Before The Income Tax, Federal Tariffs and Real Estate Taxes Punished Farmers

From a helpful history of the estate tax from the IRS, here (emphases added), which is unaware of the significant federal revenue contributed by alcohol taxes (between 30 and 40 percent):

The War Revenue Act of 1898

Throughout the last half of the 19th century, the industrial revolution brought about profound changes in the U.S. economy. Industry replaced agriculture as the primary source of wealth and political power in the United States. Tariffs and real estate taxes had traditionally been the primary sources of Federal revenue, both of which fell disproportionately on farmers, leaving the wealth of industrialists relatively untouched. Many social reformers advocated taxes on the wealthy as a way of forcing the wealthy to pay their fair share, while opponents argued that such taxes would destroy incentives to accumulate wealth and stunt the growth of capital markets.

Against this backdrop, a Federal legacy tax was proposed in 1898 as a means to raise revenue for the Spanish-American War. Unlike the two previous Federal death taxes levied in times of war, the 1898 tax proposal provoked heated debate. Despite strong opposition, the legacy tax was made law. Although called a legacy tax, it was a duty on the estate itself, not on its beneficiaries, and served as a precursor to the present Federal estate tax. Tax rates ranged from 0.75 percent to 15 percent, depending both on the size of the estate and on the relationship of a legatee to the decedent. Only personal property was subject to taxation. A $10,000 exemption was provided to exclude small estates from the tax; bequests to the surviving spouse also were excluded. In 1901, certain gifts were exempted from tax, including gifts to charitable, religious, literary, and educational organizations and gifts to organizations dedicated to the encouragement of the arts and the prevention of cruelty to children. The end of the Spanish-American War came in 1902, and the tax was repealed later that year. Although short-lived, the tax raised about $14.1 million. [About 2.5 percent of the federal budget].

Another Way to Spell 'Hyprocrite' is 'TARP Republican'

"I redefined the Republican Party."

"I've abandoned free-market principles to save the free-market system."

America: Phoenix Rising From the Ashes

From Ambrose Evans-Pritchard, here, not in the least because our own energy supplies and manufacturing are coming back, on top of all this:

The global depression will grind on as much of the Western world tightens fiscal policy and slowly purges debt, and as China deflates its credit bubble.

Yet America retains a pack of trump cards, and not just in sixteen of the world’s top twenty universities.

It is almost the only economic power with a fertility rate above 2.0 - and therefore the ability to outgrow debt - in sharp contrast to the demographic decay awaiting Japan, China, Korea, Germany, Italy, and Russia.

Europe's EMU soap opera has shown why it matters that America is a genuine nation, forged by shared language and the ancestral chords of memory over two centuries, with institutions that ultimately work and a real central bank able to back-stop the system.

The 21st Century may be American after all, just like the last.

The Velocity of Money is Retarded by Government

Especially by rules governing the timing of transactions, and also by rules distinguishing one kind from another.

Both should be voided in tax reform, equalizing them in order to establish a level playing field between investment gain and wage gain.

Capital gains held less than a year vs. more than a year? Out. Tax all capital gains at one low rate, regardless of time held. To do otherwise inhibits price discovery.

Capital gains on real estate held less than two years vs. two or more? Out. Tax all such gains at the same low rate as any other capital gain, regardless of time held.

Rates different for unearned capital gains from ordinary earned income? This distinction distorts the one in favor of the other. Both kinds should be taxed at the same low rate in order to discover which makes more sense to the investor at the time, based on market conditions. Government should not interfere with the conditions.

Rep. Newt Gingrich Gets Blame For Housing Legislation Which Led To Bubble

Rep. Newt Gingrich was instrumental in turning the American dream into the American nightmare.

Under Gingrich's leadership in the US House as Speaker he spearheaded the drive to turn our homes into a mere commodity which could be flipped over and over again free of capital gains tax. And as everyone now knows only too well, commodities go up, and commodities go down.

From his Wikipedia entry:

In 1997 President Clinton signed into effect the Taxpayer Relief Act of 1997, which included the largest capital gains tax cut in U.S. history. Under the act, the profits on the sale of a personal residence ($500,000 for married couples, $250,000 for singles) were exempted if lived in for at least 2 years over the last 5. (This had previously been limited to a $125,000 once-in-a-lifetime exemption for those over 55.) There were also reductions in a number of other taxes on investment gains. Additionally, the act raised the value of inherited estates and gifts that could be sheltered from taxation. Gingrich has been credited with creating the agenda for the reduction in capital gains tax, especially in the "Contract with America", which set out to balance the budget and implement decreases in estate and capital gains tax. Some Republicans felt that the compromise reached with Clinton on the budget and tax act was inadequate, however Gingrich has stated that the tax cuts were a significant accomplishment for the Republican Congress in the face of opposition from the Clinton administration.


Look what happened to housing in 1997 after the legislation became law according to the Shiller index:

After four decades of relative price stability in real terms, the dramatic tax change Gingrich championed helped develop one of the most notable bubbles in American history, as well as a banking crisis and unemployment the likes of which we haven't seen since the 1930s.

Whether it's Herman Cain's 999 Plan or a Flat Income Tax, The Current Code Must Go

So says Steve Forbes, here, who reminds us why that is:

The federal income tax code and all its attendant rules and regulations -- almost 10 million words and rising.

The code has been changed 14,000 times since 1986; last year alone there were 500 changes. The cost of compliance is horrific. The IRS itself calculates that we spend more than 6 billion hours a year filling out tax forms, the equivalent of almost 3 million full-time jobs. The Tax Foundation calculates that by 2015 annual compliance will be costing the American people some $483 billion a year.

Herman Cain's So-Called Abortion Flip Was Nothing of the Kind: He Clearly Endorsed Private Choice For Adoption, Not Abortion.

What it was was a poor attempt to entrap the still too trusting Herman Cain to make it appear that his position on abortion is incoherent.

The transcript of the controversial interchange shows Herman immediately grasped Piers Morgan's attempt to bait and switch when Herman TWICE interjects the comment "you're mixing two things," namely "bringing up the baby as her own" and "abortion."

The media and the left, like Ed Kilgore of The New Republic here, are hoping that if they repeat their lie enough that we'll all believe it.

Piers Morgan starts talking about abortion, and suddenly introduces a hypothetical about raising a child who was conceived in a rape "as her own":

MORGAN: Abortion. What's your view of abortion?

CAIN: I believe that life begins at conception. And abortion under no circumstances. And here's why --

MORGAN: No circumstances?"

CAIN: No circumstances.

MORGAN: Because many of your fellow candidates -- some of them qualify that.

CAIN: They qualify but --

MORGAN: Rape and incest.

CAIN: Rape and incest.

MORGAN: Are you honestly saying -- again, it's a tricky question, I know.

CAIN: Ask the tricky question.

MORGAN: But you've had children, grandchildren. If one of your female children, grand children was raped, you would honestly want her to bring up that baby as her own?

CAIN: You're mixing two things here, Piers?

MORGAN: Why?

CAIN: You're mixing --

MORGAN: That's what it comes down to.

CAIN: No, it comes down to it's not the government's role or anybody else's role to make that decision. Secondly, if you look at the statistical incidents, you're not talking about that big a number. So what I'm saying is it ultimately gets down to a choice that that family or that mother has to make.

Not me as president, not some politician, not a bureaucrat. It gets down to that family. And whatever they decide, they decide. I shouldn't have to tell them what decision to make for such a sensitive issue.

MORGAN: By expressing the view that you expressed, you are effectively -- you might be president. You can't hide behind now the mask, if you don't mind me saying, of being the pizza guy. You might be the president of United States of America. So your views on these things become exponentially massively more important. They become a directive to the nation.

CAIN: No they don't. I can have an opinion on an issue without it being a directive on the nation. The government shouldn't be trying to tell people everything to do, especially when it comes to social decisions that they need to make.

MORGAN: That's a very interesting departure --

CAIN: Yes.

MORGAN: -- from the normal politics.

CAIN: Exactly.

There is absolutely nothing controversial here about Herman Cain saying a president has no business telling people to raise such a child as their own.

And Rick Santorum should be ashamed of himself for piling on.

Incidentally, Herman is correct about the relative rarity of the adoption question: statistics show just under 250,000 total children per year waiting to be adopted and adopted, in about equal numbers.

That's because our advanced civilization murders about 1,210,000 unborn children every year.

Gaddafi in the Meat Locker

"Beauty, wit, high birth, desert in service,

Love, friendship, charity are subject all

To envious and calumniating time."

Muammar Gaddafi's Fingers

"If I was an Arab dictator and a western politician shook me warmly by the hand, I would count my fingers."

-- Simon Jenkins, The UK Guardian, 22 Feb. 2011, here.

Except the two-faced meddling hypocrites of the west had plenty of company:

China's Submarine Force To Remain Mostly Defensive, Regional and Smaller

So says David Axe, here:

The Song submarine’s surprise appearance alongside the USS Kitty Hawk helped stoke fears of Chinese undersea dominance that were further fuelled by a brief surge in PLAN sub acquisition. Today, with more US and allied submarines entering service and fewer Chinese boats on the slipways, those fears – and the policies and assumptions they produced – warrant reconsideration. China isn’t building a world-class, globally-deploying submarine force. It’s building a mostly defensive, regional undersea force – and a smaller one than once predicted.

The "incident" off the California coast almost a year ago does not warrant even a mention in this re-assessment of China's ability to project submarine power.

Larry Kudlow Likes Herman Cain's 999 Plan

Here:

Former Treasury hands Gary and Aldona Robbins priced out the Cain plan on a static basis and discovered it to be revenue neutral. Essentially they found a $26 trillion tax base yielding $2.3 trillion in revenue for a 9.1 percent overall rate. Hence, 9-9-9.

In essence, the Cain plan combines the flat tax (with its single marginal rate) and the fair tax (which uses the national sales tax). I don’t know if this is really possible. But in terms of first principles, throwing out the tax code, lowering marginal tax rates, getting rid of the carve-outs and deductions that make the current code impossible to understand, and providing an economic-growth tonic to heal our current funk, it makes a lot of sense.

That Herman Cain is rising in the polls is no surprise.

Recalculating Herman Cain's 999 Plan For Calendar Year 2008

Herman Cain's 999 Plan continues to get tweaked by none other than Herman Cain himself, in response to criticisms and questions about it in the media in the wake of recent Republican presidential debates.

Some of the additional information he is supplying looks to have been latent and just previously unexplained, while other information has the feel of modification. In any event, the unsettling thing about this is that the 999 Plan appears to be something of a work in progress, not a finished, fully vetted proposal, which makes it less sellable politically.

One question which seems so important to the left, for obvious reasons, has been the plan's ability to fund the Leviathan State's appetite.

Previously it seemed to me that the plan was woefully inadequate to the task. But some of the additional information that has come out makes me more sanguine, if that's the right word as the taxpayer stares into the maw of the bloodthirsty Beast.

For example, with respect to the 9 percent corporate tax, it turns out that, for reasons which I still do not understand, business' cost of labor is no longer deductible for tax purposes under the plan. So for 2008 when corporate profits posted as $1.25 trillion, you theoretically must add back in net compensation of nearly $6.2 trillion. I think. A 9 percent tax on $7.45 trillion now yields a much higher corporate contribution to federal revenue for 2008 of $671 billion.

Combine that with a 9 percent tax on adjusted gross income of $8.5 trillion equaling $765 billion and with a 9 percent tax on personal consumption expenditures of approximately $10.5 trillion equaling $945 billion, the resulting sum is $2.38 trillion, just shy of the actual collected in 2008 under the current system, which was $2.5 trillion.

And if I read the language of the 999 Plan correctly, there will also be substantial tariff revenue from imports designed to level the playing field between them and our own exports. Imports in 2008 of $2.5 trillion taxed at 9 percent would yield an additional $225 billion in revenue, more than enough to cover the $120 billion shortfall. Presumably some imports would not be so taxed due to pre-existing trade agreements, but the potential is obviously there for far more revenue from tariffs than America presently collects.

Mr. Cain is also now stating that his plan is undecided about how to remove the regressivity of the sales tax on the poorest Americans, but that it will. This will, of course, reduce the revenue described above, as will the income tax deduction for charitable contributions.

OWS Protesters Are So Full Of It They're Crapping On Manhattan Doorsteps

America's finest.

Story here.

'For now the Devil, that told me I did well, Says that this deed is chronicled in hell.'

Democracies don't go to war against democracies, just against everyone else.

I'm With Hitch: Secret Scripts and 3D Glasses are Kooky and I Don't Want a President Who Believes In Them

If Rick Perry had any brains, he'd have said as much:

[W]e are fully entitled to ask Mitt Romney about the forces that influenced his political formation and—since he comes from a dynasty of his church, and spent much of his boyhood and manhood first as a missionary and then as a senior lay official—it is safe to assume that the influence is not small. Unless he is to succeed in his dreary plan to borrow from the playbook of his pain-in-the-ass predecessor Michael Dukakis, and make this an election about "competence not ideology," he should be asked to defend and explain himself, and his voluntary membership in one of the most egregious groups operating on American soil.

Read the whole thing here from Christopher Hitchens.

Newt Gingrich Admits Romney Got Idea of Individual Mandate for Massachusetts from Newt and The Heritage Foundation Conservative Think Tank

Story here at The New Republic.

It's episodes like this which just prove how few genuine conservatives exist in today's Republican Party.

But go ahead, sign up with Heritage anyway, you mind-numbed robots of Rush Limbaugh and Sean Hannity.

That's just one of the big reasons Rush has worked so hard to co-opt the Tea Party and prevent a third party challenge from developing.

Rush is thick as thieves with the enemy. 

Herman Cain Is The Loose Cannon On His Own Ship

Seen here in a story about his latest abortion answers:

“It seems that Cain is either constantly misunderstanding questions posed to him on what should be easy, fundamental issues, or he admits to having misspoke after it is pointed out that the position he has stated is not that of a conservative,” the Iowa Republican’s Craig Robinson wrote. “Herman Cain has been campaigning for over a year now, and with only about two months until people start voting in caucuses and primaries, I’m more confused about where Herman Cain stands than ever before.” 

Herman Cain's TARP Comments Now and Then Reveal That He Has No Clearly Defined Objection to Government Ownership of 'Private' Industry

In June 2011, here:

I studied the financial meltdown and concluded on my own that we needed to do something drastic, yes. When the concept of TARP was first presented to the public, I was willing to go along with it. But then when the administration started to implement it on a discretionary basis, picking winners and losers and also directing funds to General Motors and others that had nothing to do with the financial system, that's where I totally disagreed. 

We should -- the government should not be selecting winners and losers, and I don't believe in this concept of too big to fail. If they fail, the free market will figure out who's going to pick the up the pieces.

In October 2011 here:

CAIN: I have said before that we were in a crisis at the end of 2008 with this potential financial meltdown. I supported the concept of TARP, but then, when this administration used discretion and did a whole lot of things that the American people didn't like, I was then against it. So yes, and I'm owning up to that. 

Now, getting back to the gentleman's question in terms of what we need to do, we need to get government out of the way. It starts with making sure that we can boost this economy and then reform Dodd-Frank and reform a lot of these other regulations that have gotten in the way -- 

COOPER: Time. 

CAIN: -- and let the market do it just like Mitt has talked about.

So Herman's story now is that he is upset that winners and losers were picked under TARP by the Obama regime. Bailing out banks was OK. GM? Not so much.

To Herman, however, picking winners and losers just among the banks doesn't seem to matter, where TARP obviously was used to pick winners and losers in that industry. Just ask all the sound banks who've had to ante up advance FDIC insurance fund premiums to restore the depleted DIF used to help the failing and see how they feel about all the special treatment the big bad boys received at their expense.

Here is Herman just three weeks after passage of TARP in October of 2008, raising no objection whatsoever to the new strategy of picking winners in the banking industry:

[I]nstead of buying toxic mortgage-related assets of banks as originally proposed, the Treasury has changed tactics and will buy equity positions called preferred stocks, which gives us as taxpayers an ownership stake in their success for a limited period of time.

Herman is making things up as he goes on many issues, editing his positions as he becomes aware of the inconsistencies of his own statements.

Not surprising, but not very encouraging.

999 Plan Contains Protectionist Elements

Which to Jerry Bowyer, here, is just another reason to oppose the plan:

And I haven’t even mentioned the protectionist elements of the plan which would, for example, allow business to deduct expenditures for capital goods if they are purchased domestically, but not if they are purchased for abroad. That one alone would constitute a Smoot, a Hawley and a half a Perot in one fell swoop.

B.O. Finally Gets Gaddafi: "And Now [Obama's] An Assassin"

So Louis Farrakhan in May 2011, here:

"We voted for our brother Barack, a beautiful human being with a sweet heart, and now he's an assassin. They turned him into them."

So ends the undeclared, illegal war against Libya, which was only supposed to take a few days.

Next!

TSA VIPR Units Search Trucks at 5 Interstate Locations in Tennessee Tuesday 10/18/11

Whatever happened to probable cause?

The American fascist police state expands its operations, in the ever so co-operative Bible Belt.

Two bus stations were also targeted, as reported here.

Random searches of cars cannot be far behind.

Herman Cain on Social Security

Seen here:

"Increasing the retirement age for benefits" is "preposterous."

Herman Cain Clearly Considers Mormonism To Be Just Another Christian Denomination

In his own words in 2007, here:

The Baptists, Methodists, Catholics, Lutherans, Pentecostals, Mormons and a few other faiths have three things in common – they believe in Jesus Christ, that He is the Son of God and that He died and was resurrected for our sins.

So what's the problem?

The political pundits continue to try and make Mitt Romney's religious beliefs a big issue as he runs for the Republican presidential nomination. Different denominations of Christianity are just that – different denominations – which means different worship practices of the same fundamental Christian beliefs.

America: where what once was fringe becomes mainstream.

Louisiana Bans Cash In Transactions For 'Used' In Order To Establish Paper Trails For Law Enforcement

Story here.

"This note is legal tender for all debts, public and private" says the one dollar bill.

Just words.

Government just can't find enough ways to slow down the velocity of money.

Herman Cain Invites Every Family To Do Tax Arithmetic To Test His 999 Plan, But Only 17 Percent Do Their Own Taxes

Could they even if they wanted to?

So this story from earlier this year:

So given all the supremely personal acts that we have happily relinquished to software, why do 60 percent of Americans use a real live tax pro to do their taxes? TurboTax costs less than $100 for most people, and it’s probably a breeze compared with open enrollment. Yet only 21 percent of Americans use tax software. Nearly as many, 17 percent, use a pencil.

Herman Cain's 999 Plan Actually Taxes Income Three Times, Not Just Once

Most people who work get paychecks from businesses. Net compensation to about 150 million Americans in 2009 came to $5.9 trillion.

The businesses who pay all these people will no longer be able to deduct the cost of labor from their corporate taxes under the 999 plan, so business will pay a 9 percent tax on its cost of labor.

Once businesses pass through the wages, the workers now pay a 9 percent tax on this money which now becomes income to them, which, however, has already been taxed once at 9 percent as income to the businesses.

Whereupon, with what's left after being taxed twice, the workers now buy things in the marketplace from businesses and pay a 9 percent national sales tax without exception, thus exposing the same money to a third round of taxation.

Over the weekend Herman Cain has maintained here that his plan "is fair and neutral, taxing everything once and nothing twice."

On the contrary, much of the income is taxed three times.

Herman Cain Has a 999 Plan. Obama Just Has a 9 Plan, as in Unemployment.

So says Joseph Curl, here.

Jonathan Chait Sticks With Calumny

Here:

Even if Cain decided midstream to switch from business plan pseudo-candidate to actual candidate, it is difficult to believe that many of his putative supporters would actually pull the lever for him. Announcing one’s support for him is a statement, a finger in the eye of Obama and the liberals, not an indicator of a likely vote.

New York Yankees Beat Wall Street Bankers 124-28 in Cross Town Beat Down

So says Mark J. Perry, here:

Where's the outrage about "excessive" salaries for Yankees players, which have increased relative to average New York City salaries much more than salaries for NYC bankers?  What about an "Occupy Yankee Stadium" protest?

"Kultur is the Ultimate Economic Fundamental"

Ambrose Evans-Pritchard keeps trying to come to terms with Germany, here.

Herman Cain's Little Noticed 718 Percent Tariff Increase on Foreign Imports

Most of us have been fixated on income, sales and business taxes in Herman Cain's 999 Plan, but there is a little noticed line which I think adds considerable government revenue in the form of increased tariffs on foreign imports, and considerable American competitiveness by exempting our own exports from the plan's 9 percent business tax and the 9 percent sales tax:

Exports leave our shores without the Business Tax or the Sales Tax embedded in their cost, making them world class competitive. Imports are subject to the same taxation as domestically produced goods, leveling the playing field.

In 2010, imports to this country came to $2.3 trillion, on which a paltry $25.3 billion was collected in tariffs. If I understand Cain's plan correctly, that tariff would balloon to $207 billion to match tax burdens born by domestically manufactured and sold goods and services which are subject to the 9 percent business tax.

The last time tariffs on foreign goods similarly accounted for 9.6 percent of federal revenue occurred sometime between 1930 and 1935.

Herman Cain is thereby defying free-trade ideology in the name of a level playing field, which message should win him considerable support among American patriots, regardless of party.

"If At First You Don't Succeed . . .

. . . keep on sucking until you do succeed! Nyuk. Nyuk."

-- Curly Howard

DC Occupiers Ruin Stimulus-Funded Sod, Camp Illegally; Feds Turn Blind Eye

Reported here.

Tea Party damage to date = 0; incidents of trespassing = 0.

Occupy Wall Street in Chicago: Applause For "The Next Big Step in the Democratic Revolution"

Video here.

Sorry Occupy Wall Street, Democracy Looks Like This, Not Like You

Arrests Spread as Occupy Wall Street Spreads

Like a disease.

Last time I checked, ZERO Tea Partiers have been arrested for anything since 2009, but just over the weekend unruly Occupy Wall Streeters in scores have been arrested:

175 arrests in Chicago;

another two dozen in New York City (where police were injured);

an unknown number of arrests in Tucson;

maybe 40 in Phoenix;

and at least two dozen in Colorado.

See the AP story here.

Tea Partiers protested bailouts in the name of free market capitalism's cure for failure: bankruptcy. They showed up at the ballot box in November 2010 and put a stop to Barack Obama's Democrat Party. Now they wait for November 2012.

Meanwhile, Occupy Wall Streeters suddenly decide to protest bailouts in the name of bailouts for their student loans, a living wage, and sundry other entitlements which don't yet exist but they hope to extract by mob action and intimidation, the modus operandi of the unions.

A cold snap can't come soon enough, or a flu epidemic.

Is The Price of Owning the S&P500 Low, or High?

Everything depends on how you calculate the price.

This way, where the financial crisis in 2007-2008 represents the all-time high:

Or Shiller's way, where the peak was way back in 1999:

Bailed Out GSEs Send 87 To Mortgage Bankers Association Annual Convention, Spend At Least $227,000 Of Your Tax Money For Fling In Chitown!

The New York Times has all the gory details here.

A Movement to Occupy My Underwear

Oops!

Richard Viguerie Rips Romney and Cain New Ones For Supporting TARP

Here:

Defending TARP should burst Herman Cain’s populist bubble, but Romney in particular, defended the 2008 bank bailout in one of the most disingenuous statements of the evening, if not the entire debate cycle.

According to Governor Romney, the $700 billion Wall Street rescue package "was designed to keep not just a collapse of individual banking institutions, but to keep the entire currency of the country worth something."

Noting could be further from the truth and Romney knows it.

Artificial GDP Explained

By Jeffrey Snider, here.

A tax will have to be paid for it, sooner or later. There will be blood.

ObamaCare's Long Term Care Insurance Provision Bites The Dust Already

Because its costs were too high to attract participation, as reported here:

Monthly premiums would have ranged from $235 to $391, even as high as $3,000 under some scenarios, the administration said. At those prices, healthy people were unlikely to sign up.

Well duh! Healthy people who signed up at age 50 not long ago could get excellent coverage for two people for less than $60 a month through Barack Obama's favorite fascist, Jeff Immelt of GE.

Government does very little well, and never cheaper than the private sector.

Rep. Bachmann Finally Sends Me An Email!

Gee, I signed up sometime in June for campaign updates, and never heard a thing. I complained about the fact, here, later that month.

Suddenly today, four months later, I get an email asking me to fill out a survey and to contribute to the campaign.

Well, we've had PerryCare = ObamaCare since then, which really is unfair to ObamaCare, and now 999 upside down is 666 and such like. Not exactly what I want my president to be saying out loud.

"Sundown, ya better take care . . .."

Flashback to Obama, March 2009: "Nobody would be happier than me to stay out of it. I have more than enough to do without having to worry about the financial system."

Quoted here:

"Well, I just think it’s clear by the time we got here, there already had been an enormous infusion of taxpayer money into the financial system. And the thing I constantly try to emphasize to people if that coming in, the market was doing fine, nobody would be happier than me to stay out of it. I have more than enough to do without having to worry the financial system. The fact that we’ve had to take these extraordinary measures and intervene is not an indication of my ideological preference, but an indication of the degree to which lax regulation and extravagant risk taking has precipitated a crisis."

Matt Taibbi: Elizabeth Warren For President in 2012

Just a little humor to start the day.

Matt Taibbi, already deeply dissatisfied with Obama in October 2009, said that here:

"Warren to me makes the most sense for the simple reason that it will be virtually impossible for the Democratic Party hacks to dismiss her as a fringe character, given that they themselves gave her such a big public position as chief of the Congressional Oversight Panel.

"This is a woman who understands the finance issues as well as we can hope to expect from any politician . . .."

You know Elizabeth Warren. She's the one who repeatedly said here "the rest of us paid for" everything which the rich used to get wealthy, so they owe us, as if the rich hadn't already paid one red cent in taxes for any of those things, too.

Yep, that's the best reasoning we can hope to expect from the Democrats.

Weekly Standard: Income Growth Has Slowed and Gone Negative in August?

See the figures, especially in Table 1 here, at the Bureau of Economic Analysis.

After reaching a peak in July, August personal income fell below that of July, but is still higher than personal income was in June, and January.

The Weekly Standard is making much of the steady decline in income growth so far in 2011 here, but without once mentioning the boost to incomes the temporary reduction in the payroll tax was supposed to supply.

According to the Bureau of Labor Statistics here, average weekly hours have been stagnant for a year, so income gains cannot be coming from more hours worked. In fact, all other things being equal, you would expect nominal income to remain the same. Which is to say, no one is getting much of a raise, but they still have jobs.

But here the BLS shows that average weekly earnings have increased 1.85 percent year over year in August 2011.

Hm.

Interestingly enough, the difference between a payroll tax of 6.25 percent on $100 of income and 4.25 percent on $100 of income is . . . $1.82 less tax, going straight into people's paychecks.

And after 7 months in 2011, using the seasonally adjusted annual numbers of the BEA, income is up 1.94 percent, including the downtick in August.

1.85, 1.82, 1.94 . . . looks like a pattern to me.

Nominal incomes are up slightly in consequence of the payroll tax cut. Otherwise, it's a stagnant income picture, just like the unemployment picture.

Unless of course you factor in CPI and discuss real incomes. But that's a whole other, and very real, problem.

Involuntary Part-Time Has Surged 10 Percent in September Since July 2011

As always, calculatedriskblog has the best charts, here:

The Bureau of Labor Statistics' recent data is shown here:

Herman Cain's 999 Plan is Under Attack by Bloomberg and WAPO

Here and here, mostly on the grounds of insufficient revenues, and tax regressivity and unfairness.

Herman needs to respond with numbers, and soon.

Occupy Wall Street Demands Student Debt Bailouts

So says Scott Cohn for CNBC.com here:

One proposed list of demands for the Occupy Wall Street movement includes "free college tuition" and "immediate across the board forgiveness" of student debt. While neither demand may be very realistic, the student debt problem is very real.

According to FinAid.org, which carries a "student debt clock" on its website, outstanding student debt is on pace to top $1 trillion in a matter of months. Student debt surpassed credit card debt in 2010, and has not looked back. The average 2011 college graduate had $27,204 in student debt, according to the organization.

The price of worship at the altar of the god, Education. Its high priests rob the easy.

Why Elites Think They Can Say The Middle Class Has All The Money, So Tax Them Instead

Because the top ten largest tranches of net compensation aggregates spanned incomes from $20K to $70K in 2009, for example, that's why.

And 8.2 million people in the $35-$40K category had the single largest pile of dough at nearly $310 billion, while the lowest tranche in the top ten were the 3.1 million people who had nearly $211 billion in net compensation and hailed from the $65-$70K category.

All told, over 68 million wage earners in the $20K to $70K category pulled in $2.7 trillion in net compensation, not quite half of the total $5.9 trillion.

The only thing is, the richer have a lot of income which escapes the categorization called net compensation by the federal government, at least another $2.5 trillion. That's how total adjusted gross income for the whole country gets to $8.5 trillion and higher on some 140+ million tax returns.

When it comes to compensation, however, it is the human factor which gives these numbers some life:

73 million people made less than $25K in 2009 (totaling less than $750 billion);

41 million made between $25K and $50K (totaling $1.5 trillion);

19 million made between $50 and $75K (totaling $1.2 trillion);

another 8 million made between $75 and $100K (pulling in together barely $716 billion);

and at the top were 9.5 million people making in excess of $100K. They alone accounted for $1.8 trillion in net compensation in 2009, the single largest sum.

If I were them, I'd try to move the spotlight somewhere else, too. 

Anti-American Occupy LA Speaker Calls For Violent Socialist Revolution

Video here:

Democrat Rep. Steny Hoyer Blames Gridlock on Voters Last November

Here:

“The American people have every right to be angry [and] disappointed by the performance of the Congress.

“Of course, the American people have also elected people with hard stances, so that to some degree the American people are realizing the results of their votes.

“If elections have consequences — which I think they do — some of those consequences are getting what you vote for.

 “In this case, many people voted for people who thought compromise was not something that they ought to participate in.”

Firm grasp of the obvious there, Steny. We voted to stop you and prefer things this way to the alternative.

But there was plenty of gridlock before we stopped you, too. When Democrats ruled the roost in 2010, unactioned bills in the Democrat-controlled Senate sent to it by the Democrat-controlled House went from 290 at the beginning of 2010 to 420 a month before the November elections.

For that kind of impotence there is no pill.

Whatever It Is, What We Have Is NOT Free-Market Banking

John Carney is absolutely correct:

In a system of fiat money controlled by a central bank, with fractional reserve banks backed by deposit insurance, characterized by enormous mega-banks that have grown so large primarily because of concentration-inducing regulation, there is no pre-existing free market into which the government can intervene.

Read the rest here.

This is where all the trouble begins: "Our money is your money, we print it for you to use."

It's the only game in town, until it isn't. And until it isn't, we don't have to like it.

Misery Index Hits Highest Level in 28 Years

From a Herman Cain economic adviser here:

There is certainly more than enough misery to go around. With the unemployment rate at 9.1%, and the 12-month change in the CPI at 3.77%, the “misery index,” the sum of the two, in August was 12.87, its highest level since May, 1983.  And, last week’s report that the unemployment rate remained stuck at 9.1% in September means economic misery remains high.

The S&P500 is Up About 9 Percent in One Week. Totally Irrational.

I can remember when that was a great year.

Taxpayer-Insured Commercial Banks Continue To Write CDS in $Trillions

Protest that you numbskulls.

These banks' political contributions are going to your man in The White House.

Gretchen Morgenson has the story here for The New York Times.

Why is This Man Making Bad Bets With Our Money?

Kyle Smith wants to know, here.

Why Don't You Occupy 1600 Pennsylvania Avenue?

Herman finds his voice (or we found his):


"Wall Street didn’t write these failed economic policies -- the White House did."

“Why don’t you move the demonstrations to the White House?”

“Wall Street didn’t write those failed policies, Wall Street didn’t spend a trillion dollars."

“Wall Street isn’t asking to spend another $450 billion.  It didn’t work with a trillion. It’s not gonna’ work with $450 billion. You can demonstrate all you want on Wall Street. The problem is 1600 Pennsylvania Avenue!”

Herman! Herman! He's our man! If he can't tell 'em, nobody can!

More here.

Herman Cain: “We’ve got some altering and abolishing to do!”

Cain also quoted the Declaration of Independence, stating that “it is the right of the people to alter and to abolish” the government.  “We’ve got some altering and abolishing to do!” he said.

Story here.

For Rep. Nancy Pelosi, Occupy Wall Street Anger Counts, ObamaCare Anger? Not So Much.

As quoted in the LA Times here:

House Democratic Leader Nancy Pelosi of San Francisco on ABC’s “This Week,” essentially called [Rep.] Cantor a hypocrite for criticizing the Wall Street protesters while embracing the “tea party” movement.

“I didn’t hear him say anything when the tea party was out demonstrating, actually spitting on members of Congress right here in the Capitol, and he and his colleagues were putting signs in the windows encouraging them,’ Pelosi said.

Pelosi said she supported the movement’s “message.”

“I support the message to the establishment, whether it's Wall Street or the political establishment and the rest, that change has to happen,” she said “We cannot continue in a way that does not — that is not relevant to their lives. People are angry.”

"The Hindenburg of anti-bank gasbags"

Yves Smith of Naked Capitalism, according to banklawyersblog.com, here.

Very entertaining.

The World: One Giant Organized Crime Which Keeps Two Sets of Books

I nominate "The Cost of Financial Ignorance" by Hernando de Soto in The Washington Post for most important editorial in the wake of TARP.

A few excerpts:

"Advanced nations seem to have forgotten . . . how important documenting assets and transactions is to the creation of credit. Consider that most private credit is made up not of bills and coins, anchored in bank reserves, but in papers that establish rights over the assets, equity and liabilities that guarantee loans. Over the past 15 years, however, as they package, bundle and resell securities, Americans and Europeans have gradually undermined the reliability of the records that guarantee or make credit trustworthy — the deeds, titles, liens and other documentation that establish who owns what and how much, and who holds the risks. ...

"When property is poorly documented, markets don’t get the information needed to connect assets to finance, and governments don’t obtain the data required to detect which connections have gone awry and how to fix them. This became obvious in 2008 . . ..

"The U.S. Treasury secretary created the Troubled Assets Relief Program to prevent a run on banks by purchasing the derivatives that financed the subprime mortgages. But officials realized within days that they couldn’t locate the assets or find criteria for pricing, buying and then removing them from the market. ...

"TARP authorities couldn’t locate knowledge about toxic assets fast enough because so many non-standardized types of records were scattered around the world. U.S. property and mortgage transactions records became obscured when companies were permitted to raise large amounts of financing by “bundling” mortgage loans into marketable liquid securities and recording these “derivatives” not with the traditional public registries but with the Mortgage Electronic Registration Systems, a private company whose registry reportedly holds about half the mortgages in the United States.

"These derivatives had a notional value of $600 trillion to $700 trillion — 10 times the amount of global annual production. They are still outside any property memory system."

'Our Citizens Ascribe Our Distresses To Every Thing But Their True Cause, The Banking System'

With its fictitious capital, otherwise known as credit without collateral, which enriches only those who issue it:

"The enormous abuses of the banking system are not only prostrating our commerce, but producing revolution of property, which without more wisdom than we possess, will be much greater than were produced by the revolutionary paper. That too had the merit of purchasing our liberties, while the present trash has only furnished aliment to usurers and swindlers. The banks themselves were doing business on capitals, three fourths of which were fictitious: and, to extend their profit they furnished fictitious capital to every man, who having nothing and disliking the labours of the plough, chose rather to call himself a merchant to set up a house of 5000. D. a year expence, to dash into every species of mercantile gambling, and if that ended as gambling generally does, a fraudulent bankruptcy was an ultimate resource of retirement and competence. This fictitious capital probably of 100. millions of Dollars, is now to be lost, and to fall on some body; it must take on those who have property to meet it, and probably on the less cautious part, who, not aware of the impending catastrophe have suffered themselves to contract, or to be in debt, and must now sacrifice their property of a value many times the amount of their debt. We have been truly sowing the wind, and are now reaping the whirlwind. If the present crisis should end in the annihilation of these pennyless and ephemeral interlopers only, and reduce our commerce to the measure of our own wants and surplus productions, it will be a benefit in the end. But how to effect this, and give time to real capital, and the holders of real property, to back out of their entanglements by degrees requires more knolege of Political economy than we possess. I believe it might be done, but I despair of it’s being done. The eyes of our citizens are not yet sufficiently open to the true cause of our distresses. They ascribe them to every thing but their true cause, the banking system; a system, which, if it could do good in any form, is yet so certain of leading to abuse, as to be utterly incompatible with the public safety and prosperity. At present all is confusion, uncertainty and panic."

-- Thomas Jefferson, to Richard Rush, June 22, 1819 

(source)

Unemployed? Was Your Hope Justified?

What, Me Worry?

TARP Was Designed to Accommodate the Fat Cats

If my memory serves me right, the whole idea was dreamt up in the first place by people at Bank of America and actively pushed in Congress long before the collapse of autumn 2008, according to a story in the New York Times from early 2008. I'd better go find that.

Anyway, TARP was for the fat cats, if not of and by them, too. And so says banklawyersblog.com, here:

[I]t's galling that special action was taken at the highest levels to accommodate the fat cats, while providing any TARP for the little guys was at first an afterthought, and that now that many of the small banks took that capital, no one in Congress or the federal banking agencies is falling all over themselves to relax any rules (e.g., amortization of CRE losses) to help them [exit] before the dividend rates rise.

My new best friend.

S&P 500 Close at 1155, 26 Percent Off the October 2007 High

For technical analysts, such a datum signifies that we are in a long term bear market since at least 2007 because the decline persists below 20 percent.

Today the Shiller p/e ratio is 19.79, shown here:

314 percent higher than the all-time low in 1920;

25 percent higher than the median;

20.5 percent higher than the mean;

and 55 percent lower than the all-time high in 1999 -- when a child was born somewhere, to mark that occasion, I am sure. Think of that: To be born at the height of irrational exuberance. I know such a person, but I didn't know the fact at the time.

A crash in the p/e ratio from here to the historical nadir would mean a collapse of nearly 76 percent.

Unthinkable? No. It is not necessary for such a crash to occur from a great height in the p/e ratio.

The collapse to the nadir in 1920 was from a p/e ratio lower than 25, as was nearly the case also in the early 1980s.

Price, and condition, that's all that matters, says the realtor. So should we all say. 

Steve Jobs on Family

Seen here:

“Steve made choices,” Dr. Ornish said. “I once asked him if he was glad that he had kids, and he said, ‘It’s 10,000 times better than anything I’ve ever done.’ ”

Rush Limbaugh Says The Banks Were Victims, The Bailouts A Success!

And the Tea Party got all hot and bothered over what, exactly?

Santelli's rant against the $75 billion mortgage bailout program called HAMP on CNBC? Noboby heard it!

The interventions bailing out private corporations like GM, Chrysler, and AIG, etc? Why, totally meaningless! Didn't happen!

This gag never appeared anywhere:

Nearly 400 failed banks haven't failed.

The FDIC hasn't had to pay $80 billion because of it.

1000 more with $400 billion in assets aren't really in danger.

Taxpayers aren't on the hook for $160 billion and rising for Fannie Mae and Freddie Mac. 

$10 trillion in taxpayer funds weren't really lent to every Tom, Dick and Hairy Bastard in the world at rock-bottom rates by the Federal Reserve!

The New York Times is simply mistaken that TARP will end up costing the taxpayers $37 billion. The CBO estimate of $25 billion is also quite simply wrong.

Partial transcript here:

RUSH: Will in Amanda, Ohio. You're up first. Great to have you on the EIB Network. Hello.

CALLER: Hey thanks, Rush. Hey, don't you think the one common denominator between the Tea Party and the protesters on Wall Street is a lack of justice? And what I mean by that is the lack of criminal prosecution from anybody from Fannie Mae and Freddie Mac, Wall Street, the banking industry, or even our own government officials.

RUSH: Um, okay --

CALLER: Not one prosecution, Rush.

RUSH: You want prosecution? Oh, "not one." I'm trying to understand. What's the correlation to the Tea Party?

CALLER: Well, the Tea Party gathered great strength after the bailouts that they tried to stop, and I think without the prosecution of anybody for crimes that have brought this country to its knees --

RUSH: Okay, name for me a crime and who you think should be prosecuted. I'm not disagreeing, I just want to know. Obama was asked this question today.

CALLER: Rush.

RUSH: Somebody asked him today, "How come there haven't been any prosecutions?" Who? And for what?

CALLER: I have to untie the other half of your brain for this one. Think about Fannie Mae and Freddie Mac.

RUSH: Okay, when I think Fannie Mae and Freddie Mac I think Barney Frank and Chris Dodd.

CALLER: Absolutely.

RUSH: Okay.

CALLER: But look at the collusion that's taken place between Wall Street and the banking industry and selling the mortgages -- or giving mortgages to anybody -- 'cause we know we can sell 'em off over here and we don't care if they're qualified or not.

RUSH: All right.

CALLER: Do you think there was a lack of fiduciary responsibility from a lot of people?

RUSH: No! I think there was fear of government.

CALLER: The what?

RUSH: I think there was fear of government. You talk about all these mortgage-related projects. Why did they exist?

CALLER: That doesn't justify crime.

RUSH: I'm not saying it does. No, no, no, no. Wait a minute. (sigh) I'm not trying to justify crime, but when you have the... I don't know. ...

Now, it's risky saying this because I sound like I'm coming to the defense of bankers. ...

They were forced to accept the bailout. The banks have paid back their bailouts with interest. The government has made a profit from the bailouts.

Capitalism's Idea of More Efficient Regulation Than the Government Kind

"Failure."

-- Rick Santelli, on The Laura Ingraham Show this morning

Senate Democrat Millionaire Tax Would Pay Less Than 10 Percent of Jobs Bill Cost

In the first year. The Democrat trick is to levy the tax over ten years to pay for a spending bill this year, and to rely on data which is suspect.

So one would have to infer from an AP story here, but you have to do the math:

About 392,000 households would get hit by the Senate Democrats' proposed 5.6 percent tax on income above $1 million, according to an analysis by the Tax Policy Center, a Washington think tank. In 2013, the first year the tax would take effect, those households would see their taxes increase by an average of $110,500, according to the analysis.

The latter figure extracted from that many households comes to just $43 billion, $404 billion short after the money has already been spent.

Socialsecurity.gov reports here, however, that fewer than 80,000 individuals had net compensation in excess of $1 million in 2009, collecting in the aggregate $184 billion. Taxing each and every dollar of that amount, not just the adjusted gross income over $1 million as the Democrats propose to do, would net just $10.3 billion.

The Tax Foundation here has a much more conservative estimate of the numbers than The Tax Policy Center. It says that for 2009 there were just 230,323 tax returns reporting adjusted gross incomes in excess of $1 million, and just 8,148 reporting $10 million or more. (Adjusted gross income captures more than just wage compensation). It calculates that the 5.6 percent millionaires' surcharge all by itself would take an extra almost $45,000 in new taxes from the median filer in this group. That also comes to $10.3 billion in new revenues annually if that median filer is typical of millionaires.

Even over ten years for a one year jobs program Obama needs to get re-elected next year, either the rest of us will be paying the $344 billion the scheme is short, or it just gets added to the deficit, crowding out other spending.

The fact of the matter is, taxing the AGI of everyone in the top half of the country with an extra 5.6 percent surcharge still would not pay for Obama's one time $447 billion jobs spending bill.

That doesn't make any sense!