only 4? I'd say with about 5-6 billion less people.

Get us down to about 3-4 billion tops. I'd prefer 2 billion to be brutally honest.

Big fan of dinosaur rule, are you?

hmm?

International Programs - estimated world population back to 10,000 BC

Before we start daydreaming about the death of billions of people, how about we increase our resource efficiency first... otherwise you just kill off a few billion people and all the resulting 'wealth' that frees up from that doesn't end up making everyone X% better, it means you still have your shit job and shit life and crazy ass speculators ('like me' says my best Joker impression) increase their balance sheet numbers by the difference.

Malthus is more about the collapse of ecosystems than magically fixing our economy my peoples! I'll admit of course trying to make a standard of living with ten billion people versus five billion is obviously harder.

not sure if this is the same thread I said GE would be a buy and I hoped they would keep the credit rating. I have been nibbling my way in and they cut their dividend today which while making that crazy yield more in line with the rest of their peers (im talking about financials since theyre being traded as if they were one) it is soooo good that they did this. Im very excited about this play over the next few weeks and intend on nibbling a little more next week while I expect it to fall a bit more before rebounding with a market rebound (short term). See if Im right and this time I have the smallest of holding but a holding nonetheless as opposed to the calls Ive been right on and never profited from :( (dont get me wrong, I have been more wrong than right and have lost money along with most people)

Can someone tell me why Capital One jacked up everyone's credit card interest rate to 29.4%, even for those customers in good standing?

because they're in an unregulated industry that will soon have the eyes of the government turned on them in about a few years?

Because they're technically insolvent and need to get every penny they possibly can if they intend to stay in business?

What do you guys recommend as a good credit card company with reasonable rates?

We've switched our credit card to JPM Chase (already had checking there), as I'd say that's one of the few banks likely to survive. Wells Fargo should also make it.

Capital One just sent me a notice that due to my low balance and infrequent use, my rates were being jacked up. Something like 15% or so. Kind of funny, I transferred a balance there last year because they offered 0% for a year, so I never used it, just paid down my balance. I now have like $50 on it and I guess I'll close it since their rewards start at 20,000 points and the interest rate is high.

Yeah, but think how much less annoying having the shit job & shit life would be with only half as many useless idiots around. That alone has to be worth something.

As it should be. They offered great rates for years and people flocked to them. Now that they are chosing to screw the pooch, then they would suffer any consequences of such actions. Meanwhile, consumers have plenty of other options to choose from. The government's only role is to prevent monopolistic and predatory practices.

Actually, it's about to be regulated. Bill was passed a month or so ago but CC companies said "wait, we can't get our computers updated until 2010". Yeah, they seem to be able to screw people at the drop of a hat but if you want to take money out of their pockets, it's 18 months of continued gouging. So, in short, CC companies are trying to grab what they can right now before the rules are put into place.

Congress pushes for credit card relief - Jan. 19, 2009

Not only that, but I'd argue there needs to be substantial regulation as your credit score is tied to opening and closing credit cards. If you wanted to shop around and change credit cards whenever yours changed their terms, you'd take a hit on your credit score. They know that and take advantage of it.

Frankly, I have a Capital One card but I pay it off every month so I'm basically using them for their convenience and rewards. I've already had WaMu cancel a card of mine earlier this year for a lack of use without so much as a warning- I got a letter saying "this card is going to be discontinued as of Dec" in November and that was it.

SI

Yeah, the fat that changing to a better card or even getting rid of a card can lower your credit score is appalling.

Interestingly (or not), I have a credit card from Citi, and the interest on it has stayed the same.

I have 2 from BoA that haven't changed either and they're the second most stressed bank, it seems. Originally, neither were BoA but both banks were bought up by them from in the last 10 years.

SI

SI, yeah I know. It's fun to rant off after a long week.

So, you believe that tax rates should be 50 %-70%? Just because someone worked hard, created a business and grew it (creating jobs, tax revenue in a variety of forms)? (Note, I'm not talking about the small handful of corrupt Wall Streeters/bankers/CEOs) Are you nuts? Talk about killing an economy and the entrepreneurial spirit that makes America great.

Nearly half of Americans don't even pay any taxes (and even get money back from the government), and the 1% of the income earners pay about 40% of the income as it is.

The oil tax is a political ploy that shows that the left side has no idea on how the oil industry (US oil companies import most of their oil at the market value) works or even looks at the balance sheets/statements of oil companies (10% profit margins, which is pretty bad).

Also, a lot of states are looking/or are increasing gas taxes. Is that really the best idea?

I believe we've had this discussion before, but taxes and income taxes are not the same thing. And given the way FICA taxes have worked since Greenspn & Co. fixed SS, a portion of FICA taxes go into the general fund are are de facto income taxes.

http://www.berkshirehathaway.com/letters/2008ltr.pdf

Somewhere in that letter Buffett mentions that we're probably going to see inflation, and that yes something had to be done in the middle of the mess last year (so a point to me and Flasch if you trust Warren).

I would not be too excited about cutting the dividend at GE. I likes my dividends! They probably think it would be better to throw that what, 10 to 15 billion???, elsewhere... can't blame em really. I'm still long on them (at the unfortunate price of 11), although I did one of my controversial short term hedge gizmos on them at 12 (my finance buddy does not like the idea of having them long at 11 and short at 12).

So anyhoo, the end result is dumb luck will probably net me 30-40%, which (don't do this at home kids, I'm not a financial advisor just some gambling crazy kid)... I will probably sink back into a half boring old savings and half long GE (to average down that stake a bit). I'm kind of expecting the yield to get around 6-7% (yes that it is a price between 5 and 7), but I'm too chicken to try timing it so I'll probably move sometime this week. Given dumb luck shorting is responsible for so much money, I'm finding it hard to play long. Especially when I spend half the thread warning about the ultimate failure of capitalism being a possibility, lol. Need to start my guns and ammo hording investment strategy as a hedge.

i hear you on GE BUT I think that that dividend cut was being begged for if you look at the price of it. The dividend was at a freakish yield so preserving that capital now I dont think realy hurts them and the price drop yesterday had more to do with the environment as a whole IMO than the actual cut itself. Preserving that bond rating is the key and I do not think they'll have a hard time doing so. BTW dont even get me started on the rating agencies....they deserve to be dragged to the woodshed.

What about this idea. I can pay off my Capital One card in the next several months. I would keep that card (until they cancel it due to inactivity or going out of business) but get a new card, like at Wells Fargo or Chase?

I've been told that there's a sweet spot of having just enough cards. You don't want too many or too few apparently, regardless of balance.

I'm guess I'm not sure what your talking about. I'm talking about income taxes only (and the capital gains tax, a seperate tax, can be included as well).

I've never had much faith in the rating agencies, its been clear for years they don't do their homework (I dunno, actually determining credit-worthiness of companies, ahem ahem!). However, markets go gonzo for rating downgrades... so still have to pay attention to them.

I would have downrated a whole lot of credit ratings in 2007, or hell earlier than that if I was into the part time speculator biz before that.

But you say they don't pay taxes when they certainly do, and some of the taxes they pay go into the same fund as income taxes. There's not a single worker that pays no federal taxes. It's fine, if misleading, if you want to limit the discussion to income taxes, but don't say that people aren't paying taxes when they are.

The point of a progressive tax system is supposed to be that it hurts a hell of a lot less to pay taxes when you have more money, since you are much farther away from scraping by just for survival.

The problem with the whole silly tax fights we have is that one side whines like little bitches whenever a tax hike is mentioned at all, even if it is on an upper bracket they'll likely never reach, because they bought some line a long time ago that rich people not paying taxes are essential since they invest the money better than the government. The bad side of course is that government tends to spend the same, therefore the real result is that taxes on everyone end up huge, including those at the low and middle brackets that are closer to 'scraping by'. So the feedback loop is the fight against taxing the rich, often supported by middle to upper middle class, often leads to a higher overall tax burden on that middle class (in my opinion, especially in the era of tax dodging tricks for politicians and super wealthy). Ironically, what is in there best immediate interest is an increase in the highest tax brackets first, so that the scrapers have enough money to continue financing the consumerist machine that the super wealthy have built their fortune on.

On the other side you have the liberals who think it is a matter of fairness that the rich should be taxed more. Again, similarly ludicrious, there is nothing inherintly wrong from the pursuit of wealth... especially if done in an ethical and pro-growth manner such as creating businesses (and jobs). Taxing should not be a penalty for success, it should merely be collecting resources from the best location in the economy to collect those resources from, and from a net standard of living point of view that means a much higher proportion of income will come from the highest brackets. This makes sense in a direct, measure the impact on the efficiency of the country sort of way. Ironically, what would help the class of those at the bottom end and liberals who want a higher percentage of taxes to be paid by the rich, is a reduction in government spending (and specifically waste). By reducing the cost per citizen you dramatically effect the amount of taxes you really need to collect in other forms, such as taxes mostly hitting the poor like payroll, sales tax, and so on. If we had more efficient spending, the best thing for businesses and the super wealthy would actually be to have low taxes on the low brackets so that the overall standard of living rises, and they can sell the products and services to provide that standard. With more of the economy in the private sector, and growing, you have less need for government spending, so even if the tax burden is most heavilly allocated on the wealthy, the overall net tax required goes down and they would end up saving money in the long run (both paying less taxes overall, and higher profits from their businesses).

So we really need to see the parties switch sides, the liberals should go on a 'kill all government waste' streak, and the conservatives should back off the 'must protect the Bush tax cuts for the rich' and go on a 'kill off terrible government programs wasting money'. Poor all of that money into roads and unicorns to ride upon them and all will be happy!

This week may be a week of maximum panic and such could be another point to drop a little cost averaging in. I love how Cramer and Suze Orman are both harping on the if you need $ in the next 5 years get out of the market....a little late for one and no shit for two. The question is how much reserves allows one to still invest with their other monies. I have a nice safety net however I look at it sometimes in wonder and say, perhaps that should be bigger, hmmmmm.

and wow:

Reports: AIG to get up to $30B more in Fed aid - Yahoo! Finance

Im against disorderly unwinding but even Im starting to wonder where the light at the end of the tunnel is (which means in the contra-flasch theorem we should be getting close and this week will be a nice rally :) )

There's some crazy shit in the new AIG monies too:

1. Taxpayer being repaid in shares as opposed to the cash that was intended.
2. Theyre going to securitize life insurance policies. OK, well I guess those arent a bubble and people will start dying tomorrow in droves...maybe the safest securitization in the last 10 years.

Honestly watching business news the last 2 years has been better than any Hollywood movie Ive seen in a long time (BTW anyone see the First 48 the other night with the Memphis Massacre? Riveting).

Warren Buffet takes a pretty heavy-duty swipe at the large government handouts in the bailout bills..........

http://www.berkshirehathaway.com/letters/2008ltr.pdf

Apparently Consumer Spending was higher than anticipated in January this year:

Consumer Spending Rose More Than Expected - NYTimes.com

So, that's one good news in a sea of bad.

So is it worth talking about how Congress has once again kept their annual pay raises, or did I miss the discussion?

Was that hidden in one of the spending bills or did they create a separate bill for that? Any chance it was posted for 5 days on the internet before a vote?

It's set up so they have to vote to get rid of it, which of course means they never vote on it.

Apparently a bill was introduced to freeze them, but it never made it out of committee.

Most of the search links I'm finding on this are third-party watchdog groups. CNN, etc don't seem to have picked up on it. A search on CNN.com turns up the same links, and if you force it to search just CNN it picks up mostly on "2009" and "congressional".

The way credit scores are done is broken, simply put. Anyone who's had to contest a line item from a credit agency or, worse, has been the victim of identity theft, knows this.

I hate to be cynical, but as far as I can tell your credit rating is based on the flawed twin principles of a) you're guilty of being a credit risk until you can prove your "innocence" through spending and paying bills and b) you need to spend like a good little consumer enough to earn a really good rating.


I'm OK with everyone from my tax bracket and up having an overall "income" tax burden (including state & local taxes, and FICA, but not things like capital gains) of 50%.

Now, seventy percent? Probably not. If government services were provided as I saw them in Denmark, Sweden and Norway then sure, but the government still wastes too much of my money for me to go that far.

Which is the other part of the bargain. I'll pay 50% if the government will try to waste less. But since I live a comfortable life and live in a comfortable tax bracket, I'm willing to take the first step.

Besides, as a citizen of Cook County, Illinois, the Federal Government wasting my money is the least of my worries. I'll get around to them eventually, but I've got other fish to fry.


In 10 years I've gone from a net income of 0 to a net income of, well, considerably more than 0. In all that time I can assure you that my ambition was never tempered by the thought that the government would keep taking more of my money as I succeeded in life.

Now, if the tax rate for people making over, say, $200,000/year was 75% or more, I think you might have a point. I think this is one of those talking points that really doesn't have a lot of bases in reality, aside from the fact that everyone likes to bitch about taxes, especially the "rich".


As JPhillips pointed out, this isn't necessarily true. In fact, there's no one in America, including illegals and tourists, that don't pay some sort of tax at some point.


This is another one of those talking points that has a considerably different meaning depending on whether it's presented in context of the amount of money the top 1% earn, or if it's presented without context (as above).

I mean really, when you're talking about the top 1% and the 50% or whatever of the population who make $50,000 or less, you're talking about an absolutely huge difference in scale. The top 1% are going to earn more from basic interest on their assets in a year than most of the other 50% are going to earn in their lifetimes. And that's being conservative.

Not to get too off base here, but this is why I always liked the way soccer stars' pay in Europe is listed in amounts per week. So Wayne Rooney earns something like $250,000 a week. And Wayne Rooney isn't even within spitting distance of the top 1%. The top 1% are earning millions, tens of millions, a week. I mean, they're earning more per hour than people are going to earn all year, or in a decade, or in a lifetime.

It's not fair or unfair that the top 1% are paying 40% of all taxes, it's basic mathematics.


Depends on your point of view. Four dollar/gallon gasoline looks like the amount that finally got Americans to start changing their habits. Given that in the future we're going to have to be more conservation-minded, getting gas back up to that level to spur innovative ideas to save gasoline and other energy might not be a bad idea.

But sure, we probably shouldn't do it in a recession. And the states that are proposing this are doing it as little more than a money grab.

I always love this whenever it comes up. It always underlines what a bunch of self-serving jackasses most of them are, as well as the fact that so few have actually held real jobs.

However, the best part is taking a look, each year, to see which ones, if any, introduced resolutions to try and freeze the raise.

One link I found claims:

But if they don't get a raise how will they ever attract the top talent?

:D

I see what you're doing here.

unfortunately it looks like the week has started like I thought it would. Im hoping that this creates a panicky bottom to the market so that some slow healing can begin and it could happen as over the next 6 weeks there is a lot of unveiling to be done for programs and such.

Ok to me things have gone from 'bad' to stupidly panic driven in the last month, I can definitely see an arguement that the market was overblown and needed to come down a bit - but its now down over 50% from its peak and obviously solid companies with safe income and turn over such as Microsoft and Nokia are tumbling like leaves ....

While their profits may well be affected by the downturn I can't believe that they'd fail to be profitable and indeed with their cash reserves I'd expect them to benefit from the situation by picking up smaller companies and weathering the storm better than most (leading to increased market share etc. come the recovery).

I throw GE into that bunch however the market is obviously pricing in a rating cut on them which is just insane although I have to admit that the books of all these companies in freefall look like a 3 year old got into the crayon box on it. I just cant imagine a ratings cut on them and continue to scale into GE but what was once a value play IMO is becoming speculative and I do not like that one bit. GE....speculative. HA!

Similar to the housing market...I would expect there will be overcorrection on the downside a bit as well.

Hopefully that's what is happening with (seemingly) undervaluation of solid companies and stocks.

Shh! Let's keep it a secret from lesser minds.

Guess we'll have to agree to disagree.

On the gas tax, I think it's stupid to raise it now, in a recession as bad as this. However, a lot of states are looking to go with a "pay-as-you-go" system that charges you on how many miles you drive. A money grab that goes against the entire purpose of ending our gas/oil-addiction.

Flasch, haven't you been calling for a bottom for like 6 months now?

This ship is going lower for a while yet.

hoping.

I think my current strategy is to fund all my buys with shorts. But can the markets fall even further? hahahahaa... they'll give it the old college try apparently.

I finally cashed out my long standing grudge against GM. Shorted 100% (in May), covered for 10%. Looking at many stocks now cause this is one of my oldest shorts, and I basically could have picked any stock in the country and performed the same and been a winner.

YouTube - Confessions of an Economic Hit Man - Part I

Interesting interview: Confessions of an Economic Hit Man

Excellent post, flere-imsaho. It's good to read a post that rejects the rationalised self-interest that is corrupting so much economic debate currently.

I almost considered excluding my signature :rolleyes:

http://www.pionline.com/apps/pbcs.dl.../REG/903029963

Couple of thoughts on a couple of Obama's proposals that directly affect me.

1) I'm one of those families that may actually cut back on work to improve my financial position. Depending on the details that are passed in a bill, our accountant has advised that we may need to cut my wife's salary back to a certain level. I don't know the specifics, but that's all kinds of wacky that lowering your salary could be a benefit at any income level. It seems awfully counter-productive.

2) With the housing market as it currently is, do we really think that getting rid of some mortgage income deductions for the higher income taxpayers is a good idea? Giving less incentive for property ownership for the people who can afford to boost this market doesn't seem like a very good idea IMO.

I'd really quiz your accountant. There's very little likelihood that reducing gross income will result in greater net income. It may be possible, but tax brackets only apply to income above a set level, not the total income.

Understood. I just threw it out there because I was surprised to even hear this kind of thing. I think the reason for cutting back would be certain deductions would only be allowed for people who make less than $XXX,XXX. And it certainly should be noted that the proposals by Obama will likely differ significantly from what eventually is passed through Congress.

BINGO!! the accountant is either spun or an idiot.

Even considering deductions, it seems unlikely. Whatever passes will probably have a scale based on income. I doubt that it will be 100% at 249,999 and 0% at 250,000.

yup...how stupid. Typical.

Agreed. I just thought I'd ask about it because I wasn't certain if anyone had heard something different.

The more I think about it the more I'd recommend getting a new accountant. Nothing has been passed or even brought to the floor. There's no possibility of knowing exactly what the final bill will mean as regards to your personal finances. Giving you advice now on lowering your gross income is completely irresponsible.

Oh I didnt realize your post above was a question...lemme see if I can find a question mark in it or if it was posed as a question or being passed as some semblance of knowledgable information sharing to paint the upcoming budget as somewhat challenging to you and your familiy's drive to increase your income.

nope.

Trust me, I'm not lowering anything without a final bill. It was something mentioned as a possibility. It goes without saying that I'd prefer to continue to maximize my income.

What's your motivation? After all, the government is just going to take more and more of your money as you make more....

:devil:

Thanks. File that under the same file as the e-mail stating that every citizen would get $200K if the gov't distributed the stimulus money equally.

But on the other hand, the expansion of gov't by the same administration who increases my taxes further ensures my job will be here for some time. What's a man to do? :)

You obviously have more faith in the current crop in DC than a lot of people do.

I typed out a lot and deleted it all because countering MBBF's question is such a waste of time I find it silly beyond almost anything. He knows exactly what he means at all times. At least Jon is funny.

You give me FAR too much credit. I was being sincere and honestly didn't have any alternative motive.

Im shocked. <-----feigned shock.

At least he wasn't surprised by something this time.

:eek:

Thanks. I was going to say something along those lines.

It's just up to one's beliefs in all politics. You'll never change someone's mind, but it's good to discuss, argue, and kept those ideas flowing.

Okay, time to fess up. Who were the 11 guys who voted for "No Recession"?

Any changes to the AMT?

I'm generally a peaceful guy, but this shit makes me want to get a torch and pitchfork, and probably another blood pressure pill.

$250,000*52weeks=13 million/year
$1m*52 weeks=52 million/year
$10m*52 weeks=520 million/year
350 million/100=3.5 million people
$52million/year*3.5 million people = $182,000,000,000,000
$182 trillion/$15 trillion = the top 1% supposedly earning >12 times the US GDP

Now that's basic mathematics. But at least we know where Obama is getting his figures to say taxing the top 1% will pay for everything.

(For fun - 40 hours*52 weeks*$50,000 median income = $104 million/year if a person made the yearly median income every hour.)The way he wrote it originally I thought he was saying he owned a small business, his wife worked for that, and there was some corporate/personal income tax arbitrage situation. Or there being certain income thresholds where she was started being eligible for Medicare or food stamps or something. But neither make sense based off MBBF working a gov't job, so yeah, I'd say go requiz the accountant on that. I'd really love to see where the misunderstanding is (or the loophole if it really exists.)

I defend capitalism to the death, but the punishment disparity between white collar crime and armed robbery is despicable. If no one in a legal position is going to hold anybody accountable, I understand why people are so willing to go after every rich person's wealth.

While it can be argued that its 'fair' to tax the top 1% heavier than others - its unrealistic for many reasons.

These people have huge amounts of cash - if they have taxes raised in one country they'll relocate to another, its not like they're a massive corporation and can't do this ... indeed the very money that Obama etc. are trying to get off them makes it extremely easy an practical for them to do so.

Not only that but their wealth means other countries will welcome them with open arms because they're likely to invest and spend a higher proportion in the country they're based within.

My wife has a S Corp that she funnels her income through. Perhaps there is something there that I'm not understanding that could change.

Not sure if you are lumping this in...but this would also describe why I believe corporate tax rates being higher, in a world that can now support remote offices, etc. is the wrong approach. The US is now "competing", at some level, for corporations & rich people alike, to want to live and base here.

I don't like the whole "rich people suckup" as a strategy for policy...but they are the one's who drive the economy. Not people like me who buy groceries and the occassional splurge on a TV(or some such purchase).

But there was no mass exodus of the wealthy during Clinton. Why would you expect that to happen now? For that matter we had plenty of rich folks in the fifties and sixties when the top rate was much higher.

How many exodus depends relationally with how many loop holes are available to allow them to dodge the tax.

For instance you can put in a 40% upper bracket limit with no side effect if you allow the same people to open a limited company and then pay themselves via. dividends at a much lower rate (this is quite common place in England for instance if you look through companies house you'll find all Premiership footballers pretty much are paid this way simply because dividend payments are taxable only at a 20% rate).

If you close off the loopholes then you WILL find people will exodus, maybe not visibly but enough to dodge paying tax ... no one likes giving away wadges of cash when they don't need to.

(on the other hand if you're happy with just making gestures for the medias sake and leaving loopholes open then obviously it'll have no effect at all in reality apart from making accountants a little richer as people employ more of them to just through the hoops)

Seriously, someone you know is going to move elsewhere because their $250K+ per year is taxed at 5% (35% to 39.6%) more than it was before? Hell, in some cases, moving costs more than wipe out any tax gain you'd get. Oh, and did I mention that pretty much all of the 1st world has higher taxes than us currently. Most places in Europe hang around 40% while some go up to 60%. I don't see the rich moving to the Eastern Bloc, Middle East, or Africa to pay less taxes- it's just not going to happen as they can't get the standard of life they enjoy currently. And I suspect they don't have the crazy level of deductions that we allow here, as almost all of these countries are more heavily regulated so a good tax lawyer gets you paying a lot less here in the US.

So, please, let's stop this meme of "they'll go elsewhere" because it's a load of crap.

SI

I fail to see how the rich drive the economy we currently enjoy. No, that's glib. But, I fail to see how they drive it more than the middle class, considering what an extreme consumer-based economy we have. Once you get beyond a certain level of living, you can't consume any more.

Considering you have 99 "poorer" people for every 1 rich person- how does letting them have money to buy 1 Rolls Royce help the economy more than 10 of those 99 having the money to buy a car from GM? Great, so they can buy a $5M home. Does that employ more people than 10 of those 99 buying a $150K home? $100 bottle of wine/$3 6-pack of coke? Expensive work of art/tv? $100 restaurant meal/Mickey-D's?

Most of the money the rich have is tied up in assets like stock either for investment or owning corporations, funds, real estate (derivatives), etc- in short, investments. In a way those help the economy run, but clearly a lot of that is just vehicles of moving capital up the ladder, making the rich richer and the poor poorer- as we've seen very clearly in the last few months, robbing long term 401k's to make a quick buck, etc. How does that help the economy at all?

Basically, the poorer you get, the more is spent locally on everyday needs on consumer goods. Now, if you want to argue whether a consumer-based economy is good, we've got a lot longer conversation. But the fact remains that the further away you get from everyday needs, in terms of income, the less is going to circulate, especially for the US. If you have just basic needs, they will mostly be met by US workers: gotta have locals to build your home/apartment, make your food, run your cable/electricity/water, build your car- American or American-made foreign car, etc. Put that together with some cheap electronics, furniture, and necessities like pots/pans/etc that are made in China and you have a basic living.

As you go up the ladder towards more luxuries, you're talking about branching out to a lot more foreign sources.

And you know what's good about capitalism, as a basic system: If you removed the top 1% right now, there'd be millions of people left, looking to take their place, making products, employing people, and selling products and become the new top 1%. So, let's not pretend the current rich we have now are the people who deign us to spend their money and give us jobs by their good graces.

SI

You'll find some people will - simple as that, I know a LOT of people who have left England as their careers have progressed and for many a reduction in tax paid has been a factor in that.

(I also know some people who have moved to the UK from higher taxed European countries for similar reasons)

It should also be noted that the people involved aren't just 'tax payers' they also people who tend to drive the economy by starting companies etc. - hence their loss to a country is more than just the immediate personal tax contribution imho.

So no I don't think its just 'crap' - but however I do also acknowledge that the effect is somewhat muted so long as countries retain the normal tax dodges (such as the one I mentioned that Premiership players use in the UK) available to the hugely weathy and instead just treat such rises as an attack on the middle class who are caught in the 'reasonably affluent' but not rich bracket.

my thoughts exactly

nailing it on the motherfucking head man!

Ok using an example of someone I've met personally - Ian Livingstone is a fairly affluent person and undoubtably pays a fair whack in income tax.

Ian founded Games Workshop (bloodbowl, warhammer etc.), then invented the 'Fighting Fantasy' gamebooks (choose your own adventure etc), he then got involved Domark and when they were bought out became chairman of Eidos for ages (which is around the time I met him).

Now I'm biased because he's a nice bloke and I've always admired the games he's had a hand in creating but ....

I think its safe to say that the amount of income tax he paid was marginal in contrast to the effect on the economy of the jobs and companies he created.

Thats whats generally meant by the importance of the higher paid individuals - they aren't thinking of high paid 'employees', most people in those brackets are involved in stimulating the economy by creating jobs etc.

BTW if Oil already tested it's low anyone want to tell me what the $/barrel was? :)

on the other hand GE continues to get pounded relentlessly and IMO unwarranted (or grossly exaggerated). GE Capital while a large and exposed facet of the company I do not believe will cause it to get a ratings downgrade (although if the stock price drops far enough it will put more pressure on the company to raise capital - I cant believe Im saying this about GE) and while they have taken unnecessary risks I see this as an incredible value going forward. Im still scaling in for a $/avg that is much lower than I anticipated but I cant believe that it's dropped this much. Shocking and right in line with everything contra-flasch.

But if he doesn't have a large consumer base to buy his products his innovation doesn't matter. It's all about a balance between creators and consumers.

yeah I was just commenting last night that there are a lot of blue-chip names that have been oversold with very attractive valuations and I need to consider building positions in some of them for the very-longterm as well as considering my strategy for participating in the market upside - whether it's solely via index funds to capture the broad market upside, or whether I toss some sector-specific ETF's in there as well...

I agree there is a balance to be had between the two, but its often economic incentives which gives people the 'push' to create companies and thus jobs etc.

Thats the arguement against having hugely onerous taxes (without loopholes) for rich people.

Strangely this is also the 'standard' arguement against socialism - ie. if you pay everyone the same and limit incentives for people to go above and beyond you end up with very little stimulation of an economy or improvements.

There are some interesting economic papers which have been written on capitalism being introduced to China incidentally which if you're interested in this sort of thing make fascinating reading (I've got a book at home in Florida which references a load of them - if anyones interested PM me and I'll forward the name etc. onward once I get back there in a few days time).

I would agree, but our definition of onerous is very different. All of the Western European democracies have a wealthy class and the tax tax burden in some of those countries is significantly higher than the U.S. In the nineties the U.S. had a wealthy class and Obama plans to restore the top marginal rate to what is was under Clinton. There's no rational argument to be made for that tax change to cause a mass exodus of wealth from the U.S.

Marc,

That won't happen in the US first one simple reason. The US taxes it citizens on their worldwide income, regardless or residency. I believe that the first certain amount is tax-free, but after that the US taxes it. The rich do tend to legally reside in tax-free states like Florida and Texas.

In defense of Marc, the wealthy Europeans flock to places Monaco, Switzerland, and the UK (which only taxes foreigners on UK income only). Those countries have a very high level standard of living.

I'm can see Marc's view, but it doesn't apply in the US.

One thing about Obama's plan that could backfire is the AMT. Unless it's changed, won't it wipe out those "middle class" tax cuts down the line?

I laugh at the threats of tax exodus, to be honest we would be better off without most of those morons in the country (especially if it means we could get some new corporate leadership that doesn't suck). SterlingIce pretty much described the basis of a real economy, I've played with numerous toy economies (it is my hobby) and studies... the U.S. is basically capital rich, it would take an apocalyptic event (not a tax hike) to really drive down investment necessary for basic functioning of the economy. In fact, the unregulated, untaxed corporate looting of the Bush era may be more responsible for the largest reduction of investment power we have seen in decades.... you are seeing productive capital being exploited and extorted away in this economy into places where it will not generate growth (such as speculation). The growth it does tend to encourage is not the best kind, such as increases in the use of leverage, or various bubblenomic situations (currently we are in a negative bubble, it is so easy to short and there is so much money doing it that it can drive prices below norm).


Anyhoo, in a capital rich environment economic growth is driven fastest by increases in average standard of living (more products consumed, increasing net revenues). If that is coupled with increasing efficiency (i.e. less waste per product) it creates the most sustainable growth... out of control subsidizing of production combined with inefficiency has a tendency to both run up the costs of debt and dealing with pollution (health care, cleanup, toxic accidents, decline in property values near pollution).

The best balance, according to my random asshattery, is to have money flow in common sense patterns. That means allowing standard of living to go up through natural processes (technology, mass production, and efficiency) and not allowing exploitation of resources for the benefit of a few. It also means rewarding rich investors with gains from that increased overall standard of living... but that value remains there whether you tax it or not. The amount of tax you need to make a severe disincentive is pretty high... if you want to compete with the third world or second world (haha, never hear that one, I wonder what it means)... well you can't. They don't mind living like shit and they have the revolutions to prove it. You need structures that build economies, NOT ARISTOCRATS, that is the whole basis of American economic success. Unfortunately, most of our elites are too busy patting themselves on the back and corrupting things further to see they are killing the cow that keeps them fed as much as the rest of us.

I personally want to be fricking super wealthy. I don't want to be taxed into oblivion when I get there, but I'm willing to pay taxes to live here in America, hire Americans, and do my business in America... not because of home team loyalty, but because we've got the best culture, technology, and prospects for innovative growth. I'll let the fatcats go exploit some third world country and laugh when their mansion gets overrun by a revolt, or their daughter gets kidnapped for ransom. Instead I'd rather be here at the center of creative activity in the world economy, making the businesses that will make me crazy rich, and make the products to make me feel crazy good (like flying cars dammit, and robot women... for uh doing laundry, ya thats the ticket).

Oh forgot my whole original purpose. Liquidated my GE short (started at 12, hit my target at 6 and auto-executed at 6.17). Bit of a gamble, but I decided to reshuffle around my money to basically buy twice as many shares as I shorted originally. I'm figuring if the ten cent dividend holds up a 6% yield at 6.5 share price is not too bad.

My averaged out long price is 7.5. I am hoping the Contra-Flasch theorem does not screw me and GE reveals something like it bought a trillion dollars worth of credit default swaps.

These threats of the wealthy abandoning ship are just as stupid as all the actors who stated they would move out of the country if Bush was re-elected in 2004. They just hung around and kept complaining.