Tuesday, April 14, 2009

SAR #9104

Honor is something you lose but once.

Precisely: The administration is spreading the word that GM may need "surgical" bankruptcy - a quick restructuring so its image and (more importantly) its sales are not permanently erased. I'm dubious; I remember "surgical" air strikes...

Sheep: In early 2008 mutual funds in the aggregate had a worth of $6.5 trillion. Today they have fallen to $3.4 trillion, but only 2% of that decline was from net redemptions. That suggests that Mr./Mrs. Public are still sitting there, frozen in the headlights.

Another View: TrimTabs, which tracks daily income tax withholding data, says the US lost over 700,000 jobs in March, while incomes dropped 4.5% y/y. The US savings rate was about 0.9%, not the 4.2% reported by the government's BEA.

Robotic Bull: Israel is doubling its force of drone D9 armored bulldozers. During the recent leveling of the Gaza strip, the "Black Thunder" bulldozers proved exceptionally useful in clearing roads of mines and towns of houses.

Plan A & Plan B: Washington's hopes and dreams rest on two sets of cavalry riding over the hill, just in the nick of time: China - to buy up all the trillions and trillions of debt the Treasury has to peddle without paying any interest, and the US Consumer - to buy up everything else, on credit. Put your ear to the ground and tell me what you hear.

Debt Star: The IMF now sees global toxic debt losses exceeding $4 trillion by 4Q2010, nearly $3 trillion of that US-originated derivatives. This is an increase of over $1 trillion in expected losses since their January 2009 report.

Mortgage, What Mortgage? New reports claim 1/3rd of all mortgage-backed securities may not be connected to a physical mortgage. Sure, they're producing cash flow now. They're connected to a household, some household . But in foreclosure, the corpus is the the actual document. Accept no substitute.

True, True: "Three of the least respected, least admired figures in contemporary American politics are Rush Limbaugh, Dick Cheney, and Karl Rove." But competition's picking up.

Piece of Cake: Obama wants to reinstate the inheritance tax at 45% on estates of more than $3.5 million, $7 million for a couple. The Republicans - and 10 deluded Democrats - want it raised to $10 million and 35%. I say split the difference. Set the cap at $10 million and take 90% of everything over that.

Doing the Ray-Ray: General Raymond Odierno, who yesterday said the US would have to stay in Iraq until the Iraqis like the US better, today said the decision on withdrawing US troops from Iraq's cities by the June 30th deadline would be made by Prime Minister al-Maliki, with US military advice. Ever meet an insurance agent who thought you were over-insured?

Beginning/Ends & Vice Versa: Kudlow and Laffer know we're past the bottom and on the way to Happyland, fueled by cheap money! Except cheap money is how we got here. Banks are profitable! Yeah, sitting on a half-trillion of taxpayer dollars they should be doing well. But don't start the dance when much of the economy's productive capacity is idle, consumers are afraid for their jobs, and unemployment is still rising.

Ratigan Reports: Dylan Ratigan, formerly of CNBC, explained his departure by saying that the story he was following was not just a financial one, but a story of "systemic policy failures that have rendered a catastrophe the likes of which we've really never seen... This is a story of this country, and this country's system of making laws..." And we wish him godspeed in telling the story.


Anonymous said...

RE: Piece of Cake:

"and take 90% of everything over that."

A very dangerous mind set CK. Be careful, you never know when the masses might decide you're too well off.


Charles Kingsley Michaelson, III said...

RBM - Let's choose up sides. You get everyone who has net assets of over $10 million and I get the other 95% of the US population - who've lost most of what little they had in assets as their house price dissolved.

Anonymous said...


My point exactly! With that thinking, sooner or later someone will set their eyes on what you have. There is always someone with less.

The communist Commissar went to a farm to explain communism to the peasant.

The commissar said, "Some people have 2 cows so we're going to take one and give it to someone that doesn't have any."

The peasant nodded and said, "That is very good."

The Commissar then said that "some people have 2 chickens so we're going to take one and give it to someone that doesn't have one"

The peasant looked at the commisar and said "Oh, that's not a very good idea."

The Commisar asked "Why?"

The peasant responded, "I have 2 chickens!"


Anonymous said...

Amen RBM.

The mantra of "tax the rich more" is supported largely by people who view the "rich" as being someone other than themselves.

I don't quite understand where people get the idea that we as a country have the right to decide who is "wealthy."

I believe the constitution actually forbid singling out certain groups for special taxation. I think classifying a group by wealth qualifies. Of course the government stopped adhering to that old rag a long time ago.

Check out this latest piece from the OECD which shows the US is is already one of the most progressive taxed countries.


Even before the rise in top marginal rates promised by Mr Obama, the US income tax collects 45 percent of its revenues from the highest-income decile. Compare that with Britain at 39 per cent, Canada at 36 per cent, France at 28 per cent, Sweden at 27 per cent and an OECD average of 32 per cent."

Here is a Financial Times article which cover it.


I would say the wealthy pay a great deal more than their "fair share."

Anonymous said...

I would love to see a flat tax system where the first $30k earned is tax free (this is to protect the lowest wage earners)and every dollar over that initial $30k is taxed at a flat rate (like 10-20%) with no deductions being allowed. Example if flat tax rate was 10% and someone makes $40k a year the first $30k would be tax free and they would only owe the 10% tax on the additional $10k ($1,000 tax payment). Someone making $1 million a year would be treated exactly the same with the first $30k tax free but would still owe the 10% tax on the other $970,000 which would come to a tax bill due of $97,000 (see even in my plan the rich pay much more real dollars).

My idea, at least to me, seems very equitable. No one group is singled out and punished. No more arbitrary decisions by politicians on who is wealthy enough to be strapped with higher tax rates.

Death taxes in my mind are just obscene abuse of the populace by the government and an ridiculous example of jealous class warfare

Jeff65 said...

You people are lunatics. Of course taxes should be highly progressive. Most of the laws on the books exist solely for the protection of private property. The natural order of things (i.e. no government) could never allow such high levels of wealth concentration to accumulate. The wealthy benefit from government far more than the few bones thrown to the less fortunate in the form of social programs.

Anonymous said...


Of course many laws exist to protect private property. That is the basis for the entire western culture since the renaissance. It has produced prodigious gains in living standards for most westerners and surely you can't be serious that the natural order of things is no government. Please enlighten us to where such a society ever existed. Seriously, every organized society forms a social compact that allows for leaders vs. followers (including apes in the animal kingdom). In many societies and cultures the "few bones"you speak of would be most welcome.

I just think it's dangerous when people start deciding how much is too much.


Jeff65 said...


You confuse social order with government. Governments as they exist today arose to protect accumulators of private property. Nearly all of the social compacts you refer to did not recognize private ownership of common property like land, water, game and other natural resources.

How can anyone take arguments seriously that do not recognize the fact that governments enable the accumulation of wealth. This is a benefit that is larger than social programs by several orders of magnitude. If I am getting most of the benefit of government, why should I not pay the most for it's continued function?

I am not suggesting a punitive or redistributive taxation system, but instead a fair one where those who benefit the most pay the most. Personally, I'd do away with income and corporate taxes entirely, but the replacement would be even more reviled by the wealthy - a stiff tax on economic rents.

Anonymous said...


Economic rent takes the value of capital out of the equation, does it not? Or does the farm worker have to supply their own tractor?

Charles Kingsley Michaelson, III said...

Okay, class. Enough. I am disappointed that not one of you made the simple observation that the justness of a tax system should be judged by outcomes.

Most also quickly ran off-topic to income taxation; the subject was whether great wealth to be passed on, creating an immense gap between the rulers and the ruled.

But enough. Move on. We all disagree, even with ourselves.