I went into this in one of the TV related threads but it probably deserves a brief mention here too.

The latest forecast for advertising spending in the U.S. looks for 2009 to drop to the lowest ratio of advertising to GDP since 1946, in other words the tightest environment in the lifetimes of virtually everyone connected to the business.

Good luck, man. "Worst in my lifetime" isn't good for anyone trying to make a dollar in a business.

Thanks, although to be honest I'm pretty much resigned to our fate at this point & am just faking my way through every day until that becomes impossible.
It borders on a miracle that a shop the size of ours has lasted this long when most of the others like us have already folded and by the time it's all said & done I suspect most of the mid-size shops that are still around will be lucky to be even a quarter of their current size.

It is what it is though, y'know?

http://biz.yahoo.com/ap/090218/obama...eclosures.html

So? Thoughts on the housing measure today? Keeping in mind, I'm no expert on housing so feel free to correct me if you see something incorrect.

I'm pretty happy with it, but I think it only affects a small number of people.

The first part basically is for people with Fannie and Freddie. Everyone across the board gets an interest rate reduction. I'm ok with this since it's across the board- it's not just people who are behind or anything like that- anyone can refinance if they want and there's liquidity with those companies to do so.

The second part will be interesting to implement. I'm not sure if this really incentivizes the banks to do anything as $1K is chump change to them, even in large quantities. However, I'm also not sure what Obama meant when he talked about banks who took TARP money were going to be held to do this. Hell, I'm not sure he knows.

I kept hearing "real estate experts" hating the plan. Except it seemed like all of them to a man (or woman) were pissed because it didn't involve large amounts of cash going directly to homeowners and ultimately their industry and pockets. Or because it didn't allow prices to be marked down to "market value" with taxpayers essentially footing the difference- again, putting money in their pocket at someone else's expense. In short, all the real estate experts were people in real estate who had a real vested interest on how this went and was perceived.

In the end, I think this helps somewhat but there is still the problem out there of the people who are badly underwater, particularly in those insane markets (Cali, AZ, Fla, the east coast, etc). I don't know what the answer is for them. It's definitely not fair to mark their houses down to "market value" since it penalizes people who did things the right way. Nor is it fair to basically subsidize those loans and pour all of that money back into banks who took silly risks. However, until we address those problems- and I'm not sure what "address those problems" means, particularly in a fair way to homeowners and banks who didn't screw themselves over, do we find a floor in the housing market and ultimately the economy.

SI

yes. its a good plan and it doesnt cost any more money than that which has already been earmarked for spending. Moral hazard issues aside this will help people stay int heir homes while not bailing out those who speculated. This is good for the country in the long run.

I really like the 6 questions that were asked and look forward to the answers to those. If the answers are satisfactory, then it would be ok but so far, all we are getting is "the funding would not reward unscrupulous or irresponsible speculators". Everyone should be sceptical and hold the federal govt accountable but too many are simply willing to go along with it without raising valid questions.

Beer Sales Suffering in Recession

I'm doing my part to keep the industry afloat guys, but I am only one man. We all need to do our part here.

I have begun to pay for pRon

Isn't that kind of like giving the Sultan of Brunei a stimulus package (no pun intended) though? I mean, if there's any industry that probably doesn't need an additional economic injection (pun intended) it's pRon.

:D

Homer: "But what can I do. I'm just... (thinks about it)... one man"

SI

Add another 627,000 to the unemployed.


I wish the media would stop causing all these lay-offs.

Queens homeowner pleads: I need your help, President Obama
I just love how my kids go to a public school and my kids are going to pay for his mistakes. I can also look forward to my grandkids paying for his kids' mistakes.

People like the guy in the article should lose their homes. They deserve to live in a cardboard box for their stupidity.

I actually have a fair bit of sympathy for the chap - so long as he's sensible in his negotiations I'd have thought he's exactly he type of person a bank should want to help.

He's not missing payments and has a reasonable job - as such I'd have thought its in the banks interest to wrangle more interest out of him by extending his mortgage period from the initial duration by another few years and thus giving themselves more interest income during its duration.

Surely this is more sensible than renegotiation for people who have proven to be unable to plan ahead and realise they might have problems in the future and so are trying to cut costs somewhat now? - those people surely are the ones who are most likely to default.

He's run up 70K in credit card bills. I'm all for simpathy, but no one should ever be granted a 550K loan with no money down and an 80K salary. I was told I was stretching it when I got a $125K loan on a $45K salary. Getting a loan that is 7X your salary is outright stupidity.

Also, there's no guarantee to owning a home. This guy obvious has had problems for 2+ years to get in this situation. At some point, it's time to sever ties and save your finances. There wasn't any planning in regards to this guy.

I agree with that, Marc. He's trying to pay his bills the right way (sort of, tho running $70K in credit card debt isn't the right way).

The one problem I have is that there's no way anyone should be buying a house with 0 down.

And they sure as hell shouldn't be buying a home costing $550K on that salary, even assuming his wife makes about the same. Especially not with kids and a $10K per year high school. I think my college cost less than that after scholarships.

SI

There is a line between being an idiot and bad luck. He crossed it to the idiot side.

Was that "stretching it" to comfortably make the payment each month or "stretching it" as far as how much they were willing to lend you?

If the latter then somebody really must have not liked your tie or something, because 6x to 8x of salary seemed to be pretty common for at least several years.
(edit to add) That's not to say it's a good idea to do it, but banks were definitely handing that out.

Our current mortgage is similar to the ratio you did but the bank was downright bewildered that we would "settle" for this house when we could have been financed for at least twice the price we eventually paid. And that doesn't seem to have been an uncommon scenario from other stories I've heard from that time frame (roughly 3 years ago).

It's doesn't seem uncommon for private schools now to cost more annually than the parents paid for their college. That's actually become a running joke with people we know, as we all look forward to our kids going off to college so we can save money.

I have 2 kids and am probably in roughly the same salary ballpark, and our $230K home has been a reasonable mortgage payment. I'm glad we didn't do much more home. $550K home would have KILLED us.

Rental income is the interesting question here, and I wonder if the rental property was put down as collateral or something...

Regardless of the man's financial planning, this is precisely the kind of situation where it greatly benefits the bank to renegotiate terms. If they foreclose they'll be lucky to sell the home for 400K and they'll have the costs of foreclosure as well as all the costs associated with selling a home. Meanwhile the home is providing zero income for the bank while it's on the market.

There are moral hazards involved in redoing mortgages, but it's almost always better for the lender to keep payments, even if reduced, coming in.

his kids don't have to go to private school. pull them out and use their tuition for mortgage payments. fuck him, kick his family out to the curb and let them freeze on the street. its not their God-given right to be in a home and have private schooling for their kids. you provide the life for your kids that you can afford, not the one you want (and then subsequently ask for assistance to help you maintain).

I can see the numbers supporting this. The problem I have is that people (such as myself) who did not poorly plan have to pay for it.

This is certainly one of those cases where the banks should be renegotiating to protect their own bottom line (a 550K mortgage being paid back, even with reworking the terms, is better than it defaulting and getting a house now worth 300K or 200K). Most banks are too stupid to do that sort of math.

Government bailout though, I don't know... I personally think the government should step in and provide a rework of any mortgage someone wants to submit to the program (before the missed payment or default situation), but that it have tough terms and not involve handouts so much as massed bargaining power to get banks to submit to refinancing (rather than stonewalling, killing mortgages and banks, banks are too shortsighted on their own lately to see this).

I do not think anyone in this sort of situation needs any more assistance other than the government to tell the bank: 'rework the rate to extend the term, create an interest rate to generate more long term revenue but make the payments possible'. We want less defaults,especially of people who can pay, all of us want that banks included... that is how you stabilize this housing mess as a first step.

Handouts though, I say screw him. Unfortunately govt only understands throwing money at things rather than attacking problems with solutions that require thought.

dola, let me pre-clarify to avoid confusion:

I don't want the government to give this guy money to stay in that expensive house.

I want the government to have some way where it can force banks to rework a mortgage.

The method of that reworking should be along the lines of:
- converting crazy ass loans into fixed term loans.
- extending the term of loans as needed to reduce monthly payments
- fixing interest rates to not adjust to the craziness caused by the current crisis... whatever the terms of the crazy contract may have been.
- void any overly harsh fees or clauses that are cleary designed to screw over homeowners in the banks favor, or make reworking mortgages harder.

The costs associated with such reworking is that banks would have given out loans expecting crazy clauses to increase their future value. I think that source of profit though is mostly evil in nature, banks trying to screw over consumers, so screw em in the earhole and tell the banks to eat the cost of having their precious fees and tricks removed.

Another cost is extending the term of loans does change risk profile of said loan. Although usually a longer term would have a lower risk rate in normal times, in this era there may be issues from having your money in the market for a longer period of time, but I'd say its an acceptable cost for handling the short term shocks to the system we are seeing. Longer terms also effects situations where the consumer may want to sell the house in the future, the government rework should clearly take that into consideration and prevent ways of reworking the loan that may make it too easy to offload the house at random prices in a recovery and screw the banks. This is why I tend to avoid changes to principle balance in this policy, ripe for exploit.

If the balance alone is enough to kill this house, which may be the case here, than I saw screw the guy. You are not entitled to irresponsible levels of credit and massive luxury in life. Hell I went through all sorts of shit just for having a debt of 5,000 (10,000 after bank tricks)... so I have little sympathy for people with 100 times the debt I had being mollycoddled.

I don't understand why Congress hasn't changed bankruptcy law to allow judges the ability to renegotiate mortgages during bankruptcy proceedings.

And with that I'd support sending guys like this into bankruptcy proceedings.

I'd rather avoid mass bankruptcy though. The hard economist in me says its probably best to just hit everyone with a giant mallet who made any sort of stumble in the last decade... but really to help stabilize the situation we want as many people as possible to stay current with their debts and keep working business as usual. Some lifestyles need to be crushed, particularly those of the mega-rich credit junkies... but bankruptcy is one of those things that hurts all sides involved really (creditors, the person extended the credit, the government, future loan seekers, banks).... lawyers might get away with some money, but they always seem to be able to do that.

I'm good with all of this and some expansion:

-If a homeowner can pay his/her mortgage if they get the loan bought out at its value with a low interest rate and reasonable fees and terms (i.e. no funny business) through some vehicle, say Fannie and Freddie, then it's done. Then people are out of the arm, they pay the fixed rate loan, and everyone's happy.

If you can get everyone, or a normal rate (i.e. all but 3%) paying back on a normal pay schedule, doesn't that pretty much make the mortgage backed securities at least worth something to the market? And then you make really strong rules not allowing a lot of the crap that went on to get us into the place. That fixes a lot of these problems, right? And isn't that pretty much what happened yesterday, at least with Fannie and Freddie's loans?

This still leaves the huge problem of upside down loans. I still have no good answer to that. You guys all know I hate the banks, right? We've been down this road enough times for you guys to know how much I hate the banks. But it sure as hell isn't fair to them that Mr $550K loan gets it written down to only $350K in principal because that's what it's worth now. You signed up for $550K, you pay $550K for your house but we'll work with you on the terms- we can stretch it out to 40 years and give you a reasonable loan at a bargain basement rate and no stupid fees, but we sure as hell aren't lopping $200K off the loan at taxpayer's expense and it's not really fair to the banks either.

SI

A bit of armchair economics here:

Set all mortgage rates to variable at 1% above the fed rate (that's enough profit for these bastards) and extend mortgages out to 50 years if necessary. Problem fixed!

Or maybe not.

Where does it put us, long term I mean, if we're doing 50 year loans on houses that often quite literally aren't likely to last that long? A lot of these houses headed for default seem likely to be new construction and frankly, from what I've seen, a lot of them aren't likely to last 50 years without falling in on themselves.
No idea what it's like in your part of the world but here, construction quality has gone to shit steadily over the past decade or two at least.

I'm tired, my mind is on about 15 different things so I'm not thinking as clearly as I might, but wouldn't that end up being only a short to medium term solution at best? Granted, that's probably more than enough to satisfy a lot of people for now but in theory, what are the ramifications of having loans secured by collateral that's worth less than the remaining note by the end of the loan? Or for that matter having loans beyond the life expectancy of the borrower. The most obvious would be an extremely high default rate down the road at some point but maybe our financial wizards can tick off a list of other issues that creates as well.

:lol:

40 and 50 year mortgages are available here since the horrendous rise in house prices since 2000.


Few mortgages are carried to conclusion and the houses sold well before the period comes to and end. Presumably the economy will recover in the medium term and the negative equity situation will have unravelled by then (at least for houses currently owned) and so people can sell their homes and pay off what remains.

Hopefully the housing crisis is a short term problem.

Note I said "variable" interest rate - so any subsequent house price bubble can be controlled by the Fed with rising rates.

What triggered the thought was an interview I've just seen with the Governor of the Australian Federal Reserve Bank who explained that because around 90% of Australians are on variable loans the recent drop in rates has reduced the monthly payment on a $200,000 house by $400 thus relieving mortgagees' financial problems. So repossessions are not taking place at anything like the rate for Americans where the percentage is very much lower.

When a large percentage of mortgagees are on variable interest loans monetary policy is much more effective because of its direct influence on consumers through mortgages. I guess it's a cultural difference - mortgagees here can choose fixed rates if they wish but don't - I assume Americans have the same choice but prefer fixed interest. I wonder if there is something to explain this difference in the terms of the loans.

And I did say it was armchair economics (and talking crap hasn't deterred anyone else ;) ) - I guess someone has thought of this and rejected it :)

So this guy in Queens spent $550,000 on a house with no-money down (on a $80,000 a year salary). He has racked up $70,000 in CC debt for his mortage payment?

Throw in the fact they renovated the house and spend $10,000 a year on private school, plus rental income (does that mean they have another mortage on the rental property?).

I don't think it was clear from the article whether that was $80k at the time they took on the mortgage or if that's what he makes now but was more when he was getting overtime plus his wife was working.

Another key point of the Japanese "Lost Decade" is the allegation there was a recovery afterwards. Considering their current GDP contraction, I'd venture to say they were temporarily pushed higher by the US overconsumption boom. There was no recovery, and there won't be a significant long-term one unless they drastically change their xenophobic attitudes towards foreigners and immigration policies. Meanwhile, they have a national debt 180-200% of GDP, combined with a population median age 43.Thank you. Broken down to its most simplest form, we are in a recession right now because people used credit to pay more than the real value for certain items (mainly houses). You can't make a house worth its purchase price unless you want to inflate the economy by that same amount. Likewise you can't make the massive credit debt disappear unless people save money and pay it off. All these stimuli packages are doing are protecting the perceived wealth of a lot of people when it fact it wasn't there to begin with. That Queens house isn't any bigger or smaller if it's worth 250k or 500k, and a 401(k) with a 30% higher balance isn't worth anything more if there has been 30% inflation, yet somehow all the political solutions are centered on preserving the perceived value of things rather than any actual productive long-term planning.

Personally, deflation is fantastic for me (and pretty much every one of my friends). I've never been in debt, wages are sticky downwards and the majority of my money is spent on food, rent/utilities, and all the insurance my state forces me to pay for (36% of my salary last month after taxes despite the fact I've never been in an accident or seen a doctor in 5 years) (oh, and beer - I'm doing my part albion). It sucks for other people that overleveraged themselves in the pursuit of often unnecessary material goods and services, but that's the risk you take.

Both true points Bishop, although Japan's 'recovery' of course depends on the U.S. consumption beast that is dying a slow death... it was still better than the path they were going. Hardly out of the ballpark, but if they continued down that previous road AND this craziness occurred, Japan would probably be a really bad mess right now.

We don't necessarilly want 40/50 year mortgages either... as Jon said, there is a point where we hit the silly factor. I do think we need to negotiate out the floating rates, if there is a recovery there may be a squeeze (if Fed continues its rate games policy) and it might choke dead any progress we make. Really the floating rate stuff to me is just encouraging homeowners to join the gambling club, and makes no rational economic sense to me. We have plenty of ways to make money off of random changes in rates in the markets, we don't need houses as another avenue for those games.

Some mortgages will need to die, even worst now that the companies are cutting to the bone because of the government's craptacular reaction to the falling economy. I really wish back in say July/August that the debate went towards shoring up the real economy and not the banks... we might be in a slightly different boat right now because prices might have stabilized faster into a more gentle downward adjustment instead of spiking every which way from the market panic, sending financial instruments off kilter that sent bank values into the tanks.

Billions of injections into over-leveraged balance sheets...., or stabilizing the assets whose PREDICTED collapse is causing the balance sheets to get covered in more and more blood red ink? Thats why I was harping the whole mortgage reform system so strongly back in the first talks about bailouts, and to a degree I think that is going to occur at any point as they try every other option and realize its time to take the common sense medicine and implement something similar to my idea.

Sheesh. What a day, shoot me now and put me out of my misery. Let's nationalize those banks (and big 3 while we are at it) and get it over with.

We better not nationalize the Big 3.

Did anyone else get a "Heck of a job, Brownie" vibe towards BoA and Citi from watching the Robert Gibbs statement?

SI

Couldn't figure out where to put this, figured I'd just throw it in here for lack of a better idea.

I thought this article was interesting, although not very deep or detailed, on the process underway at AIG as it's being unraveled & dismantled.
Meek ending for mighty unit that gutted AIG - Washington Post- msnbc.com

Here's a local story.

'Homeless in 2 weeks Please help!' :: Beacon News :: Local News

I wonder what the dispute with her landlord is all about.

Based on market reaction, I'd say we're in for at least 9-12 more months of a hard ride.

Dola...hmmm higher taxes on "the rich" during the worst recession we've had since the 1970s...

Obama to Unveil an Ambitious Budget Plan

I revise my estimate to 18-24 months.

Yeah, let's raise taxes on businesses. Great idea! Between Bush and Obama, it's becoming a no-win situation.

I thought, and I could be wrong, that the official statistics from the gov't stated that most small business which is 95% of commerce or somethig like that, make under $250K / year. I thought I remember some sort of back and forth about that with Joe the Plumber's aftermath....

I was wrong, according to CNN's analysis of IRS filings it looks like 98.6% of small businesses would be unaffected

Checking facts: Will Obama raise small biz taxes? - Oct. 16, 2008

Flasch, I'm not sure about the relevance of quoting an article before the election. Obama's already gone back on his word, so I would take his campaign promises with a grain of salt.

it was a reference of the statistic within the article of what $250K (which is the number he has recently mentioned) means....history didnt start in November.

Another amazing or mind boggling thing to me is that what SFL fails to mention is that Obama has stated he'd do this when the economy recovers and not during the recession, at least on everything ive read and heard so perhaps he read or heard something different.

Than those opposed to all the money spent on recovery usually mention inflation and deficits so you'd think that they would see this other side of the scale as being a good thing to counteract the expenditures now, no? well, no....

I'm not sure how the country will survive with tax rates slightly lower than during the Clinton years.

I'm not really finding anything recent about what he's said about business taxes that quotes $250K. He's talked about individual taxes and $250K.

My point was that he's already gone back on his word about his nominees and pork in bills. That's two for two on major things he's done in the first month of office.

yup and he went back on his word about expeditiously nixing the Bush Tax cuts....for shame.

To the point mentioned recklessly IMO by SFL is that he'd raise taxes on businesses which is true but somewhat ingenuous when using the definitions as stated as $250K which would mean 2% of businesses. PLUS he fails to mention that it isn't raising taxes BUT letting the Bush tax cuts expire as intended when they were passed. I'm with JPhillips, that when it expires, IF we're clear of the recession, than it would be a GOOD thing to try to get back to a balanced budget which will mean choices and taxes.

He had to pass a 'spending' bill IMO so I guess we differ on the need for some pork right now.

I dont know what you mean about the nominees....for the most part he's been grilling them and forcing them to pull out if there is something massively wrong ethically. I DO have a problem with Geithner getting through after the taxes came up and think Geithner shouldnt have been confirmed on that note (also on a side note that Geithner was supportive of Lehman's allowance to fall).

Gotcha.

I'll agree to differ on pork.

According to Gibbs, he never put pressure on Daschle to pull out. In fact, on February 2nd he said that he stood behind him. On February 3rd he accepted his withdrawal "with sadness and regret." There's no evidence of Obama forcing Richardson to pull out either.

My understanding was that Richardson was asked to resign, but you're right on Daschle.

Obama already gave tax cuts to a huge portion of taxpayers who don't even pay any income tax once they take deductions and credits. It's not a tax cut when you don't have to pay taxes to begin with.

We need real tax reform.

Taxes and income taxes are not the same thing.

I'll agree, however, that it would have been better to do the majority of the tax cuts as a payroll tax holiday.

I just don't give a crap if the rich have their tax rate go up 3%. All this "they'll go somewhere else" or "it'll hurt business" is nonsense. It's pretty clear that money was just going into people's pockets and they just wanted more. Not only that but if you have a good accountant, and $250K+ per year affords you that, with all the loopholes in the tax code- they're paying a lesser percentage than those of us who just pay middle class rates.

So forgive me if I don't get all up in arms about the rich having a tax cut expire.

SI

I guess I thought your statement was regarding the income tax hikes. I know we have so many taxes. One thing is clear, tax hikes or cuts are worthless if you don't adjust your spending/budget according to that.

Agreed. I think the issue is that I'd rather not see my tax dollars bail this guy out. I'd rather have the banks see sense and refinance these failing mortgages into terms people can pay, since the banks, frankly, own at least half of the culpability here.


Yep.


Besides what Mac said, switching these mortgages to 50-year time periods will spread out the instances of failure points, which will put less stress on the system.

All this stuff makes me wish my wife & I had gone for the ridiculous mortgage we were offered a few years ago! :D

Did anyone see one of the CNBC reporters rip on Obama and the bailout plan? It was kind of funny, even if you don't agree with it.

yeah, kind of a homogenous audience though.

And funny how he didn't have anything to say about the TARP bailout.

All I gotta say is, thank God for the SDS.

Or better, the SKF. Time to liquidate for the second time this month, yay evil short monster.

Ok, I just looked those up and need some education: ProShares UltraShort?

SI

they go up (usually) when the market or sector goes down however that is NOT absolutely true of all short ETF's.

I'm starting to agree with Mark Cuban and his view on the stock market.

http://blogmaverick.com/2006/01/03/t...s-for-suckers/

SDS is double leveraged short of the S&P 500. SKF is same for financials. NOT an investment, best to treat it like a highly dangerous way to short a sector of the economy if you think it is going to go down.

The leverage and the general panic mongering we have been seeing has made it one of the speculation bets I pick up from time to time (lately anytime that I sense bad news triggers on the way and it has been at a stable or low point). It is pretty much pure asshattery, but it has been one way to ride the avalanche of bad news to profit.

It is very much a daytrading thing in you ask me, stay away from it unless you have catlike reflexes! :devil:

I'm pretty much sold on stock market as a giant gambling machine, especially given that my long portfolio only makes money if I sell off on spikes and reload low which I'm trying to avoid doing (so far only got 3% overall on my hold group, better than market for sure, but easily erased, it was slightly underwater for a while recently).

That's pretty much my own opinion as well. The problem is that things like 401k matching adds an additional level of complexity to the equation. Do I put money in, assuming my employer's contribution will (hopefully) at least offset any potential loss?

For me, and I suspect most people with 401k's, the answer is yes...it is probably worth it. Unless this past October becomes an annual occurence.

What's his advice? Get insider trading knowledge, cheat, and get caught?:lol:

There is a lot of truth in that blog post. Arguably insider information is what we should have... just transparent enough that everyone can see it. :)

I've talked to very few people who can successfully explain their 'buy and hold' strategies without inevitably pointing at 'well on average it grows 12%' statistic. I make several times more money off of speculation than any sort of holding policy (hell, most of my hold stocks I buy and sell at a decent clip to look in cash on the upswings). The only reason I hold stocks at all is to try and get at some of those traditional dividend style companies Cuban is talking about where I am hoping the dividend makes the investment worth something regardless of spot price fluctuations. This will probably be the best entry point we will see in some time to get price/dividend ratios that make sense to invest in. Forget your price/earnings ratios, you can get price to CASH MONEY ratios, presuming dividends are stable or growing (a big presumption).

I'm not sure I would go that far. The case by the SEC seems rather weak in my view.

Of course, when Mark buys stock, he'll buy a large enough stake where he can have influence and follow up on his investment.

I think the SEC and its insider trading bit is more put on for show than anything. Rather than all these artificial barriers and regulations that are impossible to really enforce, I much rather would like to see companies that are pretty much incapable of hiding anything. Make so much stuff in plain view that it is pointless to be an insider (you could still effect future planning, but if others can view the exact state of your company at a point in time it is much more difficult to make effective use of that inside information without it being detected).

That would also oddly enough make the stock market make a smidgeon more sense and play up that whole public investment ideal rather than the backroom dealing with the public on the front end basically pulling a slot machine lever. Nothing about the fundamental meaning of corporation includes "obfuscate as much data as possible about state of the company or its intentions", that is all set up merely to serve insider exploitation.

And another 667000 jobs lost.

and no top in sight.

These job losses are going to crush us. I still think we need the 'Clean Up all the Fricking Messes in America' Act. Long term projects (enough with the shovel-ready shit, its okay to spread true investment over a long term, you don't need to spend money on things that can only be started tomorrow)... fix up that power grid, invent some new damn cars, clean up the water and air, make recycling into a big business... I dunno, just stimulate jobs creation not just keep handing out money with no strategy.

The capital games don't work, it might save corporations at the expense of hundreds of thousands of workers (no need to fix your business, we'll pay for your losses and meanwhile you can still cut through the bone to maximize how much government monopoly money you get to hold onto).

Instead of pulling out Iraq a year from now, we should be gone a month from now.

Instead of foreclosing houses we should put a stop on bank's smashing people across the head with an eviction notice, and let people adjust their terms to keep making payments (and keeping the prices from further plummeting, foreclosures drive down the market as far as I can tell, Flasch might know more in that area).

Instead of waiting for some consumption boost, which makes no damn sense in a country where everyone is losing their job, we should find ways to get business back to normal. We are letting financial decay spill over to everywhere else, and we do not have to. In the worst case scenario (which will happen anyway if we completely collapse) we will just end up setting the imaginary numbers to zero and canceling them out. It happens. Millions of people don't care about how much red ink is on a piece of a paper, when push comes to shove they'll burn it all. So if it really is coming to that point anyway, I say step in and erase the balance sheet manually. This means some very big banks with some very pansy ass CEOs are going to have large chunks of their net worth set to zero (as well as many average people who still have their assets tied into companies proving they are increasingly worthless). But when the dust settles, we'll still have a country, we'll still have an interest in buying and selling goods, and the economy will start climbing back up.

The reason we can't get out of this downward slide right now is because we have a bunch of lard asses riding our backs with their bags full of millions of dollars that used to be billions. The government is trying to turn those bags back into billions of dollars for no good reason other than corruption or ignorance (probably a lot of both). They are holding hostage the wealth of the average American, however that is rapidly disappearing anyway. Heck, if the average american was holding banks, they have already lost 90% of their life savings on average I would presume... going full on to zero probably won't make much more of a difference.

Somehow I don't picture those two specific things going together. As soon as you ramp up recycling you also ramp up the urge to automate the process even further. And while you create a relative handful of jobs there, you likely put people out of work in the raw materials sector who have been providing for the manufacturing of new packaging/products.


If you zero out the cash of the people who provide the funding to manufacture those goods, what do you think people going to buy or sell? And who is going to be left to pay them a salary to buy it with? Or do you really believe Americans are capable (never mind willing) of reverting back to an agrarian society & growing their own and bartering carrots for cotton?

Which many of those people you're ready to sell down the river provided in the first place.

What you really highlight for me here is a pretty simple reality: we've got more people than we've got money to go around, and as I've known for a long time we've got a lot of dead weight. What we really need is fewer people.

Terms of Service

Feb. 26 (Bloomberg) -- President Barack Obama proposed almost $1 trillion in higher taxes over the next decade on the highest-earning Americans, Wall Street financiers, U.S.-based multinational corporations and oil companies to pay for permanent tax breaks for lower earners.

Obama’s 2010 budget proposal, released today, would reinstate the top two Clinton-era tax rates of 36 percent and 39.6 percent, up from the 33 percent and 35 percent the richest Americans now pay. That would affect about 2.6 million taxpayers. The budget also would raise taxes on capital gains and dividends to 20 percent for top earners, up from the 15 percent set by former President George W. Bush in 2003.

The tax increases, which Obama vowed to impose as a presidential candidate, would take effect in 2011 and be the first on high-income earners since 1993. They also would reverse a course set by Bush of lowering the tax burden on the nation’s wealthiest people.

‘Obama Robin Hood’

“It’s a clear repudiation of Bush’s policy,” said Peter Morici, an economist at the University of Maryland in College Park. “It’s more Obama Robin Hood.”

Obama’s budget would keep in place Bush’s tax cuts that benefit lower- and middle-income earners, and it preserves a sliver of policy that benefits the more affluent: A preferential tax rate on corporate dividends. Before Bush, dividends were taxed as ordinary income, at rates as high as 39.6 percent in the 1990s.

“It is a hugely positive step to keep that part of the ‘03 changes,” said Pamela Olson, who was the top tax official in Bush’s Treasury Department when the tax rate on dividends was reduced. “It’s good economic policy, good corporate governance policy and good tax policy.”

Obama also proposes to stop the scheduled repeal of the estate tax next year and to impose a 45 percent tax rate on a married couple’s estate valued at more than $7 million.

Higher-income earners, primarily families with more than $250,000 of income, would face an additional tax burden under a proposal to limit their itemized deductions. That provision would subject more of their income to tax.

Deductions Cap

The proposal would cap the value of deductions for things like charitable donations, mortgage interest and investment expenses at 28 percent for people in the top brackets, or 30 percent less than they would otherwise receive.

Senior Treasury officials speaking on background to reporters acknowledged the proposal would be controversial. They defended it, saying it still gives top earners a deduction worth twice as much as Americans in lower brackets receive.

In all, top-earning households would pay $636.7 billion in additional taxes over the next decade, Obama’s budget estimates.

Linda Beale, a tax-law professor at Wayne State University Law School in Detroit, said “many will object to reinstituting phase-outs for itemized deductions because of the complications that creates.”

Representative Mike Pence of Indiana, the No. 3 Republican leader in the House, said Obama can expect a wall of opposition to his proposed tax increase on top-earners. Roughly half of Americans earning $250,000 are small-business owners, and the proposed increase will stifle the troubled economy, he said.

‘Overwhelming Opposition’

“There will be overwhelming opposition from the American people and House Republicans to the idea that we should raise taxes during a recession,” Pence said in an interview. “Raising taxes in a recession is not a strategy for recovery.”

Representative Jeb Hensarling, a Texas Republican, said in an e-mail, “You cannot help the job-seeker by punishing the job creator.”

The higher taxes on individuals will largely be used to pay for expanded health coverage for lower-income Americans and to make permanent Obama’s tax breaks such as a payroll tax credit worth up to $800 that was adopted on a temporary basis in the $787 billion fiscal stimulus measure earlier this month.

“He’s being so generous at the lower-income level that making $200,000 is going to be like falling off a cliff,” said Dustin Stamper, an analyst in the National Tax Office at Grant Thornton LLP. “Say what you want about the Bush tax cuts favoring the rich, but this is just becoming punitive.”

AMT Lives On

Obama’s budget also assumes Congress will continue to index the alternative minimum tax for inflation. The AMT is a parallel system that can impose higher rates on families earning between $75,000 and $500,000 when their deductions are too high relative to their income.

Executives at private-equity firms, venture-capital firms, some hedge funds and other partnerships that receive a 20 percent “carried interest” in the firm’s profits would see their tax burdens nearly triple under Obama’s budget.

Most of their carried interest currently is taxed at the 15 percent rate for long-term capital gains. Obama is asking Congress to tax the profit share as ordinary income, arguing that it’s a form of wages; under his plan, most executives would pay 39.6 percent.

That proposal will likely reignite a debate that was waged by Congress in 2007 when the House of Representatives approved the change and the Senate never considered it.

Corporate Tax Increase

Obama proposed $353.5 billion in higher taxes on corporations over the next decade, the bulk of which would come from “reforming” rules that allow U.S.-based multinational corporations such as General Electric Co. to defer U.S. tax on profits they earn overseas. GE has about $75 billion offshore on which it has never paid U.S. taxes, according to its regulatory filings.

The Treasury officials said they were preparing a more detailed plan on overhauling the international tax rules, which they may make public in the next month.

Obama’s budget estimates that such changes and beefing up Internal Revenue Service enforcement of international tax rules would generate $210 billion in additional revenue over the next decade. He also proposed to limit tax shelters by requiring they serve a business purpose by redefining the tax code’s “economic substance doctrine.”

‘Last-In, First Out’

Obama’s budget would end a tax-accounting technique called “last-in, first out,” or LIFO, that primarily benefited oil and gas companies when oil topped $100 a barrel but is widely used across industries.

Republican senators in April 2006 floated such a tax increase but backed off after Exxon Mobil Corp. Chairman and Chief Executive Officer Rex Tillerson called the proposal a “backdoor windfall-profits tax.”

In addition to oil companies, the repeal of LIFO would hit retailers, automakers and makers of non-automotive heavy equipment, textile makers, consumer products, drug companies, alcohol and tobacco manufacturers and wholesalers when times are good, according to tax experts.

The accounting method has been commonly used since the 1930s and is viewed as the most accurate measure of income for financial statement purposes, according to the congressional Joint Committee on Taxation, a nonpartisan panel.

A plan to reinstate an expired oil and chemical excise tax to fund hazardous waste cleanup would generate $6.6 billion between 2010 and 2014, according to the budget.

To contact the reporter on this story: Ryan Donmoyer in Washington at [email protected];


Wasn't sure if I should put this here or the Obama thread.

Yep, liberal vermin like Obama doing what they do: redistributing the wealth whether the bottom feeders actually do anything to deserve it or not.

I just wish to hell I could have convinced my wife to get the fuck out of here when we had the means to do so :(

Just out of curiousity, where would you have gone?

Automating recycling would create tech jobs and manufacturing for the automation, yes it would kill jobs at the manual labor level and raw resource acquisition and processing. But if overall amount of material needed to create stuff decreases, and we have less garbage just sitting around, i'll take it. You are the person saying we have too many people for our resources, I'm saying reduce the amount of resources we use/waste if possible. Kind of supporting arguments in a way.

I don't believe in crapping in the pool just to give a guy a job shoveling poop out of the water. And we'll always need raw materials and processing jobs, I just want recycling as another source of those materials, and perhaps in pipe dream land a more cost efficient one overall. Creating all those recycling processes and machines though will create some jobs for some amount of time, and leave off us someplace better overall even if we end up cutting more overall jobs from more efficient processes, so be it.

I would zero out the NEGATIVE NET WORTH of massive banks. If they overleveraged out their ass, they owe more money than they have, and lately it shows, they are not building anything with all that money we hand them, and the jobs keep being cut. We need investors, and I don't think the current crop of stock market speculators makes the grade. Sorry if I disagree with the traditional trickle down economic view (although I've consistently disagreed with the notion that rich people with more money or tax cuts grows economies, in fact I've made the case that sometimes these rich people are looting productive assets rather than growing them, acting more like cancer than executives). So no, I'm not taking money from the rich and handing it out to the poor. I'm not giving them trillions in tax payer dollars to make up for their STUPID AS FUCK decisions to super-leverage and make bets they can't cover. They zeroed it out and then some into the negatives, I'd just kick them to the curb like they have kicked out so many numerous other people over the years.

As for the wealth of the average American, I think its detiorating at a rapid pace as is. I think it will detiorate even further trying to prop up failures, and avoiding massive messes that are just continuing to pile up. I consider it holding people hostage with the threat 'give us the bailout, we are too big to fail, if we go down we'll take down the whole economy with us'. You know that is not capitalism Jon, where is the 'tough luck, do better next time welfare scum!' I would expect from a fiscal conservative? Whereas most people are concerned with the big companies of the day, I'm concerned with the whole dang economy... right now I see a need to get back to business, and more and more it looks like some stuff is just going to need to be sweeped out of the way to do so.

I know it's not what you meant but I'm going to take this and run with it. These job losses are going to crush us just like the 2001 recession. Those jobs went overseas, never to be seen again. They were replaced by minimum wage service jobs, non-insurance-offered contract positions, and H1-B visas which are getting paid half their American counterparts.

Going back to the point before, if we keep getting rid of the jobs that drove this consumer boom over the past 30 years, why should we keep pushing a consumer based economy. It seems like all it did was push the money around to the rich and overseas. But that well is running dry and it's not like we're going to be able to refill it. It's not like we're waiting on World War 3 to wreck everyone else's economy so we can emerge in a strong position. If there is a WW3, we're going to be the Germany who was bombed to oblivion or, at the very least, the country who pissed away countless dollars fighting a war that didn't improve our way of life.


Again, going back to before- it's not as if they have wealth to hold us hostage with. It's not like they're going to suddenly or even gradually increase wages when balanced versus inflation. Globalization is out of the bag and we're just going to gradually settle back towards the rest of the world as they keep coming up towards us. But it seems like we're not even interested in trying to slow that down- we'd rather scrap over what's left so that a few can get fat and happy, the many get token handouts, and all of it just accelerates our plunge towards mediocrity.

SI

I hate to agree with you on something like this, since I think you have a few different ways of getting to that than I do but I think you're right. The ecosystem seems to adjust when it's getting too overcrowded for the population on it and we're getting due for a big plague, particularly since no one except the recent Chinese have any interest in population control.

I was thinking of starting a poll of "unlikely things that will happen in your lifetime" that span the gamut- things like great depression ii, world war 3, plague that wipes out over 1B people, major meteor strike, major geologic event, human mass extinction event, us land on mars, us travel out of the solar system, make first contact with sentient life, etc. Maybe that's tomorrow's idea for posting...

SI

I like this line. I am stealing it.

There were, no joke, a few remote islands out of major storm paths that had nice houses/estates on them in both the Atlantic & the Pacific. Even more shocking, relative to US home prices they were surprisingly reasonably priced at that point. At least a couple of them appeared to be so far off the beaten path that the governmental jurisdiction they fell under seemed extremely unlikely to even realize they existed and even if they did it was hard to imagine they'd be all that interested. I really can't think of anything that would suit me better than that.

About the biggest worry I had about it was high speed internet access, my wife had more concerns about the isolation and because of having a kid it became a subject I wasn't going to make any headway on. But if you told me I could get us there tomorrow & have it be doable I'd be gone so fast I wouldn't even leave a memory.

There continues to be a lot of hyperbolic over-reaction to Obama's tax plans, when all he's proposing is basically a repeal of the truly ridiculous over-generous tax cuts Bush gave to top earners and top earners only.

You wanted to be a Bond supervillian.

Sorry, but there's simply no such thing as an overgenerous tax cut on top earners until we get to a flat tax.

Honestly I was thinking more along the lines of a hermit. I'm so over 90% of the people I encounter that it's ceased to be funny.

:D

SI

As usual, we disagree on the basic assumption. In my opinion the tax rate on top earners was already generous before Bush's tax cuts.


Ironically, I actually feel the same way. I'll probably get blasted for this, but in all honesty the world would be a significantly better place with about 4 billion less people.

Presumably neither of us are even including any Chinese in that figure, so it could get larger.

Yes, probably. To be honest I wasn't really thinking of nationalities. I tend to agree with general Malthusian principles. I'm fully aware that we still possess the ability to provide for the number of people on the earth (i.e. we can produce, if not distribute, enough food), but it's my opinion that that's only one part of the equation.

Obviously with a drastically smaller population you lose a lot of good things, like the overall amount of creativity and production, as well as the rate of scientific advancement. But I'm one of the people of a mind that the current population's strain on the carrying capacity of the earth creates more problems than it solves.

That's the intellectual argument.

The emotional argument is that I tend toward the misanthropic anyway, and I'd say the majority of people I meet (perhaps not Jon's 90%) tend to simply reinforce this.

Found the study cited here to be pretty interesting. It notes that 55% of all foreclosures and 87% of all home value losses in the current recession are located in four states. That actually explains quite a bit. I've noted in previous threads that home value hasn't been affected a whole lot in our area and this study seems to confirm that point. We've lost a bit here and there, but overall, the downturn in the economy has been much harder on just a few areas.

Hit & Run > Eighty Seven Percent of Housing Value Loss* in Just Four States - Reason Magazine

Hold on, lemme guess: Cali, Arizona, Nevada, and Florida? With a special prize for New York City coming in the next few months?

SI

How were the tax cuts generous?

The Tax Foundation - Summary of Latest Federal Individual Income Tax Data

"This year's numbers show that both the income share earned by the top 1 percent of tax returns and the tax share paid by that top 1 percent have once again reached all-time highs. In 2006, the top 1 percent of tax returns paid 39.9 percent of all federal individual income taxes and earned 22.1 percent of adjusted gross income, both of which are significantly higher than 2004 when the top 1 percent earned 19 percent of adjusted gross income (AGI) and paid 36.9 percent of federal individual income taxes."

"The IRS data below include all of the 135.7 million tax returns filed in 2006 that had a positive AGI, not just the returns from people who earned enough to owe taxes. From other IRS data, we can see that in 2006, 92.7 million of the tax returns came from people who paid taxes into the Treasury. That leaves 43 million tax returns filed by people with positive AGI who used exemptions, deductions and tax credits to completely wipe out their federal income tax liability. Not only did they get back every dollar that the federal government withheld from their paychecks during 2005, but some even received more back from the IRS. This is a result of refundable tax credits like the Earned Income Tax Credit, which are not included in the aggregate percentile data here."

"The IRS data below include all of the 135.7 million tax returns filed in 2006 that had a positive AGI, not just the returns from people who earned enough to owe taxes. From other IRS data, we can see that in 2006, 92.7 million of the tax returns came from people who paid taxes into the Treasury. That leaves 43 million tax returns filed by people with positive AGI who used exemptions, deductions and tax credits to completely wipe out their federal income tax liability. Not only did they get back every dollar that the federal government withheld from their paychecks during 2005, but some even received more back from the IRS. This is a result of refundable tax credits like the Earned Income Tax Credit, which are not included in the aggregate percentile data here."

Because it hasn't reached 100% yet silly.

Did you not get the memo? Anyone who makes more than you do is "rich" and should therefore be taxed until there's nothing left, with the money redistributed among those who have failed to earn the same level of income.

Once they're broke of course, there's a new set of "rich" & the cycle begins all over again.

This brings back memories of the "Cadillac Soup Kitchens" of the 1990s, when former billionaires were reduced to begging for food from charities due to their excessive tax bills. The charities, of course, were unable to help as the economy had withered due to the crippling tax burden placed on the wealthiest one percent.

Let's review what I wrote again:


Bolded for emphasis.

Tax rates for high earners in the U.S. are not onerous and haven't been since Reagan got a hold of them.

Now, you can certainly argue that tax money isn't well spent, and that people paying taxes, especially large amounts of taxes, have a right to complain, and I won't disagree with that. Especially in the U.S. But that's a different argument.

you know how far apart we fall on the political spectrum, and yet I 100% agree with you on this. Also on your espousal of Malthusian principles. We do need a die-off. And whether we create it (although TBH I don't think we can create it in a way large enough to reach equilibrium), or the Earth does it via natural means (over a longer timeframe and with more prolonged suffering) it will happen. It's happened before and it will happen again. As much as we like to think we're the "masters of the earth" it will regulate if need be.

I'd like to see those numbers when adjusted not for income but for total money gained in a year. People on the lower 98% of the scale aren't storing money away in offshore accounts or using tax loopholes to deflate their incomes a substantial amount (i.e. I took a loss on my second home that I claim is rental property so I can deduct that so my salary isn't as much or I got a bunch of bonus/stock/retirement money that I can magic away tax free because I have a good tax lawyer).

This sounds like how our CEO the other day said he was taking a 20% pay cut (on his 1.5M) while those of us in the rank and file only lost 2.5% or 5%. Oh, but his bonus money comes from another program so it doesn't count. And that doesn't take into account his stock options he cashed in or his stock vesting. When you look at the SEC filings for our company, he was compensated at $45M and if you counted everything he got, it's well over $60M so even the SEC doesn't account for all the money he's getting (a $15M not counted by them) and his 20% pay cut becomes realistically under 1%.

I could be wrong but I suspect I'm not.

SI