New JPIIGS: The Economic Picture

[Frisco_Slug_Esq]

Japan forced to own up to debt crises. Liberal solution???

Raise taxes...

http://home.myhughesnet.com/news/re...ass&action=1&lang=en&_LT=HOME_BUNWC00L1_UNEWS

New York State: Read my Lips, NO NEW CUTS! RAISE TAXES!
(Run Limbaugh out of Town!)

http://wcbstv.com/politics/nys.goverment.shutdown.2.1745114.html

New Jersey???
Never EVER cut spending or taxes! Take MORE money!

http://preview.bloomberg.com/news/2...erty-taxes-above-christie-s-proposed-cap.html

__________________
I'm Hungary for some €PIIGS!
A_J, the Incredulous

 

[Frisco_Slug_Esq]

Land of Liberty?

And when you can't steal using government, use the Unions!!!



Here's what a man gets for service to his country and community:

Godin, senior naval science instructor at the Naval Junior ROTC Unit at North High School in Worcester, Mass., has been teaching for the Educational Association for Worcester for 15 years without having to join the teacher's union or pay the agency fee. But last month, he says, he received a letter from school officials indicating he will be fired on June 15 if he fails to pay.

"I just want to save my job here," the 58-year-old father of two told FoxNews.com. "I've been doing this for 15 years. Nobody has ever told me to join the union or be terminated."

An official with the Massachusetts Teachers Association said state law requires public employees -- including teachers at public schools -- to join unions as a condition of employment or to pay an agency fee.

...

“It is an outrage that Major Godin, who has served his country and his students over his 14-year teaching career, is having his job threatened by organized labor over his refusal to pay union dues to a union that he doesn’t receive any benefits from. Major Godin is a good guy doing the right thing and I am committed to helping him any way I can.”

Godin, who earns roughly $75,000 a year, said he has asked for arbitration no fewer than five times, but never heard back from the teacher's union. Now, he’s waiting to hear back from the school district as the June 15 deadline nears.

"It's really nothing," Godin said of the $500 fee. "It's the principle of the matter. I think they're trying to extort money from me. They do nothing for me."

Godin says he should be exempt from the law since he receives military benefits, including medical and dental insurance.

"So that's nothing to do with Worcester there," he said. "Neither the union nor the Worcester Public Schools have allowed me to make that argument. It's just the union that wants my money."

Godin, who retired from the Marines in 1994 after logging more than 2,000-plus hours flying F-4 Phantoms and five overseas deployments, said he has not hired an attorney.

"That would cost me money, too," he said.

http://www.foxnews.com/us/2010/06/10/senator-files-bill-to-save-job-rotc-instructor/?test=latestnews

__________________
"When plunder becomes a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that justifies it."

"Sometimes the law defends plunder and participates in it. Sometimes the law places the whole apparatus of judges, police, prisons and gendarmes at the service of the plunderers, and treats the victim - when he defends himself - as a criminal.”
Frederic Bastiat

 

[Frisco_Slug_Esq]

And now, for a little "DOOM AND GLOOM..."

Tax Hikes and the 2011 Economic Collapse
Today's corporate profits reflect an income shift into 2010. These profits will tumble next year, preceded most likely by the stock market.
By ARTHUR LAFFER

People can change the volume, the location and the composition of their income, and they can do so in response to changes in government policies.

It shouldn't surprise anyone that the nine states without an income tax are growing far faster and attracting more people than are the nine states with the highest income tax rates. People and businesses change the location of income based on incentives.

Likewise, who is gobsmacked when they are told that the two wealthiest Americans—Bill Gates and Warren Buffett—hold the bulk of their wealth in the nontaxed form of unrealized capital gains? The composition of wealth also responds to incentives. And it's also simple enough for most people to understand that if the government taxes people who work and pays people not to work, fewer people will work. Incentives matter.

People can also change the timing of when they earn and receive their income in response to government policies. According to a 2004 U.S. Treasury report, "high income taxpayers accelerated the receipt of wages and year-end bonuses from 1993 to 1992—over $15 billion—in order to avoid the effects of the anticipated increase in the top rate from 31% to 39.6%. At the end of 1993, taxpayers shifted wages and bonuses yet again to avoid the increase in Medicare taxes that went into effect beginning 1994."

Just remember what happened to auto sales when the cash for clunkers program ended. Or how about new housing sales when the $8,000 tax credit ended? It isn't rocket surgery, as the Ivy League professor said.

On or about Jan. 1, 2011, federal, state and local tax rates are scheduled to rise quite sharply. President George W. Bush's tax cuts expire on that date, meaning that the highest federal personal income tax rate will go 39.6% from 35%, the highest federal dividend tax rate pops up to 39.6% from 15%, the capital gains tax rate to 20% from 15%, and the estate tax rate to 55% from zero. Lots and lots of other changes will also occur as a result of the sunset provision in the Bush tax cuts.

Tax rates have been and will be raised on income earned from off-shore investments. Payroll taxes are already scheduled to rise in 2013 and the Alternative Minimum Tax (AMT) will be digging deeper and deeper into middle-income taxpayers. And there's always the celebrated tax increase on Cadillac health care plans. State and local tax rates are also going up in 2011 as they did in 2010. Tax rate increases next year are everywhere.



Now, if people know tax rates will be higher next year than they are this year, what will those people do this year? They will shift production and income out of next year into this year to the extent possible. As a result, income this year has already been inflated above where it otherwise should be and next year, 2011, income will be lower than it otherwise should be.

Also, the prospect of rising prices, higher interest rates and more regulations next year will further entice demand and supply to be shifted from 2011 into 2010. In my view, this shift of income and demand is a major reason that the economy in 2010 has appeared as strong as it has. When we pass the tax boundary of Jan. 1, 2011, my best guess is that the train goes off the tracks and we get our worst nightmare of a severe "double dip" recession.

In 1981, Ronald Reagan—with bipartisan support—began the first phase in a series of tax cuts passed under the Economic Recovery Tax Act (ERTA), whereby the bulk of the tax cuts didn't take effect until Jan. 1, 1983. Reagan's delayed tax cuts were the mirror image of President Barack Obama's delayed tax rate increases. For 1981 and 1982 people deferred so much economic activity that real GDP was basically flat (i.e., no growth), and the unemployment rate rose to well over 10%.

But at the tax boundary of Jan. 1, 1983 the economy took off like a rocket, with average real growth reaching 7.5% in 1983 and 5.5% in 1984. It has always amazed me how tax cuts don't work until they take effect. Mr. Obama's experience with deferred tax rate increases will be the reverse. The economy will collapse in 2011.

Consider corporate profits as a share of GDP. Today, corporate profits as a share of GDP are way too high given the state of the U.S. economy. These high profits reflect the shift in income into 2010 from 2011. These profits will tumble in 2011, preceded most likely by the stock market.


In 2010, without any prepayment penalties, people can cash in their Individual Retirement Accounts (IRAs), Keough deferred income accounts and 401(k) deferred income accounts. After paying their taxes, these deferred income accounts can be rolled into Roth IRAs that provide after-tax income to their owners into the future. Given what's going to happen to tax rates, this conversion seems like a no-brainer.

The result will be a crash in tax receipts once the surge is past. If you thought deficits and unemployment have been bad lately, you ain't seen nothing yet.

______________

Mr. Laffer is the chairman of Laffer Associates and co-author of "Return to Prosperity: How America Can Regain Its Economic Superpower Status" (Threshold, 2010).

http://online.wsj.com/article/SB100...5264513748386610.html?mod=WSJ_latestheadlines

 

[Frisco_Slug_Esq]

In 2010, without any prepayment penalties, people can cash in their Individual Retirement Accounts (IRAs), Keough deferred income accounts and 401(k) deferred income accounts. After paying their taxes, these deferred income accounts can be rolled into Roth IRAs that provide after-tax income to their owners into the future. Given what's going to happen to tax rates, this conversion seems like a no-brainer.

I hope the hell the market hits 11K again before the end of the year...




__________________
The government big enough to give you something is big enough to take it away.
A_J, the Stupid

 

[Mike_Yates]

Here are a few artistic examples of what the economic crisis will ultimately lead up to.

http://www.collegesurfing.com/blog/wp-content/uploads/2010/04/33746.jpg

 

[Frisco_Slug_Esq]

Why the Democrats aren't passing a budget...

Democrats to the Left: WE KILLED THE BUSH TAX CUTS FOR THE GREEDY! *HUGE APPLAUSE*

Democrats to the Center: We didn't raise taxes, we cut them!

Democrats to the Right: Well, if you would have said something other than "NO," we could have worked on a deal...



Democrats to Mike: D00d! As looney as we are, we think you're a few spikes short of a light rail...
__________________
If you still have a job, it was "saved." If you don't have a job, it's being "created."
A_J, the Incredulous

 

[Frisco_Slug_Esq]

Mike, resize that picture or remove it...





It's taxing my patience.

 

[Ishmael]

But Barrry's the tax cuttingest president ever.

Ishmael

 

[miles]

But Barrry's the tax cuttingest president ever.

Ishmael

No, he's the coolest, most intelligent president ever!

 

[Frisco_Slug_Esq]

But Barrry's the tax cuttingest president ever.

Ishmael

You got that.

We should be thanking him for his largess with our money...
__________________
About 47 percent will pay no federal income taxes at all for 2009. Either their incomes were too low, or they qualified for enough credits, deductions and exemptions to eliminate their liability.
Provided by Associated Press

In a characteristic display of his now famous modesty, President Obama reacted to the hostility of the Tax Day tea parties by saying, “You would think they should be saying ‘thank you’” — for all he’s done for them. Right now, the fellows saying “thank you” are the mullahs, the Politburo, Tsar Putin, and others hostile to U.S. interests who’ve figured out they now have the run of the planet.
Mark Steyn

 

[rosco rathbone]

Here's the point by point rebuttal of that Laffer article:

http://www.ritholtz.com/blog/2010/06/art-laffer-make-up-your-own-facts-here/

 

[Frisco_Slug_Esq]

It begins with an ad hominem that reminds us that no one in Obama's team predicted it either, in fact right before the collapse Barney Frank was telling us how sound it was and Maxine Waters was accusing the Bush whistle-blowers as racists...



But, let us continue to read...

California has as much, if not more resource than Texas, but they are willing to choke them off for the snail darter...

As everyone else in America is well, aware, both Gates and Buffett have committed their vast wealth to charitable foundations. Hence, the issue of “nontaxed unrealized capital gains” is simply irrelevant.

As have the Clintons and MANY others who lecture us little folk about how the rich don;t pay their fair share of taxes, and then go and shelter their money because it's legal, hence moral...

• “At the tax boundary of Jan. 1, 1983 the economy took off like a rocket, with average real growth reaching 7.5% in 1983 and 5.5% in 1984.”

Again, factually accurate but totally misleading.

Reagan had the good fortune to take office at the tail end of a 16 year secular bear market, just as Paul Volcker fed the economy its distasteful medicine. Inflation was broken, and interest rates began their 25 year slide towards zero.

To ignore the reality of these factors, and credit tax cuts as the sole cause of the 1980s and 90s expansion is simply to discard reality because it does not fit your neat ideological universe. That is a surefire recipe for losing money as an investor . . .

And it's a well-known fact that Bull markets run on a 16 year cycle, so this one has, what 14 more years?

“Assuming the tax cuts are allowed to expire, the forces that may prevent strong economic growth in 2011 are entirely different from tax increases. The headwinds from the financial sector, by way of a severe credit crunch, lackluster job growth, and housing market challenges are factors that will influence the near term path of the economy. The evidence presented here suggests that Mr. Laffer’s story is selective and incomplete…”

But he doesn't say things are going to get better or that tax revenue is going to increase, now does he?

Do you not note a length of rhetoric and a lightness of countering "fact?"

 

[Frisco_Slug_Esq]

If 80% of people are usually wrong, what are the odds of the Democrats being the 20%?

 

[firespin]

Here's the point by point rebuttal of that Laffer article:

http://www.ritholtz.com/blog/2010/06/art-laffer-make-up-your-own-facts-here/

If you say so. Are these rebuttals?

"This is mostly true, but misleading."

"Again, factually accurate but totally misleading."

Where "misleading" means the author doesn't like that it's true.

 

[Frisco_Slug_Esq]

I like it when they can back up their claims with something other than NU-HUH!!!

 

[rosco rathbone]

If you say so. Are these rebuttals?

"This is mostly true, but misleading."

"Again, factually accurate but totally misleading."

Where "misleading" means the author doesn't like that it's true.

"Misleading" means "misleading".

 

[firespin]

I like it when they can back up their claims with something other than NU-HUH!!!

3% of Texas state income is from mining royalties (natural gas and oil)...I wonder why sharing that number wasn't part of the "rebuttal"?

 

[Ishmael]

As an observation, the left has long used tax policy as a tool for social engineering, ie. the use of taxes to change the behavior of the citizen. To be fair, so do a lot of republicrats, those mostly take the form of 'sin' taxes. The difference is that the left always seems to end up dumbfounded and amazed when their tax policies produce the all too predictable behavior on the part of the citizen, ie. preservation of earned income. They either go into denial when results don't match the forecasts, or they get angry and blame the citizen for not just forking over the daily bread.

Ishmael

 

[firespin]

"Misleading" means "misleading".

Spoken with zen-like clarity.

(Of course, zen isn't always that clear. For example:

A monk asked Fuketsu: `Without speaking, without silence, how can you express the truth?'

Fuketsu observed: `I always remember spring-time in southern China. The birds sing among innumerable kinds of fragrant flowers.'

But I digress.)

Facts are objective. "Misleading" is subjective. That's my point. Anybody can claim anything is "misleading" when they don't agree with it.

 

[Frisco_Slug_Esq]

Saying that Texas's success was based on resources is also misleading when you compare it with the richness of California, note their tax structure and see their endemic problems with revenue and spending...






So who's misleading who?

Japan has never really ever climbed out of their lost decade and look how long FDR's economy dragged on and on and on...

And NOW, we're going to raise taxes? Even on the middle class because a Democrat Congress doesn't want to produce a budget that can be pinned on them? They're playing three-card monte hoping that with the new election they can then say, "It was the Republicans and the Tea Party that took over the Congress that cause the hard times over the Winter and the Spring, their policies never work because they make the rich, richer (like us and our "Family Foundations...").



And the whole time they'll be yelling "LOOK AT THE TAX CUT BARACK GAVE THEM WHEN WE WERE IN CHARGE!"

Cash for clunkers!
Delaying foreclosures.
Tax credits for hiring that produced no hiring...
__________________
In all these cases, Obama commendably wants to help the less fortunate. But he seems to care far less for those who act responsibly — except to demonize them if they question whether it is fair or wise to subsidize those who at times don’t.
Victor Davis Hanson

 

[Frisco_Slug_Esq]

3% of Texas state income is from mining royalties (natural gas and oil)...I wonder why sharing that number wasn't part of the "rebuttal"?

As an observation, the left has long used tax policy as a tool for social engineering, ie. the use of taxes to change the behavior of the citizen. To be fair, so do a lot of republicrats, those mostly take the form of 'sin' taxes. The difference is that the left always seems to end up dumbfounded and amazed when their tax policies produce the all too predictable behavior on the part of the citizen, ie. preservation of earned income. They either go into denial when results don't match the forecasts, or they get angry and blame the citizen for not just forking over the daily bread.

Ishmael

They just "know," without fact. That's the one thing we've learned this year from Skip Gates, to Health Care, to Arizona...

The groupthink overrides fact. Fiery rhetoric is the coin of the new realm.
__________________
As for many great “thinkers,” for Barack Obama and his coterie words seem to exist mostly in the realm of metaphor rather than as descriptors of actual action actually occurring in anything so humdrum as reality. And so it is that, even as his bungling administration flounders in the turbulent waters of the Gulf, on the speaker’s podium the president still confidently sails forth deftly steering the ship through the narrow ribbon of sludge between the Scylla of sonorous banality and the Charybdis of gaseous uplift.
Mark Steyn

 

[Ishmael]

Spoken with zen-like clarity.

(Of course, zen isn't always that clear. For example:

A monk asked Fuketsu: `Without speaking, without silence, how can you express the truth?'

Fuketsu observed: `I always remember spring-time in southern China. The birds sing among innumerable kinds of fragrant flowers.'

But I digress.)

Facts are objective. "Misleading" is subjective. That's my point. Anybody can claim anything is "misleading" when they don't agree with it.

The results of cutting taxes have been 'misleading' everytime it's been tried.

Ishmael

 

[tactful]

Japan forced to own up to debt crises. Liberal solution???

Raise taxes...

http://home.myhughesnet.com/news/re...ass&action=1&lang=en&_LT=HOME_BUNWC00L1_UNEWS

New York State: Read my Lips, NO NEW CUTS! RAISE TAXES!
(Run Limbaugh out of Town!)

http://wcbstv.com/politics/nys.goverment.shutdown.2.1745114.html

New Jersey???
Never EVER cut spending or taxes! Take MORE money!

http://preview.bloomberg.com/news/2...erty-taxes-above-christie-s-proposed-cap.html

__________________
I'm Hungary for some €PIIGS!
A_J, the Incredulous

And when you can't steal using government, use the Unions!!!



Here's what a man gets for service to his country and community:



http://www.foxnews.com/us/2010/06/10/senator-files-bill-to-save-job-rotc-instructor/?test=latestnews

__________________
"When plunder becomes a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that justifies it."

"Sometimes the law defends plunder and participates in it. Sometimes the law places the whole apparatus of judges, police, prisons and gendarmes at the service of the plunderers, and treats the victim - when he defends himself - as a criminal.”
Frederic Bastiat

Ever get the feeling that Politics and Unions are similar.

 

[Frisco_Slug_Esq]

Ever get the feeling that Politics and Unions are similar.

Especially now that they are in bed together and government is gradually assuming all the duties of the union...






Who cares if we don't do anything for you? JUST PAY US!!!
__________________
"When plunder becomes a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that justifies it."

“Everyone wants to live at the expense of the state. They forget that the state wants to live at the expense of everyone.”
Frederic Bastiat

 

[firespin]

Here's the point by point rebuttal of that Laffer article:

http://www.ritholtz.com/blog/2010/06/art-laffer-make-up-your-own-facts-here/

I also like the part where they say "Buffet and Gates hold weath as untaxed capital gains" is wrong...because they've given away a lot of their wealth.

After its given away, it's no longer theirs...but they still have billions left, most of it in the form of untaxed capital gains. So the "rebutted" fact is actually correct. Go figure.

Note that in giving it away, everybody avoided paying taxes on it. How do I get that deal?