The Housing Bubble

Our little town once closed down a Chinese restaurant for serving road kill.

Our little town once closed down a Chinese restaurant for serving road kill.

LOL. This was on our local news last night:

WILLIAMSBURG, Ky. (WKYT) - A Chinese restaurant forced to shut its doors after getting caught with a dead deer in the kitchen.

It happened Thursday afternoon at the Red Flower Chinese Restaurant in Williamsburg.

“We were actually joking about the, you know, the whole Chinese restaurant. You know some rumors that you hear,” says Katie Hopkins, a customer of the Red Flower restaurant.

But, Hopkins and her friends never imaged what would happen next, after finishing up a buffet lunch.

“Two of the workers came in wheeling a garbage can and they had a box sitting on top of it. And hanging out of the garbage can, they were trying to be real quick with it. So that nobody could see it. But there was like a tail, and a foot and leg. Sticking out of the garbage can and they wheeled it straight back into the kitchen,” adds Hopkins.

Hopkins immediately called the health department to describe what she saw, “Many people eat there. A lot of locals eat there on lunch breaks and stuff. It was very disturbing. There was actually a blood trail that they were mopping up behind the garbage can.”

http://www.wkyt.com/wymt/home/headlines/Restaurant-shut-down-after-roadkill-brought-inside-171805741.html

Of course the real question is: Why didn’t they use the back door? Is that where they keep the cats?

You’re welcome.

Ol’ school is the ONLY school.

Making some more now.

When you fry that stuff in February, and it lights up your house, send me some ♥.

Puss, if you don’t mind, could you post the recipe one for time for moi.

I’ll be picking what’s left of my crop today.

Three step-process (all easy but time-consuming):

Add oliive oil to a very large pot. When heated, start tossing in quartered tomatoes willy-nilly. (Yes, the oil matters for technical scientific reasons. Certain flavor molecules are not water-soluble. They will transfer to the final product via the oil.)

Just cover when the pot is full. I had four pots going.

The tomatoes will leach water and as such they will start cooking. Let them cook. This depends on your burners. When they are soft, you need to pass all of them through a food mill. You want the water and the pulp, not the skin and seeds.

Bring them back to another pot and let reduce at low heat for a long time. At this point the oil will rise to the top like white scum. You need to keep skimming this. (Yes, this is work but you can circle back every 20 minutes.)

You are both reducing them as well as caramelizing the sugars. Add salt towards the end.

Will freeze for a year.

The flavor is absurdly concentrated. Just one tablespoon when pan-fried in February makes the whole house smell of tomatoes.

Thank you.

You’re welcome.

Just follow the instructions carefully.

And ♥ me in February!

“A person is smart. People are dumb, panicky dangerous animals and you know it.” — Men in Black

“There are no fundamentals to figure out.”

+1 All one had to do was decipher “The Maestro.”

I was losing money trading based on the truth. Now I trade on second-guessing what others perceive the truth to be and it is working out pretty well for me.

“Now I trade on second-guessing what others perceive the truth to be and it is working out pretty well for me.”

I’m dabbling in Keynesian beauty contest investing myself these days. The trouble is, I am not quite an expert yet at guessing what greater fools are likely to buy.

As I recall, Fannie Mae and Freddie Mac collapsed in September 2008. (I was attending a business meeting at the time it happened — talk about a MAJOR DISTRACTION!).

Barring a similar major blowup of a financial corporation, I’m guessing Mr Market can hang on until after November 6 before reverting to where fundamentals dictate he should go.

Balancing the Books | SATURDAY, SEPTEMBER 29, 2012
Blueprint for a Housing Crash
By GENE EPSTEIN | MORE ARTICLES BY AUTHOR

Uncle Sam and cousins Fannie Mae and Freddie Mac deserve most of the blame for the mortgage mess and the financial bust. Also, a fresh look at entrepreneurs, revamping security and blowing the whistle on electronic pick-pockets.

In his 2012 State of the Union Address, President Obama declared that the financial crisis of 2008, triggered by the collapse of the subprime mortgage market, was caused by “banks [that] had made huge bets…with other people’s money,” abuses that were allowed because “regulators had looked the other way, or didn’t have the authority to stop the bad behavior.”

The president’s version of what happened reflects conventional myths: The private sector initiated the bad behavior, and government culpability was limited to the sin of omission, not of commission. Now along comes the work of another official who has held elected office—from across the pond, in this case—to explode those myths for anyone who cares to listen.

Author Oonagh McDonald served for 11 years as a member of the U.K. Parliament from the Labour Party, and for four years as the Opposition Spokesman for Labour on Treasury and Economic Affairs. With those credentials, she can hardly be dismissed as an antigovernment ideologue. She is also a rare combination, at least for the U.S., of politician and academician, having held professorships and written previous books on business and finance. In this thoroughly researched, practically definitive tome, her story of the American dream turned nightmare could hardly be more different from Obama’s version.

A “large slice of the blame,” she writes, must go to Fannie Mae and Freddie Mac, the government-sponsored enterprises in the book’s title. “But above all,” McDonald declares, “it was the distortion of the banking sector to achieve political ends that ultimately caused the crisis.”

She elaborates: “Politicians, with their unthinking political stances, must…take the lion’s share of the responsibility. The vast subprime market…was the child of the affordable-housing ideology.”

As the book recounts, the politics and ideology were clearly articulated, and aggressively implemented, by Obama’s two predecessors. When President Clinton announced his National Homeownership Strategy in June 1995, he spoke of the need to “make it easy for people to own their own homes.” And, when President Bush introduced his American Dream Down Payment Initiative in 2002, he deplored the “home-ownership gap” and spoke of “dismantling the barriers that prevent minorities from owning a piece of the American dream.”

In 1996, the Department of Housing and Urban Development began setting annual goals for the proportion of mortgages of low- and moderate-income families that Fannie Mae and Freddie Mac were required to buy. The goal was increased each year, rising from 40% in 1996 to 57% by 2008. While Fannie and Freddie were the “dominant players in the market,” other government agencies, including the Federal Housing Administration, participated in the unfolding tragedy. Over a 16-year period, the U.S. government promoted subprime and other nontraditional mortgages, degraded mortgage-underwriting standards, and caused both the mortgage meltdown and the global financial crisis that resulted from it.

McDonald takes on the major issues without flinching. For example, there is the commonly held view that Fannie and Freddie followed Wall Street’s lead into subprime lending for competitive reasons. The author calls this “simply not true,” citing evidence that both became major participants early, in response to ever-increasing affordable-housing goals set by HUD.
…
Fannie Mae and Freddie Mac: Turning the American Dream into a Nightmare
by Oonagh McDonald
Bloomsbury Academic
475 pages, $85

I am sure this expires on Nov 7th.

Obama administration tells contractors again: Don’t issue layoff notices

http://thehill.com/blogs/defcon-hill/industry/259305-omb-tells-contractors-once-again-dont-issue-layoff-notices

“Obama administration tells contractors again: Don’t issue layoff notices”

Weird, It’s not like a progressive to cheat in an attempt to win an election.

How could I possibly have excluded Realtors™ from my taxonomy of liars?

I’m having a bad day…

Who’s your candidate? The communist is polling well below 1%.

Who’s your candidate? The communist is polling well below 1%.

When you get pissed it shows I’ve been convincing and logical. I was good today I take it. Thank you.

it sounds as though she was trying to kill him.

Considering he was in plain clothes, she may have thought he was a criminal attempting to carjack or otherwise attack her. As such, she may have just been trying to get away from him, not run him over.

“As such, she may have just been trying to get away from him, not run him over.”

Are you suggesting her car couldn’t outrun the peace officer? Did he run her down as she raced away from him, and jump on the hood of her car?

This sounds quite incredible!!!

Did he run her down as she raced away from him, and jump on the hood of her car?

Seems more likely than she ran her car right at the guy and he was able to jump on the hood and hang on. The physics of that don’t make sense. How did he keep from going right through or over the windshield if she was going straight at him?

“Seems more likely than she ran her car right at the guy and he was able to jump on the hood and hang on. The physics of that don’t make sense.”

If she tried to drive off, how would he not have fallen off?

Physics, smysics…

Though my lovely wife and your significant other share similar tastes in reading, I must confess to enjoying all of the above, with a slight leaning towards economic cataclysms.

Prices ok. I am new to the Cape but you get a nice house in Centerville (Barnstable County) next door to Hyannis for well under $400K. And within a mile of the beach.

I am new to the Cape but you get a nice house in Centerville (Barnstable County) next door to Hyannis for well under $400K

Prices are still out of whack. There are no jobs on the cape which means either you buy a vacation home and use it in the summer/rent it out when not being used or you commute to Boston where the jobs are.

$350K for a home on the cape doesn’t pencil as an investment and your commute to Boston up 495 or 3 is easily 2 1/2 hours…
Still a ways to go.

But the basic flaw in your argument is that it’s always been thus.

You’re just figuring it out? Sucks to be you, no?

LOLsies.

The epistemological thrust would be that you are just figuring out stuff that any WASP on the East Coast knew in his WASPY bones before Edith Wharton was even born.

It’s always been so. What’s new now?

But the basic flaw in your argument is that it’s always been thus.

The basic flaw in your argument is that you are wrong. It has not “always” been thus.

Wealth inequality has not “always” been thus.

Income inequality has not “always” been thus.

Lack of private sector pensions has not “always” been thus.

House prices have not “always” been thus.

Cost of living has not “always” been thus.

Union busting has not “always” been thus.

Wage levels have not “always” been thus.

Health-care costs have not “always” been thus.

Threats to SocSec and Medicare have not “always” been thus.

Corporate power has not “always” been thus. (I can go on)

Sucks to be you, wrong and ignorant of the history and economics of your own country no? LOLsies.

It actually has.

Except for a brief period around WW2 where the American middle class gained ground only because the manufacturing capacity on America survived whilst that of the rest of the industrial world was destroyed completely, it has always been thus.

We are reverting back to equilibrium.

The “solution” has always been to throw enough bread and circuses in front of the masses, and put bullets in the heads of those that suggest otherwise.

Don’t you live in Latin America? Isn’t this almost a maxim out there?

Sounds to me like you’re rising above your station. Don’t be too surprised when you get shoved back into the hole.

We are reverting back to equilibrium. Except for a brief period around WW2….

“Brief period around WW2″ Hogwash. We are going backwards when judged by America’s historical trend of increasing opportunity for each generation. This is fact.

We are not “reverting back to equilibrium”. Historically there is “no equilibrium” in a nation, where for over 200 years, the next generation could expect to do as well or better than the previous generation. That’s why people CAME TO AMERICA. That is our history, our reality and our tradition of which you seem to know very little of.

You haven’t a clue, do you?

You figured out some small tarriff-arbitrage or tax-arbitragage and bought yourself a house, and you think you know how the rich work?

The rich Brazilians aren’t in São Paulo, sweetcakes.

They are busy corrupting governments in Maputo or some other former Portuguese colony. That’s how the game works. They are not interested in the tiniest sliver of a sliver of a shard of the pie. They are way too busy stealing the entire GDP.

You’re a wastrel. An ol’-fashioned term that’s entire appropriate here.

Clueless. Blowhard. Anti-intellectual wastrel.

Anti-intellectual wastrel.

You just insulted yourself. You just said that an “anti-intellectual” just blew your (USA) “reverting back to equilibrium” “argument” out of the water. Yep. A “Clueless. Blowhard” just blew your stupid argument out of the water by simply stating the fact:

Historically there is “no equilibrium” in a nation, where for over 200 years, the next generation could expect to do as well or better than the previous generation.

I refuted your nonsense so well that you’re now reduced to ignorantly babbling about the rich and Brazil, wrongly speculating on my income and childishly calling names.

Damn, I’m good! LOLsies.

Except for a brief period around WW2 where the American middle class gained ground only because the manufacturing capacity on America survived

Had we not had FDR’s New Deal programs, and been following Keynesian economics, the post-WW2 period would have been a golden period for the 1%, as opposed to a golden period for the middle class.

We would have been much like the Russia of today. A golden period for oligarchs, with the middle class being thrown a very few bones.

In all seriousness, that was an awesomely humorous comment…

OK I’m slow - you were being cynical. Sorry!

Lip - do you know how much taxes rates would need to go up on “the rich” in order to balance the budget

Making “balancing the budget” the only justification for letting the BushTaxCutsForTheRich expire is a straw-man.

The fact is, the BushTaxCutsForTheRich contributed 25% of our deficit since passed. 25% is HUGE. Let them expire and our deficit is 25% solved. There is no other single factor as easily effective.

Budget Insanity

By John Stossel - July 11, 2012

Last year, Congress agreed to $1.2 trillion in automatic spending cuts, unless politicians find other things to cut. They didn’t, of course. So now, with so-called sequestration looming in January, panic has set in. Even the new “fiscally responsible” Republicans vote against cutting Energy Department handouts to companies like Solyndra and subsidies to sugar producers. Many claim that any cut in military spending will weaken America and increase unemployment.

It’s another demonstration of the politicians’ addiction to spending — and how we are complicit. “One more infrastructure bill” or “this jobs plan” will jumpstart the economy, and then we’ll kick our spending addiction once and for all.

But we don’t stop.

For most of American history, government was tiny. But since Lyndon Johnson’s Great Society and the promise that government would cure poverty, spending has gone up nonstop. This is not sustainable.

Progressives say: If you’re so worried about the deficit, raise taxes! But it’s a fantasy to imagine that taxing the rich will solve our deficit problem. If the IRS grabbed 100 percent of income over $1 million, the take would be just $616 billion. That’s only a third of this year’s deficit.

It’s the spending, stupid.

http://www.realclearpolitics.com/articles/2012/07/11/budget_insanity_114758.html - 38k -

Taxing the Wealthy to Balance the Budget Will Not Work

Some argue for taxing the wealthy to reduce federal deficits. However, hiking taxes on taxpayers in the two highest brackets would increase their tax rates to mathematically impossible levels. To close the 2035 deficit, the top two tax rates would increase to 159 percent and 166 percent, and in 2050 they would reach 236 percent and 246 percent.

CURRENT TAX RATES AND TAX RATES NECESSARY TO CLOSE DEFICIT

Chart

Sources: Internal Revenue Service and Congressional Budget Office

http://www.heritage.org/federalbudget/tax-wealthy-deficits - 32k -

But it’s a fantasy to imagine that taxing the rich will solve our deficit problem.

Straw man 101.

Not “solving” the problem does not mean it won’t help solve the problem - thus the straw-man

Rio, I was responding to the assertion made above that by simply raising the tax on the rich the U.S. could balance the budget. I was not making a point about extending the Bush tax cuts on the rich.

According to the CBO and Pew Charitable Trust *all* of the Bush tax cuts (for rich and poor alike) cost the U.S. Treasury about 330 billion per year including accrued interest (about $270 billion + interest over time). If you look at just the Bush tax cuts for those households making over $200K per year they claim that costs the treasury about $100 billion per year (including carried interest). The budget deficit has been as high at $1,700 billion and is trending down currently to 1,200 billion (we hope) this year. So we can conclude:

1) Extending the tax cuts on the rich will eliminate $100 billion of the 1,200 billion definite per year - about 8%.

That’s if you consider “the rich” those making over $200K. I don’t. I think we need a lot more people making over $200K and that comes via other means. We have a lot of people making over $200K for a few prime years in their life - usually in their late 50’s. And they need to if they are expected to fund their own expenses later in life without even more government help.

2) In order for the taxing the rich to balance the budget than you need to move the top two marginal brackets up. How much? Was my question. Here is how much. The 35% bracket needs to go up to 75% and the 28% bracket needs to go up to 45%. And note that there are a lot of people in the 28% bracket making quite a bit less than $200K. Add to that state tax which in California can be 10.5% and I’m looking at paying 75% Federal + 10.5% state + 3.8% Obamacare tax = 89.3% of my income in income taxes. That nets me (the rich person that I am) 10.7% to take home.

Now that’s based on static accounting. What do you think people like me will do if they are faced with taking home 10.7% of their own income? Drop out. And when we get there that is exactly what I intend to do. So in actual fact even raising the top rate to 75% won’t begin to balance the budget because the revenue won’t be generated by the rich. They’ll just buy a country farm home, a pony and ride it out like my great granddaddy did during the depression.

So you see taxing the “rich” doesn’t even come close to solving the problem.

I’m not saying that we shouldn’t tax the rich a it more or that we shouldn’t let the bush tax cuts expire. I’m just saying is it utter hyperbole to claim that we just need to eat the rich and the problem is solved.

Now that’s based on static accounting. What do you think people like me will do if they are faced with taking home 10.7% of their own income? Drop out.

“Going Galt”, the rich taxed 90%, and letting the BushTaxCutsForTheRich expire “won’t reduce our deficit 100%” are all straw men arguments. They are deflections and hide-the-pea IMO.

Because: No one is talking about 90% tax rates on entire incomes. Threatening “Going Galt” on something that won’t happen is meaningless and letting the BushTaxCuts expire would help lower the deficit by a substantial amount. That is won’t reduce it 100% does not negate the fact that it would help a lot.

That is it (letting the Bush tax cuts expire) won’t reduce it (the deficit) 100% does not negate the fact that it would help a lot.

Rio, you are the one making the straw-man argument against me. I wasn’t even referring to the expiring Bush tax cuts. So I can’t possibly be using straw-man arguments to avoid an honest, logical debate. You keep making a straw-man argument to my point by changing the argument to the Bush tax cuts.

I am defending the very solid thesis that it is incorrect that all we need to do is tax and rich and our debt issue is solved and everyone can have a free pony! That’s my thesis. And I think I need to make this simple point separate from any other argument because *A LOT* of people believe there is enough income (and some to spare) to immediately end the deficit and debt issues. And they really do think that a small tax rate hike on the income of the rich would close the deficit and pay down the debt. They really do believe this. And we need to at least start the debate by being informed of the facts. And that fact is so totally wrong that you can’t even begin to look at a solution until both sides of the argument know their numbers. I hear this all the time about California’s finances and I lay out the actual numbers for people that believe this and they are actually stunned because they have been led to believe it must be the case and it’s not! So let the argument stand that simply taxing the rich a bit more is not going to make the deficit go away and get the debt paid and allow for lots more freebees. It is not. People need to be clear on that point.

Rio, if you want to talk about the expiring bush tax rates as a *separate* argument then do that.

If you are going to close the U.S. Budget deficit and slowly pay down the debt it is going to take everything we got for a very long, long time. And yes that means higher taxes for everyone making more than the median income. You need to raise taxes on the middle class, the upper middle class and the rich. And that won’t even come close. Expiring the Bush tax cuts on those in the top two brackets would close 8% of the deficit. Expiring all the cuts you could get to about 25% but that would mean taxing the poor again. We haven’t done that for a long time. You could leave them out and maybe get 20%.

So where is the other 80% going to come from? So to me the question isn’t so much if the Bush tax cuts should expire. They need to expire and that’s just the down payment! Maybe you could raise them even a bit higher but once you get over 50% of income going to Federal + State taxes I think you’ll hit a hard drop-out limit. So it’s self defeating. We need to get close to 80% from someplace else. That someplace else is in productivity, growth and budget cuts.

We’re looking at a major change in the status quo.

And the “Going Galt” theme (Yes, I read the book last year - damn that was a long monotonous book) that’s a whole third issue. Yes, people do go Galt. I don’t know how old you are but I have heard two detailed first hand accounts of the great depression. My dad told me all about growing up in the Great Depression and my Grand Mother told me all about it too. My family went Galt. People may not like to hear the truth. But when the system becomes unworkable for them they check out of the system and either create their own system or find another system. A lot of the rich went to the farm and lived quite fine during the Great Depression. So I’ll make the point that people can and will walk.

I’ll also make the point that to claim that no one is talking about 70% Federal tax rates - that is just not the case. There are many people I speak with in California who actually believe that is just the ticket. And look at France - they’ve already done it. And it’s happened in the past in the U.S. The longer we live with a fantasy about how much we need in tax revenue and how much spending we need to cut and how much more growth and productivity we need the greater the risk we have of going to the 70% tax route. And that won’t end well. Everyone needs to get real about the numbers.

We’re looking at a major change in the status quo.

And a big part of that change needs to be higher taxes on the rich. That this alone won’t solve the problem 100% is irrelevant to the fact that it will help solve the problem. Continually stressing that “it won’t solve the problem” discounts and even ignores its ability to help solve the problem.

Looking where to balance the budget:
That someplace else is in productivity, growth and budget cuts.

Productivity:
Most of the money from gains in productivity the past 40 years have gone to the very rich. If they are not paying squat in taxes, the gains in productivity will not translate into much more tax revenue relative to the gains in productivity.

Growth:
The point above on productivity applies to growth as well.

Budget Cuts:
For starters, I suggest halve the military/prison/police state and means test Soc Sec.

And I’ll take you on about one final point you made. Basically you said that as long as the system is rigged so only the top 10% can make money the only solution is to hand out freebees. The only solution is freebees? Really? Until when? The freebees run out? Why buy time then? Why bother to do anything? Why build up anything, wealth, business family? Just speculate and collect feebees - that’s the ticket.

Isn’t they why we have a housing bubble forum? Our Central Planners decided to make everyone rich by creating a housing bubble? They tried to get berry pickers to buy $500K houses in Salinas? Get rich quick with no money down loans? The system designed by central planners to make everyone rich is why everyone is now poor. In short - create credit and inflate, inflate and inflate! It works until it blows up.

To me the solutions are much more down to earth. A currency with a stable value so people have the incentive to save and build wealth. Let them earn a dollar now and know it will still be worth a dollar when they retire. The only way you get there is stop the deficit spending.

As soon as you end the credit bubble you also stop all the asset speculation. You stop HFT and the rest. You beak up monopolies and you stop patent abuse so the little guy can compete.

Then people have the incentive to go to college and *not* study FIRE oriented subjects and instead go for STEM fields and actually get back into real arts and sports too. Things that add value to life.

Then generate small businesses among a greater percentage of the population. It doesn’t have to be that many more actually to make the whole system grow much faster.

These are just rambling thoughts.

Running the system as a meal ticket via Ponzi credit inflation is not the solution.

“And a big part of that change needs to be higher taxes on the rich.”

If by a “big part” you mean less than 1/10th of the solution then it is a big part. I say less than 1/10th because as per the numbers I cite above it would be 8%. One that we can agree. 8% is good.

“Continually stressing that “it won’t solve the problem” discounts and even ignores its ability to help solve the problem.”

And continually stressing that we need to tax the rich and we’ll all be saved also ignores the other 92% of the deficit issue. So which emphasis is more misleading.

Again I agree that the rich (me - gulp) should pitch in the 8% more. I am just saying what you are basically - don’t make it misleading either way. 8% is 8% full stop.

“Productivity: Most of the money from gains in productivity the past 40 years have gone to the very rich. If they are not paying squat in taxes, the gains in productivity will not translate into much more tax revenue relative to the gains in productivity.”
“Growth: The point above on productivity applies to growth as well.”

If you mean “productivity” based on serial credit bubbles, freebees, housing bubbles, “financial innovation,” high frequency trading, stock bubbles and dollar debasement from all of the above deficit spending induced credit bubble miracles then yes.

Central planning a redistribution doesn’t work.

A stable dollar that’s worth the same when you retire means people can generate the types of productivity in family, small business, health, arts, sciences to generate plenty of real growth. It doesn’t take much to change the coarse of people’s lives.

Kill off the financial parasites, break up monopolies, limit patents and let the small guy complete. Instead of people pursuing the FIRE economy and bubble lottery tickets they’ll pursue investments in their real futures. Plenty of wealth can be created by the households themselves and not the oligarchy.

And continually stressing that we need to tax the rich and we’ll all be saved also ignores the other 92% of the deficit issue. So which emphasis is more misleading.

Stressing that “it won’t solve the problem” is more misleading because I still believe stressing that “it won’t solve the problem” is a straw-man tactic used by the right to convince people not to raise their already low taxes by any amount.

Again I agree that the rich (me - gulp) should pitch in the 8% more.

It can be argued that the 8% figure just seems to be a percentage based on an arbitrary level of what “rich” is. I propose we lower the arbitrary level of what rich is and raise the top marginal rate even further to get to an arbitrary level of 15%.

1. Kill off the financial parasites, break up monopolies, limit patents and let the small guy complete. Instead of people pursuing the FIRE economy and bubble lottery tickets they’ll pursue investments in their real futures. Plenty of wealth can be created by the households themselves and not the oligarchy

(but then)

2. ….redistribution doesn’t work.

I agree with #1. but #1. requires and is a form of redistribution which you say does not work in your point #2.

“It can be argued that the 8% figure just seems to be a percentage based on an arbitrary level of what “rich” is. I propose we lower the arbitrary level of what rich is and raise the top marginal rate even further to get to an arbitrary level of 15%”

In other words tax the middle class more too. I agree - that’s where the money is. Middle class if we define it as $32K - $72K - we’d have to also cut the bush tax breaks for the upper end of that range to get to 15% I believe.

The days of low taxes is unfortunately over. I hope everyone enjoyed it while it lasted, especially for “the rich” and the upper middle classes. We already spent it - it’s long gone. Our window of time to keep taxes lower ended quite some time ago. We could have gone that route and stayed on it. But that milk was spilled. It’ll be another 30 years probably before we get the chance again. That’s if we deal with the other 85% of the issue here.

I don’t understand this:

“I agree with #1. but #1. requires and is a form of redistribution which you say does not work in your point #2.”

I said:

“Kill off the financial parasites, break up monopolies, limit patents and let the small guy complete. Instead of people pursuing the FIRE economy and bubble lottery tickets they’ll pursue investments in their real futures. Plenty of wealth can be created by the households themselves and not the oligarchy”

I can think of two hundred reforms (as I am sure you can) right now off the top of my head to meet all these goals without even starting into wealth redistribution. In fact I have seem many of them posted on this forum by other people here.

If these things are done people will aim and invest in the right direction. When you were a kid didn’t you think - man I want to be an astronaut, etc? I did. My dad grew up and he wanted to be a pilot and he became a pilot. People naturally want to take on challenges, to invest in the future to do things in the real economy. Only when the credit bubble ponzi scheme became clear to everyone did kids veer off coarse in the U.S. and end up in FIRE (finance, insurance and real estate). That was logical. They had no choice. People trying to do real thing were getting left behind. Look at the statistics - all our future scientists ended up on wall street adding no value.

“Kill off the financial parasites, break up monopolies, limit patents and let the small guy complete. Instead of people pursuing the FIRE economy and bubble lottery tickets they’ll pursue investments in their real futures. Plenty of wealth can be created by the households themselves and not the oligarchy.”

You guys are getting close to the real problem. The central planners at the Fed seem to have convinced themselves that their currency manipulation exercises not only are necessary to make the U.S. economy hum, but also can move the sun, the moon and the stars.

We need a new, enlightened generation of bankers who realize the best financiers can do is to support economic activity. Unfortunately, the current generation of bankers seems stuck in the habits of financial deception, easy money lending, moral hazard creation and bailouts that led to the 2008 collapse.

you said that as long as the system is rigged so only the top 10% can make money the only solution is to hand out freebees. The only solution is freebees? Really? Until when? The freebees run out? Why buy time then?

Freebees are not a solution but a symptom of an economy warped to benefit the rich. Wealth and opportunity have been redistributed from the middle-class to the rich the past 40 years. To eliminate the “freebees”, wealth and opportunities will need to be redistributed from the rich and back to the middle-class.

Killing off the financial parasites, breaking up monopolies, limiting patents and letting the small guy complete as you prescribe (and I agree with) WILL redistribute wealth. That you think you can do the above “without redistributing wealth” does not mean that doing those things will not redistribute wealth. The final result of those are a (positive for the economy) form of wealth redistribution.

Therefore I think your concept that “redistributing wealth does not work” is erroneous because doing the above WILL redistribute wealth and will “work” well for the economy and the middle-class IMO.

“When you were a kid didn’t you think - man I want to be an astronaut, etc? I did.”

Yep. I wanted to be one of those government (NASA) workers who, through serendipity, built the foundation for the Information Age in which we live.

Good debate here today Rio!

A bunch of my comments never got posted. Probably because we are getting too off topic and we probably don’t need to flame up these issues too much in the month before the election. But I enjoyed it!

I’ll tell you what. I’ll make you a deal. I’ll make sure to stress the your point that the Bush tax cuts do need to expire (sorry to those of you who feel overtaxed now - get ready for more tax pain) if you make sure to stress my point that taxing the rich can only solve 8% of the issue (while taxing the rich and middle class can get us between 15 - 20% there depending on the cut-off).

Let both of us debunk the extreme views offered by the politically motivated right and left as well as black and white views posted by those that don’t know any better. There is no one single painless answer. It’s going to take going all in from all angles for a prolonged period of time.

I’m out of here and heading to the running trail.

C Ya!

Rio, your reply to the redistribution definition posted after I sent my last reply. I’ve gotta run but I’d love to take that up another time. But I would point out that under studied function theta, as in the time function. And I would add the concept of a zero sum game. Maybe we could explore distribution -versus- the changing size of the total pie -versus- time.

Gotta run! Thanks again!

Gotta run! Thanks again!

You’re welcome. Thank you too.

This article, below, is an analysis of taxes today as compared to 50 years ago which seems to be pretty objective. The take away is basically that we, as a society, demand more services but don’t want to pay for them.

http://teachinghistory.org/history-content/ask-a-historian/24489

Damn those facts. Government employment has shrunk and private sector employment has grown on Obama’s tenure.

Obama’s record on job creation: How good or bad?

The question of jobs is central to Election 2012. Mitt Romney claims President Obama has been a failure, while Obama says he’s presided over steady growth. Decoder sweeps aside the spin.

By Mark Trumbull, Staff writer / September 15, 2012
…
Some of the important facts:

Obama is correct when he says that in the past 30 months, private-sector employers have created about 4.6 million net jobs, according to tallies by the Bureau of Labor Statistics. Since the public sector has been cutting jobs during that time, the nation as a whole has added about 4 million jobs, which works out to about 135,000 per month. The most recent months have been a bit below that average.
…

The More Important “facts”:
President Obama touted that “business once again added jobs for the 30th month in a row,” while Republican Mitt Romney said the 95,000 people who found jobs in August were outnumbered by nearly 400,000 people who dropped out of the labor force, apparently in discouragement.

400,000 people being dropped off the labor pool sure makes Unemployment look a LOT LESS than the 8.2% figure bandied about.
By the way, just for the really stupid, it takes a about 250,000 jobs a month to keep up with population growth and attrition.
when you don’t get the number you are going BACKWARD, not Forward.
I understand Obama is an EEOC appointee and really doesn’t understand arithmetic, although he claims to.

They could conficate all of the top 1%’s wealth and it would hardly put a dent in the total debt.

Let’s look at that.

By the fourth quarter of 2010, the [US]household net worth had recovered by a growth of 1.3 percent to a total of $56.8 trillion.

However, after the Great Recession which started in 2007, the share of total wealth owned by the top 1% of the population grew from 34.6% to 37.1%

As of September 2012, debt held by the public was approximately $11.27 trillion or about 72% of GDP; intra-governmental holdings stood at $4.74 trillion, giving a combined total public debt of $16.02 trillion
wikipedia

So, US household net worth is about $57 trillion. The 1% own 37% of that total. 37% of $57 trillion is about $21 trillion.

The national debt is about $16 trillion.

Conclusion: Confiscating the wealth of the 1% would pay off the entire national debt, and we’d have about $5 trillion left over. Not too shabby.

But the assertion came with its own a weasel word- ‘total’. Total US debt is about $ 58 trillion. So, if we confiscated the 1%’s wealth, we could ‘only’ pay off about 40% of every debt in America, public and private. That’s still quite a dent!

“The radio host asked him about his account in MFGlobal and he said something like 80% has been recovered so far.”

He must have cut a deal. You cannot blame him. When it first happened, most of his interviews were attacks on Corzine and MF.

How ironoic the name of Corzine’s co…MF.