Rokjok777

Another Crisis Looms Right Around the Corner

US tax rates at the low end of the developed world? Let's see, I lived in California, I had a 39% Federal rate and a 10.1% rate. In return I got expensive health care, ridiculously expensive college tuition, crappy roads, no public transport, and if I had paid into Social Security, and it was still solvent, I got my money back with 0.1% growth.
I now live in Australia, with a tax rate of 48%. In return I get excellent health care for practically no fee (house calls! they pay for a taxi back to your house!); college tuition at excellent schools costs me $1000 per year; my employer is required by law to put 11% of my income into my own segregated self-directed retirement fund. After five years of employment they are required to offer a paid five-month sabbatical. Don't get me started about the number of paid holidays....Oh, and GDP per capita is about the same as the US.

So the rates may look comparable...but what do you get for your money? Oh, I forgot, in the US you get the pleasure of knowing your tax dollars went to kill a bunch of goat herders on the other side of the world. 37% of tax receipts go to the Pentagon, wake up folks.


On Nov 25 11:27 AM ACCOUNTANT wrote:

> For the most part - what garbage!!!
>
> However, great comment by verdae. There is so much disinformation
> running around that it is actually very nice to read a comment from
> someone that has actually done their homework on what they post.
>
>
> just saw a thing in USA Today regarding tax rates. US is at bottom
> of developed world. We could raise taxes by 5% of GDP and still be
> lower than the vast majority of developed world. In fact, federal
> revenues in 2009 are estimated at 15.1% of GDP, or 5% below the average
> for the years 1970-2000. That is the biggest reason for the huge
> deficit - revenues have just totally dropped off the table.
>
> Combine that with TARP spending and stimulus spending, you have your
> budget deficit. The last two will go away by themselves, and the
> first will need to be addressed. What most people don't realize is
> that the biggest items of Bush's tax cuts were back-ended so they
> wouldn't look so expensive when the 10-year analysis were done back
> in 2001. those back-ended provisions started going into effect in
> 2008.
>
> To illustrate, in 2010, my wife and i could have (in our particular
> circumstances) a non-earned income of about $102,000 and not pay
> one nickel of federal taxes - in my opinion, that is ridiculous.
>
>
> How is this possible? Well, non-earned income implies NO payroll
> taxes. No income taxes will apply because of standard deduction,
> 2 exemptions, HSA deduction, $10,000 passive activity loss carryover,
> and $67,000 of qualifying dividend income or long-term capital gain
> income, which is only taxable if your marginal tax rate is 25% or
> higher. Based on this scenario, we would be just below that tax rate
> - thus - no taxes on that $67,000, and the various deductions above
> will cover the rest of the income. Thus - no taxes on $102,000 of
> income - great for me but sheer public policy stupidity!!!!!
>
> Tax rates will not go back to 70% or 90% or anything close - look
> for a top rate of between 39% and 43%.

Global Markets in Review: Share Prices Too Far Ahead of Economic Reality

There are entire DECADES where cash was the best-performing asset class. No fun, though....


On Nov 22 01:36 PM Advill wrote:

> Maybe it´s true but:
>
> Real estate will be depressed in the mid term
> Inflation is around the corner
> Commodities are already higher than economy
> Trillions of TARP money moving around......WHERE DO I INVEST MY MONEY
> ? perhaps is the daily question moving billions each day and my small
> account too!
>
> Rgds

Obama's Fears of a Double Dip Recession Are Nonsense

MHFT, you are one sarcastic and astute MF. I agree with every single word you said. If you're ever in Sydney or Shanghai or Seattle, I'll buy you a snifter of Martell...


On Nov 19 09:32 AM Mad Hedge Fund Trader wrote:

> cde I know what keeps Obama awake at night. Let’s say we spend our
> $2 trillion in stimulus and get a couple of quarters of weak growth.
> Then once the effects of the stimulus wear off, we slip back into
> a deep recession, setting up a classic “W.” Unemployment never does
> stop climbing. This happened to Roosevelt in the thirties. So congress
> passes another $2 trillion reflationary budget. Everybody gets wonderful
> new mass transit upgrades, alternative energy infrastructure, and
> bridges to nowhere. But with $4 trillion in spending packed into
> two years, inflation really takes off. The bond market collapses,
> the dollar tanks big time, gold goes ballistic to $5,000, and silver
> explodes to $50. Ben Bernanke has no choice but to engineer an interest
> rate spike, taking the Fed funds rate up to a Volkeresque 18%. Housing,
> having never recovered, drops by half again. This all happens in
> the 2012 election year. Obama is burned in effigy, a Mormon is elected
> president, and the Republicans, reinvigorated by new leadership,
> retake both houses of congress. We invade Iran. Crude hits $500.
> This is not exactly a low probability scenario. Remember Jimmy Carter?
> This is why junk bond yields are still stubbornly high at 12.5%,
> and credit default swaps live at lofty levels. Are the equity markets
> pricing in this possibility? No chance. The risk of Armageddon is
> still out there. Personally, I give it a one in three chance. Pass
> the Xanax.

Weekly Recap: Is the U.S. Going Bankrupt?

I have really enjoyed your comments here on SA but it seems recently that you are feeling quite dark...almost biblical. Surely things cannot look that bad, cheer up my friend. As my late mother used to say "it's only money..."


On Nov 13 11:44 AM User 353732 wrote:

> The interesting question is not whether the US is bankrupt; it is.
> That is what negative net worth means.
>
> The 3 interesting, presently, unanswerable questions are:
>
> 1. What mechanism or mechanisms will the US Regime use to manifest
> the default?
> 2.How will the world and what is left of the American Middle Class
> respond?
> 3. Post response, will the USA as we know it exist as a legal, sovereign
> entity?
>
> No flourish of trumpets will announce the defaults and its cascading
> consequences. The night before, it will be business as usual for
> the US Regime; the next dawn will be a dawn like no other in American
> history.
>
> The night is far spent. There is a last day for economic wickedness
> and financial depravity. Reality and truth do prevail and will prevail.

World Recovery Is in the Hands of OPEC

This is not really a serious post. That America would/could somehow invade the MidEast and seize oil is a fantasy left over from WWII. For starters, we would have to borrow the money to do so. From whom? Would China sanction this? Japan? The Saudis perhaps?

Faces of Death: The U.S. Dollar in Crisis

Currencies are affected by two main factors, cross-border trade and investor risk appetite.
USD has had "home court advantage" on both of these for decades. First as the wordwide trade currency and secondly as a good, visible, safe, transparent, and popular place to invest, both for institutions and individuals. This home court advantage has saved the US tens of billions of dollars by allowing US interest rates to remain relatively low because there is a background demand for our currency.
But this "home court advantage" is slipping on both counts. Cross-border trade MAY increasingly be done in other currencies, but the shift will be slow. IMF says the USD share of trade transactions will fall from 60% to 52% in the next ten years.
The real effect IMO will be because of the second factor, investor appetite for USD assets. In the last 30 years, the American myth has been propagated throughout the world via Hollywood, mainstream media, and indeed, the US military. Everyone "knew" America was not only the strongest country but also the smartest, and also the best place to be an entrepreneur. America rescued the world from fascism and put a man on the moon. Most giant pools of investor assets are still controlled from NYC and London, and in most cases those investors didn't know anything about the rest of the world, didn't understand those locations, hadn't heard of their brands, didn't like their political instability and sketchy contract law. And let's face it, inherent racism also played a role: they didn't want to invest their money with someone with yellow or brown skin.
As giant pools of money are increasingly directed from places like Dubai and Beijing and Moscow and Rio and Norway and Singapore, however, many of those knee-jerk biases will be much less powerful. Yes America can and will create the next Google and Apple and Microsoft, but so will Brazil and China and India. And as America slips in things like education, taking care of its citizens, regulatory oversight (Bernie Madoff?) and replaces private capital formation with public entitlements, The USD will be less and less attractive to investors. It will be a generational change, kind of like sterling after WWI. IMO.

Marc Faber: Equities Safer than Dollars

Very simple. The Fed hands banks money (through 17 different "extraordinary" programs at last count, including TARP etc., (and before the purists start screaming about whether these programs "equal" real money, Fed cannot "create" money etc, the fact remains that the banks have more money than they did before the Feds actions)) Banks funnel that money to their "prop" desk, trading their own "proprietary" accounts in various markets. Hence we get the phenomenon where Wall Street "picks each other's pockets", trading in sub-millisecond executions, fractions of a pip, creating new "instruments" to pick their customer's pockets, all completely unhinged from the world of capital formation, company financing, and the economic activity the economy REALLY needs to get moving again.
That's how.


On Sep 29 03:41 PM Thomas J. Gordon wrote:

> Faber is an interesting guy. I watched the videos. I have a question.
> Faber said the stock market was going up be Bernanke was giving people
> money to buy stocks. What is the mechanism for that? When I took
> macroeconomics, the fed increased the money supply, the banks applied
> the multiplier affect, and overall prices rose. Overall prices aren't
> rising (yet?). How does money printed by the fed wind up in the hands
> of people that want to buy the overall stock market? I have a problem
> with the recurring statements that excess money printed by the fed
> ends up in some particular market (real estate, oil, etc..)

V-Shaped Revenue Recovery + L-Shaped CapEx Growth = Unstable Economy

Regrettably I think it's Tyler's last sentence that matters most. We'll just kick the can down the road for another few years. Then it really will be canned food and ammo time...

The Fair Value Math for the S&P 500

one problem: a 15X multiple is way above the mean. Stocks are "cheap" when multiples are single-digit. Given the pitiful state of worldwide demand, the rampant tricks, insider deals, collusion, off-balance sheet tricks, and "quantitative easing", a 15x multiple seems pretty rich.

Shift in U.S. - China Dialogue Is Louder than Words

I love the guys who state that mighty American military power will dominate, while ignoring the fact that the money to PAY for all that ridiculous hardware and troops in 140 countries is BORROWED, in this case from our PRESUMED ENEMY

Are Stocks Always Best for the Long Run?

One fly in the ointment, not yet mentioned here: interest rates. They dropped like a stone from 1982 to 2009, of course bonds did well.
Makes me think twice about large bond positions right now, with rates currently at zero.
There are entire decades where CASH was the best-performing asset class, perhaps we are in one of those decades. Capital preservation. No fun at all...

Why the Dow Is Headed to 6000

These are interesting times. A few quotes echo through my head: "Don't fight the Fed" "Don't fight the tape" "The trend is your friend til the end" "Markets can stay irrational longer than you can stay solvent"
But I think the Fed is running out of bullets. And I think companies are running out of cost-cutting ideas. I think US demographics are changing, and with less household formation and more downsizing it will be many years before housing reaches the old highs. Bank balance sheets are still a joke: most are carrying their commercial loan portfolios at 98 cents on the dollar. In the markets, Goldman is something like 20% of the volume, the big boys are just picking each other's pockets in a giant rigged casino, waiting to play Mr. Retail Investor like a chump.
There are entire DECADES where cash was the best-performing asset class. It's so boring but right now I am 80% cash, 5% gold, 5% commodities, 10% various equity positions, mostly emerging. July earnings season will be key and will confirm (or deny!) the direction.
The whole commercial system is designed to remind us what we don't have, so take time to remember what you do have.

The Rally That Never Was

lengthy list on HedgeFolios asks some great questions:

How did the Bear Stearns bailout work?

How did the AIG bailout work?

How did the Fannie and Freddie bailout work?

How did all those government foreclosure avoidance programs like HOPE NOW work out?

How did TARP work?

How will the PPIP work?

How successful was Bernanke with his market manipulations?

How have all the forced mergers like BAC Countrywide and Merrill worked out?

How helpful was the stress test?

Were all the toxic assets fixed just by changing mark-to-market or announcing PPIP?

How did the first stimulus plan work out?

How did the recent stimulus plan work out?

How cheap is the market based upon the crappy estimates we are supposed to believe?

Do you have good expectations for interest rates?

Do you have good expectations for taxes being lower?

Do you have good expectations for budget deficits declining?

Do you have good expectations for lowered government spending?

Do you have good expectations for house appreciation?

Do you have good expectations for lowered foreclosures?

Do you have good expectations for low unemployment?

Do you have good expectations for wage rates increasing?

Do you have good expectations for private equity deals getting refinanced?

Do you have good expectations for credit card debt reductions?

Do you have good expectations for commercial real estate, aka CMBS?

If the US has bottomed, has Europe?

Do you expect the dollar to stabilize or not crumble?

No Rest for the Economy's Wicked Parties

I moved with my family from San Francisco to Australia after Bush was "re-appointed" in 2004. We couldn't be happier. Next month I will get Permanent Residency and after that will drop my US CITIZENSHIP.
Just do it.


On May 27 01:02 PM SBgal wrote:

> Thanks for telling it like it is. In all seriousness, where can one
> emigrate in this world with civil rights (this eliminates China),
> clean water (eliminates half the geography of the globe), and where
> one won't be affected by the maelstrom that will develop when the
> US implodes? I live in California, the 5th largest economy in the
> world and we are essentially bankrupt. Everything seems fairly normal,
> but there is a sense, for those of us who watch economic trends,
> that the "big one" is coming--and I don't mean another earthquake.
> What should the "average joes" and "janes" do?

New Bubbles Are Brewing in Shanghai and on Wall Street

Superb. Thank you, Gary. Sometimes it's hard to see that the Emperor is naked these days. Keynes famously said "markets can stay irrational longer than you can stay solvent", and that's a real problem right now. The level of government and shadow-banking system manipulation is epic. Many, many false signals, impossible to separate signal from noise right now.