jump to navigation

Time to get a really big washer … November 8, 2011

Posted by WillardWhyte in Economy, Justice, Politics.
Tags: , , ,
add a comment

… and fix this stupid faucet that keeps dribbling out this same corrosive “trickle” of failed, counterproductive policy.

Trickle-down won’t work because those who already have way, way more than they need won’t do it. They’ll take the tax break — and sit on it. Or invest it where growth looks good and steady over the next five years — in companies and enterprises in markets growing rapidly and consistently.

Which isn’t here.

Because the mass of the population is deleveraging out from under the debris left by the Crash of 2008. And real wages are down and have been for a decade and will be for another decade.

Why? Because even though GDP is back to the level last seen before the crash of 2008, and even though corporate profits are headed for a record this year, none of that has been shared with labor — that means the mass of workers who somehow held onto their jobs and threw their shoulders into the wheel to produce the GDP bounceback and profit bounceback.

Just about all of the recovery went to stock buybacks, restored and bolstered dividends, mergers (that cost jobs) and richer executive compensation, immediate and deferred.

None of that recovery largesse trickled down much past the executive washroom. And I’m not talking unions. I’m talking white-collar wimpos who tell themselves are getting somewhere and that their hard work and sacrifice in the last three years will be rewarded. When?

And the people upstairs who made the decisions about how to divide the corporate gains from the recovery are the very same people the GOP expects to rekindle the domestic economy with a rush to — do exactly what? Invest in exactly what? The next Wall Street bubble maybe. If Goldman or Citi or John Paulson can suck them into the next doomed CDO.

It hasn’t happened in the years since the Bush tax cuts. But still the GOP heads in the Super-Committee offer up a “revenue plan” that includes (if you trust this sourced account from Reuters):

—  Limiting the mortgage tax deduction for second homes, and some other upper-income perks, which would bring in about $250 billion over 10 years.

— In return for not only keeping the Bush tax cuts, but taking the whole upper end rate — which would rise to 39.5 percent if the cuts expire — down to 28 percent, which is what the bulk of the rapidly vanishing middle class pays. No price tag on that baby, but it surely swamps the vacation home deduction.

Not only does the math in that “deal” not produce progress toward whacking a deficit, it further enriches the top end in an era where simply every analysis shows the middle is the group that took the relative haymaker in the recession, benefitted the least from the market and economy rebound fueled by the government stimulus that largely caused the deficit to explode,  and which has absolutely no discretionary spending room left to rekindle the economy with any sort of robust DEMAND FOR GOODS AND SERVICES from our underutilized factories and worker pool.

And why, I ask, must I go to Reuters to learn of this proposal? I guess the Americn media was pretty full up today with Joe Paterno, Michael Jackson’s doctor, Lindsey Lohan in Playboy and whatever other gossip passed for news.

Sigh.

Advertisements

I’ve had about enough of the Tory Party ‘Patriots’ October 22, 2011

Posted by WillardWhyte in 2012 elections, Economy, Politics.
Tags: , , , ,
add a comment

Well, the first non-political assessment of Herman Cain’s 9-9-9 tax plan is in and, to the surprise of no one at all familiar with various forms of flat tax-ery, it amounts to a massive redistribution of wealth going forward.

As this assessment  from the Tax Policy Center shows:

— 84% of U.S. households would pay more than they do under current federal taxes.

— Households with incomes below $30,000 would have, on average, between 16% and 20% less in after-tax income than they do today, mainly because of the national sales tax and the loss of Earned Income Tax Credit.

— Households making more than $200,000 would see their after-tax income grow by between 5% and 22% on average.

— 95% of those with more than $1 million in income would receive an average tax cut of $487,300.

The study doesn’t specifically say what happens to most of the people between $30,000 and $200,000, but you can figure it out. The poor pay a lot more than they do now, but that won’t raise much. Those at the upper end get big tax reductions.

And since the Tax Policy Center agrees with Cain that his plan would raise just as much money as the current system does, the folks in the Big Middle have an awful lot of lost revenue to make up through much higher tax outlays.

And this proposal has catapulted Mr. Cain to the head of the class among Republican presidential candidates. The others now are scrambling to come up with something similar to placate a wing of this “party” that seems so enamored with the 1770s that it has become completely color-blind.

And I make no reference to Mr. Cain’s ethnicity in that. The Palin-Bachman-Perry-Paul front seems to be hell-bent on turning the GOP into the Tory Party, for all they seem to wish for is the destruction of any and all legal protections for our air, our water, our land, any laws that would safeguard our marketplaces from usury, fraud, rotten food and goods brought in by boat from lands comfortable with the employment of children in sweatshops, in many cases employed by subsidiaries of multinational corporations based in the USofA.

And they rush to support a taxation system such as the one put forth by Mr. Cain that would execute a massive redistribution of wealth from people making less than $200,000 to the very wealthy – the new American royalty who will control the faux-King they hope to choose to replace Mr. Obama.

This would take us very rapidly to a place akin to 1776, when these colonies chose to take up arms to liberate themselves from an English tyranny that came with the seal of the King, but was planned, controlled and executed by the merchant elite in jolly old London. In America, the Tories sided with the mercantile tyranny. As the Tea Party does today.

Indeed, they clamor to ladle praise on a Cain plan that would enact a new national tax of 9 percent on — well, tea, among other common commodities.

If this all were not so deadly real, it would be comedy. It amazes me that good conservatives, good well-intentioned Republicans do not rise and thrust this band of absolute idiots from the stage.

If  for no other reason than to protect themselves from this radical restructuring of the entire economy, done in the hope that once all this wealth is moved to the very rich, some of  it will trickle down somehow and make everything better.

No. Mr. Cain’s extremely disruptive proposal would rip just about every business plan in the country to shreds, destroy tens of thousands of small businesses and make the recession of 2009 look like a minor bump in the road.

It would do this by erasing every shred of discretionary income left in most of the economy, leaving the very rich with a whole lot more money they will not be able to spend.

And guess what? They won’t invest it in new businesses that would hire a bunch of people to make stuff that no one has any money to buy.  Trust me — that’s not a formula many of them used to get rich.

Obama’s call to arms January 25, 2011

Posted by WillardWhyte in Economy, Obama, Politics.
Tags: ,
add a comment

There will be those who say “how?” With a deficit in the trillions, and an accumulated pile far beyond even counting, when you come right down to it. With 9.5 % of us still out of a job.

But the President clearly “gets it.” He has some ideas, but realizes he and those on his side of our great political divide do not have all the ideas needed to build a new and greater nation — and world. He has some goals, in a line that comports to the world as he sees it. But knows this ranking is not the only set of priorities.

He calls it a “Sputnik moment” and it is that — a crossroads where we all choose whether to fight amongst ourselves for power and glory and bitty sized more of what there is, all on the way down to a scarcity world we should not care to visit; or together find a way to bear the burdens needed to restore sanity to a budget, while grooming a new generation of American leaders and innovators and building a new economic juggernaut — using people, enterprises and ideas from whatever color lips, in whatever dialect.

There are “big things” to be done. No one alone, no party in or out, can manage the task.

It is time to replace bitterness with diligence. And start laying the first course.

Yes, let’s put Goldman back in charge December 4, 2010

Posted by WillardWhyte in Economy, Environment, Justice, Politics, U.S. Budget, Wall Street.
Tags: , , , , , , ,
add a comment

I’ve been listening very very closely to all the reform talk down in the Swamp, emerging only with confusion.

One group – the bright Red one – rails against an end to what always was limited tax relief for the top 1 percent or 2 percent of earners, now casting any act to not extend this relief as a move that would sap the slow 3 percent recovery we are in the midst of. Can’t take that $80-$100 billion a year out of circulation in what they continue to say is a “recession,” even though the economy stopped receding and started proceeding four quarters ago.

They know that. But they lie because it’s convenient for the narrative.

This group, then, does a wonderful spin with full gainer, and demands an end to extended unemployment benefits and an immediate return to 2008 spending levels, reigning in such stimulus-intended measures as broadened Medicaid coverage, boosted university research grants, various individual tax credits designed to spur household spending on energy efficiency upgrades. This, if put into effect, would take at least $100 billion in spending by individuals out of the economy – spending on doctors, medicines, researcher salaries and equipment purchases and all those things all those people scraping by need to buy. You know, rent, milk, bread, gasoline, spaghetti sauce, mostly from small businesses, if that matters (actually, the Wal-Marts are counting on taking that “market share” pretty soon, so it doesn’t long term).

Somehow, the Red team doesn’t think this will in any way slow down the economic expansion, though study after study show without dispute that the poor and unemployed and even the middle class university research assistant have a much higher propensity to spend than does the individual or couple making $250,000 and up. So if you are going to pull $100 billion out of the economy – and either way you are doing that – and your true intention is to not hurt the recovery, you draw from the top, not the bottom, of the take-home ladder, because the subtraction of spending multiplied down the line is less.

(more…)

Two men laying bricks to build … something November 21, 2010

Posted by WillardWhyte in Economy, Musings.
Tags: , , ,
add a comment

Both of these guys — Apple Steve Jobs and News Corp’s Rupert Murdoch — can make you flinch often with their ego and their controlling approaches. But they have one thing in common that bears considerable study as we all move forward: They lead.

This venture they seem to be proposing does not appear all that radical in its design, though it does funnel distribution through a narrow needle, and of course opens up another potentially large information pipeline to the Murdoch empire — and philosophy.

But there is plenty of room for competition in this too.  Maybe.

The lesson, I think, is far more valuable than concerns about monopoly power or propaganda. And it is a simple matter of men with an idea taking considerable riches and putting them on the line to build something to meet what they see as a need in the marketplace, perhaps hedging the bet a tad with smartness to help create the need with buzz.

It’s a TV model: Here’s what we say is the “news” today, all packaged and buffed and piped to a predominantly passive audience, one that isn’t going to be floating all over the ether browsing. A loyal, measurable audience that can be sold to advertisers now pulling their hair out trying to line up with media with an audience that doesn’t change in the blink of an eye.

Many mega-rich folks out there are sitting on their pile, waiting for someone to point the way to a safe place with a high margin and no downside. They’ll do OK and I guess we need that also.

But we badly need people willing to point the way, hack through the first layer of brush and plant the flag in new territory.

Not just in media. In every realm. Because most of the old streams, mines and deep formations are played out, and new market share comes from someone else’s piece, not from growth.

This isn’t a government thing. Government and make this easier maybe, or harder maybe. And our elected officials need to work real hard to make sure the balance is properly tipped to the former.

But without this kind of vision focused on cultivation rather than on harvest, it does not happen. Stagnation happens.

Serious business for the infantile November 20, 2010

Posted by WillardWhyte in Economy, Greed, Politics, U.S. Budget, Wall Street.
Tags: , , , , , ,
add a comment

Exactly when did these two guys — Simpson in particular — become the ultimate in Wise Men?

And from this piece, there seems to be a whole lot of chortling going on over the potential ruination of the U.S. economy if their particular strategy for reducing the deficit — and radically overhauling the entire tax code with little assessment of impact — is not swallowed pretty much whole. Get this:

“I can’t wait for the bloodbath in April,” Simpson said, relishing the prospect of political turmoil. “When debt limit time comes, they’re going to look around and say, ‘What in the hell do we do now? We’ve got guys who will not approve the debt limit extension unless we give ‘em a piece of meat, real meat” in the form of spending cuts. “And boy, the bloodbath will be extraordinary,” he said.

Extraordinary indeed. It’s all a game to him too — the graying, dottering Fox can’t wait for the Hen House to catch fire.

Shameful.

This is fun, but … November 14, 2010

Posted by WillardWhyte in Economy, Politics, U.S. Budget.
Tags: , ,
add a comment

…after going through it and saving the nation from deficits through 2030 with mouse-clicks that took about 15 minutes, I find myself wondering about all the ramifications.

My ratio of spending cuts to tax increases was 61-39, and it did not seem like I was taking food out of the mouthes of babies, leaving infirm seniors by the side of the road with just a bone to gnaw on, or leaving the nation wide open to attack — now or a quarter-century from now.

Earmarks, farm subsidies, a 10% reduction in federal workforce and a 250,000 whack to government contractors, reducing troop levels ion South Asia and cutting non-combat military compensation and capping Medicare growth and reducing SS benefits to high-income folks all seemed like areas that could take trims.

Workforce/contractor reductions of 10% would about equal what has taken place in the private sector, with productivity expected to absorb workload. It surely would provide ample incentive to managers to find wasted effort, if only by having to prioritize the most productive tasks and workers. This is always artificial, so I would allow a manager to be able to save a position if he/she were able to identify permanent/verifiable savings equal to 110% of the full cost of that position  in salary and benefits.

Capping Medicare growth to GDP+1% also seemed reasonable, if very difficult. As medical costs will go up with sheer volume more than that, it requires a heavy hand, and that hand would need to find the waste and fraud in a hurry. A good whistleblower program is needed here.

On the tax side, I returned estate tax to 2009 level, with $3.5 million exemption; cut cap gains to Clinton-era levels; kept Bush tax cuts for all but those above $250,000; jacked payroll taxes back up to cover 90% of income (level at original enactment); converted mortgage interest deduction to credit); and enacted bank tax as a disincentive for risk.

I opted against a carbon tax (prefer market approach with cap-trade); a sales tax; millionaire’s tax; and complete loophole reduction.

I opted against the Bowles-Simpson complete wipe-out of “loopholes” because I am a believer in using the tax code, as well as the checkbook, to attempt to steer investment toward things deemed in the national interest — like energy independence, reinvestment of profits into R&D, individual incentives for education. Markets today are extremely short-term in their vision and the government needs to “help” money look longer.

That said, the tax code needs to be overhauled with a “zero-based budgeting” approach — each clause amounting to a “tax expenditure” must be justified after an exhaustive, neutral cost-benefit audit fully identifying where the crutch applies and why.

With all this said, I’ll say I have no idea whether this little graphic exercise created by the Times is “neutral” or “spun” to identify things a “progressive” would target, and not highlight as an option things a “conservative” might want as an option.

And I’d also say that it all kind of assumes all else could be ignored, which I don’t agree with as an approach.

Still, it is quite thought-provoking and worth the time I think, if for no other reason than to get familiar with what really might be “saved” by the various options on this list.  Things like the estate tax don’t really help close the huge gap all that much and might very well motivate hardship-sales of  enterprises best left in family hands. Perhaps another method would be better — such as a ceding of a non-voting ownership stake to a blind trust, with repurchase options to owners or their designees. Perhaps Treasury could pool the combined stake and sell slices into the open market, giving Uncle Sam the cash and shifting the risk/gain to global investors.

It would be nice, maybe, if the Wall Street Journal or Bloomberg joined with the Times in this venture to extend the choices (and in a manner of thinking also vetting the entire deal for “bias”). And perhaps each option could link to pro-con essays or more detailed studies of the risk/reward for each, allowing folks to better understand the pain/gain each choice involves.

Sort of a joint venture in education and reason.

 

You can tax me now — or tax me later November 11, 2010

Posted by WillardWhyte in Economy, Politics.
Tags: , , ,
add a comment

Twin stories from Bloomberg — here on Obama and there on Bernanke’s Bucks — have some unsettling news for the hundreds of millions out there waiting for an economic boost to follow the GOP ascent to House leadership, or from the Federal Reserve’s $600 billion buy of Treasuries.

Investors think they are going to get their cash reward with extended tax cuts, like the new climate for investments and see hope for a smaller U.S. budget deficit.

But the view is pessimistic when it comes to any GOP impact on the overall economy, job gains or credit.

And they think  — a whopping 76 percent of them — that Ben’s money move will have absolutely no effect on unemployment in the U.S. And by a 56-41 margin — with 3% too busy bidding up gold to answer — they said the Fed move would not bolster the U.S. economy in the coming year.

They know the purchasing power simply is not there — not across the board as it needs to be to sustain healthy production.

I say this and note this poll not to depress, but in the hope that it helps us all get to the place we need to be: One where we do not expect things to get radically better, radically soon — and govern our expectations well.

The devastation from the Crash of 2008 requires rebuilding the economy and we must demand from our elected officials plans for that — not snake oil promises or pledges or pablum suggesting they can do this overnight.

They can’t — we can’t. Anyone who says they have a magic elixir is lying, rendering them part of the problem.

Oh — I forgot to mention that those investors don’t like Obama.

Gold bars, future oil, cotton ain’t gonna hire Joe the Plumber November 8, 2010

Posted by WillardWhyte in Economy, Politics, Wall Street.
Tags: , , , ,
add a comment

I found this take on Ben’s money-move to be quite on target. This in particular from Richard Fisher, president of the Fed bank in Dallas:

I could envision such action would lead to a declining dollar, encouraging further speculation, provoking commodity hoarding, accelerate the transfer of wealth from the deliberate save and unfortunate, and possibly place at risk the stature and importance of the Fed.

But Ben knows this, just as he knows that the odds of monetary policy stimulating job growth and greater consumption in the U.S. are extremely long.  It’s his only play, knowing now the fiscal side is headed toward the austerity solution demanded by the voters, ostensibly. And that will take billions out of circulation in 6-8 months.

With no new wage growth on the horizon at anything but the top end, throwing accelerant on commodities and equities and potential bubbles abroad is intentioally destablizing, a sort of drop-the-gloves-and-hope-the-sparks-fly approach that depends on some of the embers landing in the deadwood and warming many.

But Ben undervalues the monkey still perched on the back of money markets —  the jonesing for fast money made with money, not output of goods and services in demand. The dice and spinning wheels and flashing lights still draw the biggest crowd, and garner the loudest roars from the onlookers.

It’s going to help some folks make a good chunk of change on the house, Ben. That’s about it, because a “real job” is still the chump play.

The folks sitting on the mounds of cash are not coming off until your cheap money is all gone and it becomes clear the only way to make money is the old-fashioned way.

Funny, didn’t hear about this on Monday November 4, 2010

Posted by WillardWhyte in Economy, Greed, Politics.
Tags: , , , ,
1 comment so far

The guy set to take over the House Financial Services Committee — which oversees agencies regulating banks — shows what’s tops on his agenda: Rolling back financial reforms to let the banks back into high-stake gambling with U.S. government insured deposits. That’s long for: Your money and mine, “insured” by your tax dollars and mine.

Reuters is here and Salon is here. Here’s a quote from Rep. Spencer Bachus’ letter to Treasury Secretary Timothy Geithner and other top regulators, who are writing rules they were ordered to write by the financial reform law passed last spring.

I strongly recommend that your study of the Volcker Rule take account of how trading activities fit into the core business plan of global banks, as well as the consequences for U.S. banks and the banks’ clients of prohibiting those activities in the U.S. while they continue to be permitted everywhere else in the world.

Funny — I’ve read that five times now and I must have missed the part about you and me and how the Volcker Rule would be bad for us and getting rid of it would create jobs.

Well Butch, we’ll get to all you cowpokes out there after we make things better for Wells Fargo.