.
The federal government should:
Replace its seniority-based, wage-fixing pay scale with performance-based pay.
Reduce federal benefits.
Make it easier to dismiss unproductive employees.
Not all federal employees are overpaid. Some of the most skilled and hardest working are probably underpaid.
But the "government is a monopoly," writes Heritage's Conn Carroll. "It has no competitors to act as a check on employee compensation." Unless serious reforms are enacted, taxpayers are looking at an excess cost of $47 billion for civil "service" next year – whether it's good service or not. And that's a real sacrifice for taxpayers.
Federal employees are often called civil servants because their work is considered a "sacrifice" on their part to "serve" the public.
But for many of Uncle Sam's employees, it's not really that much of a sacrifice to work for the government.
Recent findings reveal that, on average, federal employees receive much higher pay, better compensation and more job security compared to their private sector counterparts, forcing a real sacrifice on the part of taxpayers to fund these elaborate benefits.
Heritage Foundation labor expert James Sherk has just released a study analyzing data from the Bureau of Labor Statistics' Current Population Survey for 2006 through 2009. He found that "the federal pay system gives the average federal employee hourly cash earnings 22 percent above the average private worker's, controlling for observable skills and characteristics." This translates to about $28.64 an hour for Uncle Sam's workers versus $18.27 an hour for those in the private sector.
But it's not simply better take-home pay. Federal workers also enjoy far better benefits. "The average private sector employer pays $9,882 per employee in annual benefits, while federal government pays an average of $32,115 per employee," writes Sherk. When factoring in these non-cash benefits, which include the coveted Federal Employees Health Benefit Program, federal employees are earning approximately 30 to 40 percent more in total compensation.
This all adds up. Sherk found that if federal employee compensation mirrored that of their private sector counterparts, federal spending would be reduced by $47 billion in 2011 alone.
That's right, that's $47 billion in savings if federal workers were paid like those in the private sector.
And this cost will only increase as the federal government adds more workers to its payroll. Unemployment currently stands at 9.5 percent and the economy continues to shed private sector jobs, but the government has added almost 200,000 jobs since the recession began. And these new hires, along with older ones, receive unmatched job security – a priceless commodity in today's market. Once hired, Sherk notes, feds "keep their jobs unless their supervisor works through an arduous process of exhaustively documenting their performance and working through a complex appeal process."
This imposes an enormous burden on taxpayers. As Heritage President Ed Feulner writes on Townhall.com, "federal over-compensation sends the wrong message, encouraging people to work for the government even though most federal jobs don't contribute much to overall economic growth."
Something has to be done. And Heritage Foundation experts have prepared common-sense solutions.
The federal government should:
Replace its seniority-based, wage-fixing pay scale with performance-based pay.
Reduce federal benefits.
Make it easier to dismiss unproductive employees.
Not all federal employees are overpaid. Some of the most skilled and hardest working are probably underpaid.
But the "government is a monopoly," writes Heritage's Conn Carroll. "It has no competitors to act as a check on employee compensation." Unless serious reforms are enacted, taxpayers are looking at an excess cost of $47 billion for civil "service" next year – whether it's good service or not. And that's a real sacrifice for taxpayers.
The Idiocracy of our Leaders
From Porter Stansberry:
In today's Digest, I'll debunk your faith in humanity... but you might find yourself laughing. Sometimes it's all you can do when faced with the enormity of the problems facing our country and the ignominy of our leadership.
Let me begin with Hillary Clinton. God bless her. Has there ever been a more unfortunate woman in history? She wasn't qualified to pick a spouse, let alone run the foreign affairs of the United States. And now this... Let history record that economics has never entered her mind. Hillary was comparing the United States to Brazil recently when she said: "Brazil has the highest tax-to-GDP rate in the Western Hemisphere and guess what – it's growing like crazy."
She was implying that if we raised tax rates on the rich, our economy would improve. And just to remind the audience of exactly what she meant, she began her talk by pointing out a theme that's growing in popularity in Washington these days: "The rich aren't paying their fair share," she said. Never mind the fact that the "rich" pay for the vast majority of government and roughly 50% of American citizens pay no federal income tax at all. What Hillary either didn't know or didn't care to mention was the highest income tax rate in Brazil is 27.5% – even lower than the Reagan-era rates her husband jacked up. Compared to the 43% rates "the rich" will be paying this January, Brazil seems like a tax haven for wealthy Americans.
It's hard to believe Hillary could be so woefully ignorant of the real lesson the Brazil economy demonstrates: Lower rates of tax generate far more revenue (as a % of GDP) than do steeply progressive rates like we have in the United States. The reason is utterly simple and intuitive to every person who has ever had a real job: Nobody likes to give half his paycheck to the government. As any economist (liberal or conservative) would tell you, steeply progressive taxes result in lower economic growth, higher unemployment, and vastly more tax avoidance. When will the Democratic party cease its attempts to capitalize on class demagoguery and adopt sensible economic policies?
Washington D.C. is the Daytona 500 of uselessness, ignorance, and vaingloriousness. You can imagine it as a giant toilet bowl, with all of the politicians racing into the sewer. There's Hillary, sitting right on the pole – far in the lead. I never imagined someone could overtake her on the race to the bottom. But I seriously underestimated the mind-blowing ignorance of Nancy Pelosi...
On July 1, Pelosi proclaimed in a weekly press briefing that the best way to stimulate the economy was to extend unemployment benefits – beyond the two-year limit. "It injects demand into the economy... It creates jobs faster than almost any other initiative you can name."
Silence. There's nothing but stunned silence. And the growing realization that these people (our leaders) have no idea what they're doing...
Pelosi is the daughter of a congressman. She went to college in Washington D.C., interning for senators. She married out of college and raised five children. Then, in 1987, she won a special election in California's Eighth District, where only 15% of the voters are registered Republicans. It is probably the "safest" Democratic seat in Congress.
In short, Pelosi has spent her entire life in government – sitting in a guaranteed seat. She has never run a business, held a regular job, or employed anyone in her entire life. I'm sure she believes what she said – that the government should simply support everyone and doing so is the quickest way to improve the economy. It is all she knows. As she said: "It's impossible to think of a situation where we would have a country that would say we're not going to have unemployment benefits."
Actually, Nancy... until 1935 there was no federal role whatsoever in unemployment benefits. Such arrangements were organized voluntarily by trade associations and unions – and were self-funded. It didn't occur to Americans that they ought to be responsible for someone else's unemployment insurance until Franklin Delano Roosevelt showed how the newly expanded electorate had changed politics in America forever. Campaigning with the explicit promise to rob your neighbors was good politics. And it has been ever since. The irony is, such policies have now become so mainstream that politicians like Pelosi don't even remember where they came from or their party's role in creating them. Nor do the politicians yet understand that believing in these ideas – that everyone can live at the expense of their neighbors – will lead to a catastrophic financial collapse, a situation that' s well underway right now.
In today's Digest, I'll debunk your faith in humanity... but you might find yourself laughing. Sometimes it's all you can do when faced with the enormity of the problems facing our country and the ignominy of our leadership.
Let me begin with Hillary Clinton. God bless her. Has there ever been a more unfortunate woman in history? She wasn't qualified to pick a spouse, let alone run the foreign affairs of the United States. And now this... Let history record that economics has never entered her mind. Hillary was comparing the United States to Brazil recently when she said: "Brazil has the highest tax-to-GDP rate in the Western Hemisphere and guess what – it's growing like crazy."
She was implying that if we raised tax rates on the rich, our economy would improve. And just to remind the audience of exactly what she meant, she began her talk by pointing out a theme that's growing in popularity in Washington these days: "The rich aren't paying their fair share," she said. Never mind the fact that the "rich" pay for the vast majority of government and roughly 50% of American citizens pay no federal income tax at all. What Hillary either didn't know or didn't care to mention was the highest income tax rate in Brazil is 27.5% – even lower than the Reagan-era rates her husband jacked up. Compared to the 43% rates "the rich" will be paying this January, Brazil seems like a tax haven for wealthy Americans.
It's hard to believe Hillary could be so woefully ignorant of the real lesson the Brazil economy demonstrates: Lower rates of tax generate far more revenue (as a % of GDP) than do steeply progressive rates like we have in the United States. The reason is utterly simple and intuitive to every person who has ever had a real job: Nobody likes to give half his paycheck to the government. As any economist (liberal or conservative) would tell you, steeply progressive taxes result in lower economic growth, higher unemployment, and vastly more tax avoidance. When will the Democratic party cease its attempts to capitalize on class demagoguery and adopt sensible economic policies?
Washington D.C. is the Daytona 500 of uselessness, ignorance, and vaingloriousness. You can imagine it as a giant toilet bowl, with all of the politicians racing into the sewer. There's Hillary, sitting right on the pole – far in the lead. I never imagined someone could overtake her on the race to the bottom. But I seriously underestimated the mind-blowing ignorance of Nancy Pelosi...
On July 1, Pelosi proclaimed in a weekly press briefing that the best way to stimulate the economy was to extend unemployment benefits – beyond the two-year limit. "It injects demand into the economy... It creates jobs faster than almost any other initiative you can name."
Silence. There's nothing but stunned silence. And the growing realization that these people (our leaders) have no idea what they're doing...
Pelosi is the daughter of a congressman. She went to college in Washington D.C., interning for senators. She married out of college and raised five children. Then, in 1987, she won a special election in California's Eighth District, where only 15% of the voters are registered Republicans. It is probably the "safest" Democratic seat in Congress.
In short, Pelosi has spent her entire life in government – sitting in a guaranteed seat. She has never run a business, held a regular job, or employed anyone in her entire life. I'm sure she believes what she said – that the government should simply support everyone and doing so is the quickest way to improve the economy. It is all she knows. As she said: "It's impossible to think of a situation where we would have a country that would say we're not going to have unemployment benefits."
Actually, Nancy... until 1935 there was no federal role whatsoever in unemployment benefits. Such arrangements were organized voluntarily by trade associations and unions – and were self-funded. It didn't occur to Americans that they ought to be responsible for someone else's unemployment insurance until Franklin Delano Roosevelt showed how the newly expanded electorate had changed politics in America forever. Campaigning with the explicit promise to rob your neighbors was good politics. And it has been ever since. The irony is, such policies have now become so mainstream that politicians like Pelosi don't even remember where they came from or their party's role in creating them. Nor do the politicians yet understand that believing in these ideas – that everyone can live at the expense of their neighbors – will lead to a catastrophic financial collapse, a situation that' s well underway right now.
Wednesday, July 14, 2010
The Emperor Has No Credit
According to the old joke, one of the scariest phrases in the English language is: "We're from the government, and we're here to help."
One might now revise that phrase as, "We're from the government, and we're here to destroy you. We want you to put your faith in blind institutions and false promises... to let your hard-earned savings be ravaged by the locusts of inflation and the weasels of Wall Street... and if by any chance you have anything left when we're done with you, we want to tax the tatters of your nest egg into oblivion."
The Emperor Has No Credit
One might now revise that phrase as, "We're from the government, and we're here to destroy you. We want you to put your faith in blind institutions and false promises... to let your hard-earned savings be ravaged by the locusts of inflation and the weasels of Wall Street... and if by any chance you have anything left when we're done with you, we want to tax the tatters of your nest egg into oblivion."
The Emperor Has No Credit
Friday, July 09, 2010
The Price of Propaganda
Lesson from Pinocchio, a lie continues to grow until it's as plain as the nose on your face.......
The Price of Propaganda
The Price of Propaganda
It’s “Chapter 66” as U.S. States Face De Facto Bankruptcy
The opportunity for conservative governoships has never been better. Like New Jersey, they can use the economic crisis to loosen the union death grip on state citizens......
It’s “Chapter 66” as U.S. States Face De Facto Bankruptcy
It’s “Chapter 66” as U.S. States Face De Facto Bankruptcy
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