We're turning Californian, turning Californian!

With the emergence of the bust, Icelandic authorities allowed its banks to go belly up, while the Irish government decided to support the banks. According to estimates, the cost to the taxpayers of providing support to Irish banks stood at €63 billion. (The private debt of the failed banks was nationalized.) In Iceland, the government, by allowing Icelandic banks to fail, made foreign creditors, not Icelandic taxpayers, largely responsible for covering losses.

The fact that Iceland allowed the banks to go bankrupt was a positive step in healing the economy. Unfortunately Iceland introduced a program of safeguarding the welfare of the unemployed. Also, the collapse of the Icelandic krona was a hard hit to homeowners who borrowed in foreign currency. In response to this, the authorities orchestrated mortgage-relief schemes. Iceland has also imposed draconian capital controls. Obviously, all this curtailed the benefits of allowing the banks to go belly up.

Whether the Icelandic economy will show a healthy revival, as suggested by some experts, hinges on the monetary policy of Iceland's central bank. We suggest the same applies to Ireland. (What is required is to seal off all the loopholes for the growth of the money supply.)

However, it is clear that Iceland's economic situation is less bad than Ireland's, and that is largely due to the Iceland's allowing its banks to go bankrupt.

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Luo had just completed his house at a cost of about 600,000 yuan ($95,000) when the government first approached him with their standard offer of 220,000 ($35,000) to move out — which he refused, Chen said. The offer has since gone up to 260,000 yuan ($41,000).

...

Deputy village chief Luo Xuehua — a cousin to the duck farmer — said he didn't expect the dispute to go on much longer. He said he expects Luo Baogen to reach an agreement with the government soon, though he said the homeowner's demands are unrealistic.

"We cannot just give whatever he demands," Luo Xuehua said. "That's impossible."

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As I discussed in my previous article "'Early Education or Early Indoctrination" our educational curricula could soon come under the control of the United Nations. The United States government supports their attempts at globalizing our American education system and indoctrinating our children in an early education program (0-5 years of age). But attempts to place our children in school from birth are being deterred small business: the daycare industry. Parents currently have the option of either putting their children in an "early education" school focus from birth until kindergarten or an in-home day care or center. But that too might be a thing of the past if the state and federal governments continue placing burdensome and costly regulations on these small daycare centers that love and care for our children.

Many parents opt for in-home day care because they feel it is more of a "home away from home" environment; a place where children are hugged, love and rocked, and learn the basics of life as they would if they were at home. But in-home daycares and centers are increasingly shutting their doors because of impossible government regulations. In the 2005-2006 legislative session of the Michigan House of Representatives, there was uproar by the daycare provider community when the Michigan Department of Human Services (DHS) held hearings regarding the implementation of numerous and costly new daycare regulations. Former Representative John Stahl (R-North Branch), Chair of the Family and Children Services committee held hearings in response to the concerns from constituents contacting their legislators. The committee listened to testimony from well-respected and award-winning daycare centers asserting that if the new rules were implemented, they would be put out of business because they could not afford to implement the new rules, which included teaching requirements and early education training. While some of the new regulations were needed for safety reasons, many were punitive and costly. The Michigan DHS implemented most of them anyway. According to Colleen Steinman, a spokesman for the Michigan DHS in a 2009 story, "Daycares are struggling primarily because the economy is suffering and because licensing requirements are becoming more stringent."

As a consequence of the overreaching Michigan regulations, one mom was investigated by the Michigan DHS for running an illegal day care. What was her alleged violation? She allowed her neighbors' kids to be dropped off before school so they didn't have to wait outside at the bus stop. The DHS told her she had to stop watching the kids.

What are many of these new educational requirements and why are they so costly? The new regulations include 'early education' academic requirements that the providers (now called teachers) must have. "While Gov. Bev Perdue announced recently that there would be no new rules allowed to encumber businesses, a universally applauded measure to help expedite the economic recovery effort, the wheels were already in motion for a new and particularly onerous regulation on childcare providers, known as Early Educator Certification (EEC). This new regulation will likely have a negative impact on the cost and availability of childcare in North Carolina." (Source)

In Connecticut preschool teachers who earn on average $8-$9 per hour were told if they did not get a bachelor's degree, which costs thousands of dollars to obtain, they would be out of a job.

The National Education Association (NEA) says, "Unfortunately state standards for privately run, child care programs are significantly lower than that for school-based pre-kindergarten and Head Start Programs." This is ironic considering the many failures of the Head Start program.

The NEA does not believe that a loving private daycare provider is capable of teaching babies and toddlers unless the provider i.e. "teacher", is an academic. These are the recommendations of the NEA to the federal government, "Lead teachers in private centers hold a minimum of an associate's degree in child development or early childhood education, all teaching assistants in private childcare settings hold a minimum of a child development associate (CDA) or a state issued certificate that meets or exceeds CDA requirements." This means that a person who owns an in-home daycare would be required to have a degree. A person who does daycare because she loves children, wants to teach them basic social skills that are necessary before learning can commence, like sharing, caring, emotional control, and socializing. And if the daycare provider would like her mother or friend to help on occasion as my previous daycare provider did, she would have to also have an education, because raising six successful children would not be adequate.

On top of requiring these providers to go back to school and spend possibly thousands of dollars to obtain a degree to teach babies and toddlers, the states are actually decreasing reimbursement rates to providers who do not conform to the new educational regulations such as the case in Wisconsin. Daycare providers who are currently only rated as a two star and do not take the necessary educational classes mandated by the government to move up in the rating system may be forced to close their doors.

Some states, such as Massachusetts and Michigan,are also forcing the in-home daycares into unions They are forced to pay dues whether they want to or not, which also decreases daycare provider's incomes. Fortunately for Michigan, this has since been reversed.

Why would governments force burdensome and costly regulations on small daycare businesses? Why would they require minimally paid providers who already work long hours to spend thousands of dollars to obtain a degree? Why would they reduce their rates of reimbursement and attempt to force them into a union? Why would the government want to risk the economic impact of more small businesses going under in a time when our country cannot afford it?

In his State of the State address on January 11, 2005, former South Dakota Governor Mike Rounds said, "My final question is this: Could it be that the education establishment/child advocate crowd is scrambling to find a way to pump more taxpayer dollars into public education by sweeping preschool-age children into the state-funded school aid formula?" http://www.dakotavoice.com/200702/G/20070206_CF.html

What easier way to accomplish implementing and expanding a new schooling system than to give parents no other option?

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4est_4est_Gump said:

"An analysis by Breitbart News has found that the number of individuals on food stamps now exceeds the combined populations of 24 states and the District of Columbia."



When are the "Million Man Math Economic Multipliers" gonna kick in?

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As we get closer to the day when Obamacare moves from threat to reality, it seems probable that the resulting catastrophe for tens of thousands of businesses, as well as the massive increase in premiums for many families, will propel Republicans to majority status in 2014.

How many businesses will be forced to close shop? How many will cut back on the number of employees to stay in business? How many will refuse to expand, unable to handle the increased costs?


How many jobs will Obamacare cost?

Michael Tanner, senior fellow at the Cato Institute, lays out the grim reality:

Under ObamaCare, employers with 50 or more full-time workers must provide health insurance for all their workers, paying at least 65% of the cost of a family policy or 85% of the cost of an individual plan. Moreover, the insurance must meet the federal government’s requirements in terms of what benefits are included, meaning that many businesses that offer insurance to their workers today will have to change to new, more expensive plans.

ObamaCare’s rules make expansion expensive, particularly for the 500,000 US businesses that have fewer than 100 employees.

Suppose that a firm with 49 employees does not provide health benefits. Hiring one more worker will trigger the mandate. The company would now have to provide insurance coverage to all 50 workers or pay a tax penalty.

In New York, the average employer contribution for employer-provided insurance plans, runs from $4,567 for an individual to $ 12,748 for a family. Many companies will likely choose to pay the penalty instead, which is still expensive — $2,000 per worker multiplied by the entire workforce, after subtracting the statutory exemption for the first 30 workers. For a 50-person company, then, the tax would be $40,000, or $2,000 times 20.

That might not seem like a lot, but for many small businesses that could be the difference between survival and failure.

Under the circumstances, how likely is the company to hire that 50th worker? Or, if a company already has 50 workers, isn’t the company likely to lay off one employee? Or cut hours and make some employees part time, thus getting under the 50 employee cap? Indeed, a study by Mercer found that 18% of companies were likely to do exactly that. It’s worth noting that in France, another country where numerous government regulations kick in at 50 workers, there are 1,500 companies with 48 employees and 1,600 with 49 employees, but just 660 with 50 and only 500 with 51.

New York City’s small business could be particularly hard hit. Of the 238,851 city firms included in a state Department of Labor survey, 96% had fewer than 50 employees. How many of them, given the chance to expand, will look at the mandate and decide they’d rather keep their small business small?

Overall, according to the Congressional Budget Office, ObamaCare could end up costing as many as 800,000 jobs.

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You read that correctly: 800,000 jobs. And that’s according to the CBO, a notoriously conservative outfit when it comes to projections. (Its current estimate of Obamacare’s cost from 2014-2023 is $2.6 trillion.)

Individuals and families who will be forced to buy their own insurance when companies drop their health insurance plans will be in for a shock. Even with subsidies, some families will end up paying nearly 10% of their gross income for health insurance.

The bottom line is mass confusion. Put simply, the American people are unprepared for such a massive change in their lives. Most people don’t realize that their current insurance coverage is inadequate. They actually believed the president when he looked into the cameras during his 2010 State of the Union address and assured citizens that they could keep the insurance plan they have now. Instead, government-mandated coverage for a wide variety of services that many current insurance plans don’t cover will radically alter health insurance for millions.

Many economists are already predicting a recession as a result of implementing Obamacare. Coupled with voters doing a slow burn over the sheer complexity and maddening bureaucracy that will come with Obamacare, the Republicans, if they play it right, should find themselves in an excellent position to put a stranglehold on Congress and set themselves up for an excellent chance to win the White House in 2016.

The GOP will be blameless in this fiasco. The warnings from Republicans since Obamacare was first proposed about the consequences of the law will make the party seem like soothsayers. The Democrats will be forced to defend a law that caused a recession, significantly increased insurance costs to families, and brought many businesses to their knees. It’s hard to see how the elections of 2014-16 won’t severely damage the Democrats and make them a minority party for the foreseeable future.

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I have now posted a notice in my office and each exam room stating exactly what Obamacare will cover for those yearly visits. Remember Obama promised this as a free exam — no co-pay, no deductible, no charge. That’s fine and dandy if you are healthy and have no complaints. However, we are obligated by law to code specifically for the reason of the visit. An annual exam is one specific code; you can not mix this with another code, say, for rectal bleeding. This annual visit covers the exam and “discussion about the status of previously diagnosed stable conditions.” That’s the exact wording under that code — insurance will not cover any new ailment under that code.

If you are here for that annual exam, you will not be covered if you want to discuss any new ailment or unstable condition. I cannot bait and switch to another code — that’s illegal. We, the physicians, are audited all the time and can lose our license for insurance fraud.

You, the patient, will then have to make a decision.

Do you want your “free” yearly exam, or do you want to pay for a visit which is coded for a particular, new problem? You can have my “free” exam if you only discuss what Obamacare wants me to discuss.

This happened to me personally, as a patient, when I went for my physical. It is the law. If you are complaining of a new problem, then you have to reschedule, since Obamacare is very clear as to what is covered and what is not. Obamacare — intentionally — makes it as difficult to be seen and taken care of as possible.

Patients can be very tricky. I have had patients make an “annual” exam, only to want to discuss and be treated for another ailment. I can’t do it.

I can hear the complaints from you guys already — I become the bad guy. “Why don’t you just take care of the problem, and not bill out any different code? You’re a rich doctor, and we are entitled to free stuff.”

It doesn’t work that way. First, doctors are not rich and, like most of you, actually work terribly hard for a living. Second, Obamacare is the law — and as I said earlier, we are audited all the time now.

Also — I don’t ask for free gas when I go to the gas station, or ask for free food from the supermarket. Additionally, Obamacare has a 23% cut in Medicare reimbursement to doctors and hospitals.

These lower payments won’t cover the cost of staying in practice to take care of the patient.

Private doctors are becoming a thing of the past. By 2014, less than 25% of physicians will be in private medicine. Obama was right in stating you can keep your doctor if you want to — the problem is he or she will rarely be available.

On top of all of that, doctors will be obligated — that’s right, obligated — to talk to you about things you may have no interest or need to talk about.

You may just want to have a pap smear or check your cholesterol. However, I am now mandated by the government to talk to you about your weight, exercise, family life, smoking, sexual abuse(!), and even to ask if you wear seat belts. And I am mandated to record your answers.

I am a physician. But I need to tell you to wear a seat belt and then record your answer.

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The second and competing vision of economic well being in the 2012 election is based on equality and is focused on the role of the collectivity rather than the role of the individual. The vision shifts responsibility for ensuring economic well-being from the individual to the collectivity which for all practical purposes means the government. (See Obama's outline of this vision in his speech at Osawatomie.) The collectivist vision instructs that everyone in the collectivity takes care of everyone else under the supervision of the government and in order to ensure that everyone in the collectivity has enough, the government forcibly redistributes resources from those who have to those who have less. Safety and security reside in the collectivity, that is to say the government, and not in the family or individual. The redistribution effort also serves to foster the goal of relative economic equality and it is difficult to discern which is the more important of the two objectives, economic well-being or economic equality, because the two are simply assumed to be perfectly compatible.

The practical effect of the egalitarian and collectivist vision is that it produces massive numbers of government workers whether they are productive or not, and programs such as food stamps, child care, medical care, housing subsidies, telephone services, 99 week unemployment compensation and when the 99 weeks run out, lifetime unemployment compensation disguised as disability payments. Because this vision seeks to replace the family with the government as the basic means of economic security, it ignores the vital social role of the family, weakens and even denigrates it by expanding the definition of marriage to include non-homosexual couples, by making divorce convenient and easy, and by subsidizing out of wedlock births and single parenthood.

The advantage of the egalitarian and collectivist vision of economic well being to any political party that promotes it is that it creates a class of government dependent citizens who will reliably vote for that party in every election. The disadvantage of the vision is that it creates perverse incentives that discourage work, energy, creativity, striving, ambition, innovation and economic growth. By destroying work incentives and family cohesion, it destroys human lives and deprives the society of the human capital needed to build and maintain a prosperous economy. In due course the government finds it has more and more dependents to support which means more electoral success for the government party. But over time the number of producers declines and the number of dependents increases and the government runs short of money. The federal government can paper over this problem for a surprisingly long period of time by borrowing and printing money but eventually this will dissolve into Financial Crisis II, that is to say, the bond market will rebel or a financially destructive inflation will ensue.

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When I suggested previously that any price point over $1,745 an ounce would be a good place to start some small sales if you need the cash for durable goods, I didn’t expect the price be there at the end of the trading day. I keep reminding myself not to put too much stock in trades that happen on low volume trading weeks, but the upward trend in gold prices is impressive even with that in mind.

Still, don’t be surprised if traders come back from the holiday weekend, laden with debt from holiday purchases, and want to lock in some profits next week. In the age of machine trading it’s easy to forget that there is still a very human element at work in the markets.

Regardless of what profit-taking that may happen early in the week, the overall trend for gold is higher. Despite occasional ups and downs, that trend has been more or less intact since 2001. The good news for gold and silver investors is the underlying drivers of the upward trend in precious metals are still solidly intact.

Not only is the Federal Reserve still pumping cash into the economy to the tune of $40 billion a month, diluting the value of our currency, the majority of central banks in industrialized countries are doing the exact same thing.

Along with the currency follies, central banks are continuing to add to their own gold supply. For the first 10 months of this year central banks have stayed on track to meet or exceed last year’s accumulation.

It is not a coincidence that the very organizations printing money like there’s no tomorrow are also the very ones turning some of that funny money into gold. They are hedging against the value of their own currency because they know the world is trapped in a race to the bottom on currency valuations.

So don’t take my word on the future of gold; take the word of the central banks of Brazil, Russia, Kazakhstan, South Korea and China.

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The issue that divides the anti-gold bugs from the gold bugs is simple to state. The gold-coin standard places monetary authority in the hands of millions of economic participants who own gold. The gold bugs favor this. The anti-gold bugs oppose it.

The rival camps are divided by rival systems of economic sovereignty. The gold bugs favor the sovereignty of the free market. The anti-gold bugs favor the sovereignty of the banking cartel, which is the joint creation of the federal government (Federal Reserve) and the states (state bank licensing).

This is a replay of the arguments of Adam Smith against the arguments of the mercantilists. It is the logic of widespread, decentralized private ownership and voluntary contract versus the logic of government licensing, barriers to entry, and the legal right to counterfeit money.

The anti-gold bugs do not want to put it this way. This is why gold bugs should always put it this way.

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Nevertheless, whether fraudulently or not, Americans went to the polls and re-elected the most divisive, the most incompetent, the most enigmatic, and, ultimately, the most subversive president in the entire history of the republic. And the consequences, as we will begin to see, will be both catastrophic and perhaps irreversible. The economy is in a chaotic mess as the recession gathers momentum and inflation cripples the American dollar. Unemployment will continue to grow as small business is strangled in a blizzard of regulations (5,932 in the last three months) and big business and investors gradually relocate. Foreign policy is in ruins: the Middle East is a conflagration of Islamic fundamentalism and anti-American fury; China is robustly expanding its sphere of influence; and Russia is pumping geopolitical iron at the expense of an enfeebled, more “flexible,” America. “The American spirit,” writes Jerusalem Post columnist Caroline Glick, justly, “has been overwhelmed by the European model of social democracy at home and appeasement and treachery abroad.”

America is broken. The Democratic Party has become a regime of oligarchic socialists that has conscripted a veritable colony of dependents to ensure its hegemony. It comprises, to quote Victor Davis Hanson, “the subsidized lower classes who pay no federal income tax and receive a growing array of federal largess coupled with, on the other end, a technocratic blue-state elite making $200,000 annually” — not counting its millionaires and billionaires who revel in plutocratic immunity. As Daniel Greenfield points out, too many people are now invested in failure — those who profit from a parasitical hold on entitlements and borrowed or redistributed revenue, and those who “feed off the infrastructure of the welfare state” and “get rich by helping the poor.” The economic miscarriage of the last four years, he continues, is “not a disappointment to them, but an encouragement.”

It doesn’t stop there. The Fourth Estate is now almost entirely corrupt, a political annex of the Democrats that retains its power to sway citizen-readers because it masquerades as a free and impartial press. The rift between red and blue states appears irreconcilable, and it is no surprise that petitions for secession are presently circulating in 22 states (as of this writing), including Texas, which was at one time an independent republic. These petitions may not be initially successful but they are signs of radical discontent in the present and harbingers of dissent, conflict and perhaps dissolution in the future — a future to be defined by Obama’s second term in the White House. No less worrisome, according to The Telegraph, “In October the number of background checks on people applying to buy guns, an indicator of future sales, increased by 18.4 per cent.”

America is no longer a confident, unified country — it has been a house divided against itself since at least the incendiary Sixties. But it would seem to this observer that the family squabble has morphed into an all-out and irresolvable quarrel about means and ends and the shape of America to come, leading eventually to fiscal collapse and possibly to internecine strife as well. The year 2012 marks the point of no return, an ironic confirmation of the Mayan calendar at the national level.

This is the state of affairs that a capricious, self-preoccupied, dismally educated, and credulous electorate has brought upon itself, dismantling piece by piece the very democracy that has underwritten it up to now. As Winston Churchill once quipped, “The best argument against democracy is a five minute conversation with the average voter.” Assuming, of course, that Churchill’s “average voter,” in his or her current dementalized condition, can maintain an intelligible conversation for that length of time. The promise of unlimited goodies was enough, says historian Bruce Thornton, “to make millions of voters ignore Obama’s manifest economic malfeasance,” and vote their short-term personal interest over the long-term health and sustainability of the nation. Citing classical Greek historians Thucydides and Polybius, Thornton shows how, given sufficient time and success, democracy almost inevitably begins to work against itself when the “selfish calculus of…the individual voting citizen” trumps “the future wellbeing of the state.” “The ancient critics of Athenian democracy wouldn’t be surprised,” he laments, at the travesty of decadent governance and citizen complicity in the contemporary U.S.

The America we have taken for granted and insouciantly abused is no longer. The two-term Obama presidency, with its roots in the seditious neo-Marxist doctrines of Antonio Gramsci, Cloward-Piven and Saul Alinsky, signals what resembles the end of the great republican experiment. The American dream seems to have become just that — a dream — or what amounts to the same thing, the American nightmare. What its enemies could not do, a demoralized America has accomplished for itself. “And a man’s foes,” we read in Matthew 10:36, “shall be they of his own household.”

The only issue that remains is whether recovery and restitution, something akin to a reborning, is still possible. Recently, on a whim, I visited a so-called Metaphysical Emporium and purchased a crystal ball to add to my collection of exotica. But I must confess that, even when washed in salt water and set against a dark backdrop as recommended, it has been entirely unforthcoming on this question.

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... Democrats want to raise statutory tax rates, while Republicans prefer to zero in on effective tax rates -- the "real" rates taxpayers actually pay.

The top statutory rate for individual income taxes under Clinton was 39.6 percent. But according to the Congressional Budget Office, the highest effective tax rate for the top 1 percent under Clinton was 24.2 percent (Table 1A). So during the celebrated Clinton era, high earners were lowering their tax bill through loopholes...by at least 38.8 percent!

In his November 14 press conference, Pres. Obama said: "But what I will not do is to have a process that is vague, that says we're going to sort of, kind of, raise revenue through dynamic scoring or closing loopholes that have not been identified." But loopholes wouldn't need to be identified if a cap were put on the dollar amount that can be claimed using them.

Boehner's idea of putting caps on loopholes is a much better idea than merely raising statutory tax rates. After all, the whole idea of loopholes is to lower one's real rate of taxation. But here's another idea: rather than caps on loopholes, get rid of loopholes altogether for taxpayers at the very top.

If Congress disallowed any and all loopholes for the top 1 percent, they could set the top 1 percent's statutory rate to their current effective rate and still bring in the same amount of revenue. In 2010, the effective rate for the top 1 percent was 20.7 percent. (That figure comes from Average Effective Federal Tax Rates, a table at Tax Policy Center.)

You'll notice that for the top 1 percent, the 2010 effective rate is just 3.5 points lower than the highest effective rate under Clinton, the aforementioned 24.2 percent. So if the feds simply must raise the tax rates on the evil top 1 percent, they could set them to somewhere between 20.7 and 24.2 -- if they take away all their loopholes.

If one knows the effective rates for all the groups in Obama's top 2 percent, one can apply the above method to them, too. For instance, the Tax Policy Center's table shows that the top 0.1 percent has an effective tax rate that is a tad lower than the top 1 percent. (Incidentally, according to that table, it takes revenue of just $508,677 to get into the top 1 percent, and $1,973,943 to get into the top 0.1 percent.)

Even if only for Obama's top 2 percent, the radical simplification described above might be difficult for Congress to swallow. They may prefer to raise statutory rates and leave the complexity in the tax code. That's because the tax code with its many loopholes is one of the main ways Congress asserts its power. But consider this: it's possible that a taxpayer could have a statutory tax rate of 100 percent and end up owing nothing if there are enough loopholes. So it's not too bright to dwell on statutory tax rates when they can be easily subverted. (Congress would do well to consider the French.)

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Dances With Falsehoods said:

Jon N. Hall


Read more: http://www.americanthinker.com/2012/11/snookered_on_the_fiscal_cliff.html#ixzz2DW4bbUAm

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Why do some societies maintain institutions that cause economic backwardness? This is the vital question that MIT economist Daron Acemoglu and Harvard economist James Robinson asked in their seminal 2006 article, “Economic Backwardness in Political Perspective” in the American Political Science Review. Their analysis concluded that all too many rulers have clearly calculated that it’s better to keep their people in poverty than risk losing the privileges of political power.

Acemoglu and Robinson assume that all things being equal, politically-powerful groups would welcome superior institutions and technologies. Acemoglu and Robinson forthrightly and correctly define superior institutions as free markets for labor, capital, and resources, strong property rights, and the rule of law. This set of institutions more or less defines economic liberalization. They are superior because they produce prosperity, longer lives, and more civil peace. The conundrum is understanding why so many regimes fail to adopt these superior institutions.

The answer to this puzzle is what the two economists call the “political replacement effect.” As they explain, “Political elites will block beneficial economic and institutional change when they are afraid that these changes will destabilize the existing system and make it more likely that they will lose political power and future rents.” Rent in this case is the wealth that political elites divert from the productive parts of society to themselves via taxes, corruption, exclusive licenses, import restrictions, monopoly ownership, and the like.

In their analysis, Acemoglu and Robinson conclude that well-entrenched elites will permit and encourage economic liberalization because they will benefit from the increased prosperity but will not be overthrown. On the other hand, countries in which there is considerable competition among political elites will also tend to encourage economic liberalization because all factions recognize that citizens will remove incumbents who do not adopt prosperity-enhancing innovations. However, innovation is stifled in those regimes where the elites are somewhat entrenched but fear replacement. In such cases, the elites calculate that economic liberalization might empower rivals and end up depriving them of the looted wealth their current political position affords them.

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Taxpayers didn't cause the "fiscal cliff" emergency; derelict pols did. But the taxpayers, not the pols, will pay for it. To pay off their debts, pols will first rob the rich and then move on to the middle class, where much greater potential tax revenue resides.

The difference between bank robbery and politics is one of degree, not kind. But if you control the media, education, and culture, as the redistributionists in America largely do, politics as organized theft can be presented as good government. The "extremists," according to this understanding of politics, are the ones who refuse to participate in the fleecing.

The whole fiscal cliff debate revolves around redistributionist hectoring that casts collusion in organized theft as compromise. Under the patronage of the media, the politicians most responsible for the debt get to dictate the terms of compromise to the ones least responsible for it. Fiscal hawks receive regular media scolding for not agreeing to tax increases while the most prodigal members of Congress feel no such scrutiny and remain in control of the debate.

The preservation of federal government spending is so sacred that the establishment implicitly compares it to the abolition of slavery. Ruth Marcus of the Washington Post thinks President Obama should hold regular screenings of the movie Lincoln for members of Congress, such is the movie's relevance to the fiscal cliff debate. A spate of articles, celebrating the glories of compromise on behalf of progressive goals, has appeared praising Honest Abe for his dishonesty as the movie depicts it.

Why pols would need encouragement to be dishonest in order to keep spending other people's money isn't clear. They are already very good at it. They don't need to watch Lincoln to hone their skills. But the scene that Marcus proposes would capture the phoniness of Washington nicely: dishonest pols riveted to a semi-fabricated tale (one of the consultants on the movie has acknowledged that it is riddled with historical inaccuracies) based upon the work of an author known for her plagiarism. The burgeoning cult of Dishonest Abe befits this age in which pols like to see their vices projected as virtues on screen.

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Our estimates of prospective stock market return/risk, on a blended horizon from 2-weeks to 18-months, remains among the most negative that we’ve observed in a century of market data.

On the valuation front, Wall Street has been lulled into complacency by record profit margins born of extreme fiscal deficits and depressed savings rates. Profits as a share of GDP are presently about 70% of their historical norm, and profit margins have historically been highly sensitive to cyclical fluctuations. So the seemingly benign ratio of “price to forward operating earnings” is benign only because those forward operating earnings are far out of line with what could reasonably expected on a sustained long-term basis.

On the basis of smooth fundamentals such as revenues, book values, dividends and cyclically-adjusted earnings, the S&P 500 is somewhere between 40-70% above pre-bubble valuation norms, depending on the measure. That’s about the same point they reached at the beginning of the 1965-1982 secular bear period, as well as the 1987 peak. Stocks are far less overvalued than they were in the late-1990’s, but it is worth noting that nearly 14 years of poor market returns have resulted simply from the retreat from those bubble valuations to the current rich valuations. If presently rich valuations were to retreat again to undervalued levels that have accompanied the start of secular bull markets (see 1982 for example), stocks would produce yet another extended period of dismal returns. That prospect certainly isn’t the reason for our present defensiveness, but it’s worth understanding the dynamic that has produced the pattern of market returns we’ve observed over time.

At present, the return of the S&P 500 over the past decade – though below average – has actually overshot what would have been expected in 2002. This reflects the fact that valuations today are still well above their norms. Unless we assume that valuations will remain rich forever, this doesn’t portend well for returns going forward.

We remain convinced that stocks are richly valued here. A fairly run-of-the-mill normalization of valuations in the course of the present market cycle would imply bear market losses of about one-third of the market’s value, without even establishing significant undervaluation. Then again, there’s no assurance that valuations will normalize, or that stocks will experience a bear market here. Maybe Wall Street is correct that profit margins will remain forever elevated and The New Global Economy™ will never again witness “normal” valuations on these measures at all. There’s no shortage of analysts who effectively embrace that view by focusing only on forward-operating earnings.

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Up to this point, the real loss from stocks could have been compensated by one's allocation to bonds. However, from this point forward, with the 10-year treasury yield at 1.65% and pension plan assumptions at 8%, it's highly likely both stocks and bonds will be a drag on a 50/50 portfolio's real return, and especially on expected (needed) rates-of-return.

This reversion-to-the-mean, slow-growth dynamic, as it unfolds, seems likely to usher in the final exodus from "investing" by the boomers. It will also leave a scar on the those in their 20's and 30's today, which will keep them out of the markets for some time.

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In the 2009-10 tax year, more than 16,000 people declared an annual income of more than £1 million to HM Revenue and Customs.

This number fell to just 6,000 after Gordon Brown introduced the new 50p top rate of income tax shortly before the last general election.

The figures have been seized upon by the Conservatives to claim that increasing the highest rate of tax actually led to a loss in revenues for the Government.

It is believed that rich Britons moved abroad or took steps to avoid paying the new levy by reducing their taxable incomes.

George Osborne, the Chancellor, announced in the Budget earlier this year that the 50p top rate will be reduced to 45p from next April.

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The top statutory rate for individual income taxes under Clinton was 39.6 percent. But according to the Congressional Budget Office, the highest effective tax rate for the top 1 percent under Clinton was 24.2 percent (Table 1A). So during the celebrated Clinton era, high earners were lowering their tax bill through loopholes...by at least 38.8 percent!

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JackAssJim said:

You know you're going to put somebody's eye out if you keep doing this.

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There will be no short term solution to the problem now facing Western civilization in general, and America in particular. Modern leftist authoritarians and their intellectual progenitors have created a special historical circumstance from which recovery must be painful, slow, and often heartbreaking -- namely, the complete breakdown of the shared birthright of reason and character which has traditionally allowed nations to forge ahead on common ground in the aftermath of even the most violent eruptions.

There is a fond hope in some conservative circles that the inevitable destructiveness of Obama's second term will deliver a broke and broken populace straight into the arms of the kind of common sense conservatism that promises a return to financial stability and civil order, or even into a "second American Revolution." Attractive as this hope may be, its plausibility depends on a number of societal conditions that are unmet in present circumstances.

Allow me to preface my argument against this dream of a leftist implosion by emphasizing that I mean to be neither a doomsayer nor a naysayer. Rather, I certainly believe there is a path to civilizational renewal -- there always is -- but not one likely to fit a neat pattern or short term game plan. Far from any contrarian intentions, throwing the cold light of reason on our dearest wishes helps us to understand the nature and extent of the challenge before us, a necessary first step towards the ultimate victory we will certainly win. Now to the point.

The historical precedent implied in the prediction of socialist self-destruction is not applicable to today's situation. The typical expression of this precedent goes something like this: "Centralized control fails every time it is tried; ergo, it will fail again in America." From this precedent, so the argument goes, it follows that America's collapse under socialism will produce popular grounds for a gradual revival of liberty.

This reasoning is doubtful on two fronts. For one thing, while history shows that socialism does indeed fail, it does not show that this failure always leads to a revival of liberty. The Soviet economy collapsed. The empire dissolved. Successive Russian leaders loosened restrictions on private economic activity. Now Russia has Vladimir Putin, a "democratically elected" KGB dictator for life. If there is a lesson here, it is one very familiar to American conservatives, namely that thugs and demagogues can exploit a failed economy.

China, learning from Russia's mistakes, pulled itself out of communist stagnation by ingeniously intuiting that mere relative liberty can unleash private aspirations powerful enough to sustain economic activity. Thus, a land without property rights, freedom of speech, or political pluralism has manufactured enough ersatz "economic freedom" to invigorate the dormant profit motive in the hearts of the Chinese. The Chinese Communist Party has mass produced "Capitalism: The Parlor Game," and so far that superficial simulacrum of liberty has engendered real world economic results.

It remains to be seen whether the effects of this brilliant psychological manipulation can last. Europe has been functioning on a similar model of carefully regulated business activity permitted within an increasingly oppressive political apparatus for decades now -- with the added Brave New World (Order) cleverness of substituting moral permissiveness for political freedom -- and we are beginning to see the ultimate outcome: an infantilized public employee population screaming for more speed from the back seat as Über-Daddy takes the EU car careering off a cliff and towards a thousand-year descent into the black.

What few cases one can cite of truly revitalized former leftist authoritarian states were buttressed in their recovery by the direct political and economic assistance, as well as the indirect example, of the United States. This is a key point. The failure of socialism is relative. Without a point of stark comparison, failure is less recognizable. Poverty must have a point of reference against which it can be judged as poverty. This, of course, is the main reason modern totalitarian states have always tried to restrict access to the outside world, and to erase their own national history -- they do not want their suffering subjects to see what might have been.

As for the socialist authoritarians themselves, we must not fall into the trap of judging radical leftists as if they think like decent or reasonable people. (The "well-creased-pant-leg-means-he'll-make-a-good-president" fallacy.) What you and I judge as societal failure is, to them, of little consequence in and of itself. For general prosperity is not their goal. In short, the intellectual leaders of the left know as well as you do that their regulatory state with its confiscatory taxation, propagandistic education, and morally subversive cultural elite will not produce prosperity and individual happiness, i.e., that their regime will "fail" the true test of good government. In the authoritarian's eyes, however, the only failure that matters is the loss of his power. With no clear external examples of freer, more prosperous nations, American authoritarians will not face the stress of competing models against which their rule may be judged and found wanting. They will never be put on the spot to justify their oppression with practical results. When the U.S. economy collapses, it will take the world with it. There will be nowhere to go. And there will be no light to look to for hope.

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In simple terms, Western man may, in the main, no longer be capable of living in liberty. He does not want it. He does not know it. And he has been bribed and brainwashed out of the primal feelings that would have made it attractive to him.

In principle, this is nothing so extraordinary. It was clearly foreseen by thoughtful statesmen of the not so distant past. This diminished Western man is what Benjamin Franklin was intimating when he described America's new government as "A republic, if you can keep it." It is what George Washington was foretelling when he warned that the American system of government depends on the maintenance of virtue. And it is, of course, what Alexis de Tocqueville was predicting when he spoke of the peculiar dangers of "soft despotism."

These last considerations bring us to a final important point, related to those who see this as the moment for a "second American Revolution," in which constitutional ideals, clearly presented in open intellectual warfare, will win over a majority of the public and lead, in short order, to a revitalized republic, and a reinvigorated modern civilization.
Defenders of this view remind us that the original American revolutionaries were also a courageous Tea Party minority, forced to fight not only against a more powerful British empire, but also against the acquiescence or complacency of the broader population.

This is true. But we must not neglect something else that is also true: the late eighteenth century in the Western world was a time of general rationalism and virtue-based ethics, as opposed to the irrationalism and moral subjectivism of "values," which we have inherited from late nineteenth century European philosophy. Moral relativism was not the norm; moral debate concerned how best to achieve, manifest, and promote the virtues that were understood as essential to a good life.

At the junction of ethics and practical politics, liberty was broadly understood in those days as a good; disputes concerned how best to achieve it. Property was generally understood as a natural product of human life and endeavor, to be violated, if at all, only if one could somehow justify such violation as a rational exception to the rule that men own themselves and their labor.

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Barack Obama and his leftist kin are far less concerned with the justice and legitimacy of their authority than was King George III. Their policies are far more restrictive and damaging to real individual liberty than were King George's. England and the colonies were neither ruled nor populated by men oblivious to the basics of moral character or respect for human life beyond their own. America, like the West in general, is ruled and largely populated by precisely such men today.

Washington spoke truly: a democratic form of government, republican or otherwise, is only as virtuous as the citizens who form it. Institutions of liberty, equality, and mutual respect cannot be sustained in, let alone re-imposed upon, a society that has generally forsaken every single virtue named in Aristotle's Nicomachean Ethics, and has in turn filled the soul's moral void with hatred, envy, gluttony, sloth, covetousness, lust, and collectivism's unique license to pillage, namely its presupposition that individual men -- that is, other men -- do not really exist.

The entire moral and intellectual structure of the West has rotted out from within, over the course of generations. Winning elections is still valuable -- as is choosing the most principled candidates. (The two are not contradictory goals, contrary to the delusions of the entrenched political establishment.) But winning elections, even with good candidates, cannot solve the West's existential crisis. The divide this time is not tempered with a measure of long-developed moral common ground. Two fundamentally opposed views of life are represented, and the side of reason and decency is by far the outnumbered force.

The modern left's anti-rational, anti-virtuous, anti-individualist superstructure must be destroyed, mercilessly and thoroughly. It took generations for this brilliant scheme of reassuring repression -- soft despotism -- to be wound around the West, like spider's silk around its paralyzed prey. It might take generations to unravel it. The alternative to this fight, however, is to sit passively by as the world enters a new dark age.

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