Hillery Clinton Talks About Brazil As A Taxation Model

See: Clinton: 'The rich are not paying their fair share'

"Brazil has the highest tax-to-GDP rate in the Western Hemisphere and guess what — they're growing like crazy," Clinton said. "And the rich are getting richer, but they're pulling people out of poverty."

Both Clinton and Obama campaigned for president on promises to allow the Bush tax cuts for wealthy Americans expire this year, a plan that is now part of Obama's budget. The move will effectively raise taxes sharply on people earning more than $250,000.

Hillery is clearly suggesting that Brazil's high tax rate is the reason that its economy is growing.

Brazil may have a high tax rate, but it also largely avoided the banking disaster that has put many other western nations on the brink of bankruptcy.

See: Lessons from Brazil: Why Is It Bouncing Back While Other Markets Stumble?

But all of Brazil's banks can be thankful that, to a large extent, they haven't had to deal with the toxic assets that crippled banks in developed countries. Unlike their counterparts elsewhere, Brazilian banks were not as exposed to the property sector and credit derivatives, and financial soundness indicators were robust coming into the crisis, according to Fabio Barbosa, head of Banco Santander Brasil and the Brazilian Federation of Banking Associations (Febraban). He cites the high capitalization requirement as a key reason for the sector's resilience -- the minimum capital adequacy requirement in Brazil is 11%, compared with 8% under the Basel regulations that other banks around the world follow. In December 2008, the average ratio for the sector in Brazil was 20%, and for the country's five largest banks (accounting for 67% of total assets) the ratio was 18.5%. He adds that Brazil also didn't have a shadow financial system, like in the U.S., thanks to tight regulatory and supervisory oversight. All financial institutions (including investment banks) are under the watch of the Central Bank.

One of Brazil's biggest advantages is that it did not have a Barney Frank or a Chris Dodd plundering it's banking system to redistribute wealth.

Comparatively, with the rest of the western world seeing their future play out for them in the street riots of Greece, Brazil is doing pretty good. It could do even better.

High tax rates reduce the private sectors ability to raise money for new projects, new ideas, new services, and new businesses. If Brazil were to reduce its tax rake to a lower level, productivity in their private sector would likely increase, which ironically enough, would also increase the amount of tax revenue that the government would be able to take in. Increasing the opportunity for the private sector to make money also increases the potential amount of taxable revenue that can be collected.

Conversely, if Brazil were to increase its tax rake even more than it is at present, it could expect to see an eventual decline in private sector productivity. Lower profits would reduce the amount of taxable revenue that the government could then skim out the publics pockets.

There is a point at which the tax rates can be raised high enough that the result would be reduced tax revenue to the Government. Right now, Brazil is in a boom period. They are making money. The high tax rate is not the reason that they are making money. It is just a factor that businesses in Brazil have to deal with, a hindrance that they have to overcome, a red-line that they have to pay for in their books.

In time, as their economy matures, that high tax rate of theirs will become more of a problem. Their politicians will either have the wit and the will to lower their tax rates which will increase profits and tax collections, or they will squeeze the public even harder with even higher taxes, which will reduce profits and reduce tax collections.

But to think that Brazil has somehow managed to tax itself into prosperity . . . is nuts.

Greece - Economic Liberalization And Removing The State From The Market Place

See: The Bitter Pills in the Plan to Rescue Greece

Another reform high on the list is removing the state from the marketplace in crucial sectors like health care, transportation and energy and allowing private investment. Economists say that the liberalization of trucking routes — where a trucking license can cost up to $90,000 — and the health care industry would help bring down prices in these areas, which are among the highest in Europe.

Note how in this paragraph, "liberalization" refers to "removing the state from the marketplace."

Greece is in such bad shape, they are considering taking two steps back in order to take one step forward.

Not to worry though. One of the proposals is to have Greece increase its Value Added Tax (VAT) up to 25%. That is a high enough rake off of the private sector to insure that no real economic recovery will come of anything inadvertently positive that could be imposed.

There is no easy solution for Greece or for any other nation that is suffering from the all to predictable results of running out of other peoples money to spend. You can't spend what you don't have. Resorting to debt will only make the problem bigger. Resorting to raising taxes will only cripple that part of the economy that creates wealth. Freeing the economy from government regulation and taxation could work but it can not rescue welfare-state socialism from its all to predictable and inevitibly destructive results.

Bottem line, Socialism Sucks.

The Looming Commercial Mortgage Debt Crisis

With California, New York, and some of the other large states on the verge of default, a problem with commercial property debt may push them that much closer to the brink.

See: Commercial Mortgage Default Rate in U.S. More Than Doubles

The default rate for commercial property mortgages held by U.S. banks more than doubled in the fourth quarter and may reach a peak of 5.4 percent at the end of next year, according to Real Capital Analytics Inc.

We may have rough seas ahead of us.

The timing of the midterm elections will make all of this that much more interesting.

Democrats Will Destroy California

The Democrats are inherently incapable of stopping themselves from destroying California.

See: California is a greater risk than Greece, warns JP Morgan chief

Mr Dimon told investors at the Wall Street bank's annual meeting that "there could be contagion" if a state the size of California, the biggest of the United States, had problems making debt repayments. "Greece itself would not be an issue for this company, nor would any other country," said Mr Dimon. "We don't really foresee the European Union coming apart." The senior banker said that JP Morgan Chase and other US rivals are largely immune from the European debt crisis, as the risks have largely been hedged.

California however poses more of a risk, given the state's $20bn (£13.1bn) budget deficit, which Governor Arnold Schwarzenegger is desperately trying to reduce.

I have serious doubts about California coming to grips with it's debt problem. The Democrats own that state's legislature lock, stock and barrel. Even if Arnold Schwarzenegger were inclined to be a fiscal conservative, there is damn little that he could do to stop the Democrats from running the state smack into the ground.

The Democrats will not become fiscal conservatives. It just won't happen. Their very reason for existence is to create an ever expanding welfare state. It's what they promise to get elected and it is what they believe is right and good.

Given the Democrat's visceral hatred and fear of the concept that lowering taxes increases tax revenue, and their willingness if not eagerness to raise tax rates for both revenue collection and for social engineering purposes, what can we foresee them proposing to get themselves out of the mess that they have spent themselves into?

Can we really imagine for a moment that Democrats will seriously even entertain the notion of tax cuts and social spending reductions?

Tax cuts and social spending reductions, real tax cuts and real reductions in social spending, just won't happen.

Unfortunately, California is such a large part of our nations economy that when they hit the wall, the rest of us will feel it.

Gasoline Prices Going Up In A Down Economy?

Gas prices are set to rise soon.

See: Experts: Gas prices in Chicago to top $3

What's pushing prices higher is the crude oil that's used to make motor fuel, said Fred Rozell of the Oil Price Information Service. Crude is an international commodity that has become ever more expensive as demand grows in China. As crude prices increase, so do gas gas prices.

Don't be shocked if the price per gallon goes up well over the $3 dollar mark,

In the not too distant future, some dumb and/or dishonest Democrats will be raising a stink about the rising price of gasoline (petrol) at the pump. Being economically challenged from their starting point, the complexities of supply and demand are not something that the Democrats care much about nor do they know how to cope with them save to use them to engage in class-warfare rhetoric.

The markets are rational. There is an increasing demand for certain types of crude. Other buyers are now on the market. The commodities markets, particularly the oil markets, are less and less directly tied to the American economy.

There is also the additional influence of the changing value of the dollar to account for. As the value of the dollar falls due to the actions of the Democrats and the Obama Administration, the dollar price of the commodity will also rise.

Shit will happen. Democrats will promote class-warfare. And the sun will also rise.

Greedy Democrats Lusting For A Tax On Gold

Democrat greed knows no bounds. Hungry for revenue from any source that She and her fellow Democrats can think of, the Governor Of Washington State is lusting for a sales tax on gold and other precious metals.

See: Is Washington's tax exemption on bullion a gold mine?

Gov. Chris Gregoire repeatedly has singled out the bullion tax break since she ran for her first term in 2004 as an example of the sort of preferential treatment that ought to end.

The governor followed through this year, proposing to start taxing bullion sales as part of her budget proposal to the Legislature. State-employee unions, interested in staving off job cuts, have come out in support.

The State-employees unions are the most powerful lobbies in the state of Washington. They have the Democrats by the short hairs. What they want, they get.

Unfortunately, the real world will not cooperate as slavishly as the Democrats and their State-employee union puppet-masters would like.

The association estimates there are now at least 100 coin and bullion dealers in the state — small coin shops and larger dealers who also sell gold as an investment for retirement accounts. Their businesses would be in jeopardy if the state reinstitutes the sales tax, Robinson said.

As an added blow, national coin-dealer trade shows no longer would consider meeting in Washington.

Because the price of gold is set like a stock on a national market, dealers operate on only a 1 to 3 percent markup, said Karen Feldman, who owns Tacoma Mall Blvd Coin Stamp & Jewelry.

Gold is selling at more than $1,000 an ounce, so if Washington dealers had to tack on a sales tax of nearly 10 percent, it would add about $100 to the price of a 1-ounce gold Krugerrand, Feldman said. Customers simply would buy gold on the Internet or in Oregon and Idaho, which don't tax bullion sales.

A tax on precious metal trades in Washington State would just move the transactions somewhere else. It is a predictable result. The Democrats are just too possessed by greed to give a tinker's damn.

HT: Fenway Nation

See Comment in Do You Deserve To Have Your 401k And Your IRA Confiscated?

Do You Deserve To Have Your 401k And Your IRA Confiscated?

If you plan on voting for Democrats, the answer is Hell Yes! Its your party pushing this abomination from hell so by all rights, you should suffer the worst from it.

See: Retiree Annuities May Be Promoted by Obama Aides

The U.S. Treasury and Labor Departments will ask for public comment as soon as next week on ways to promote the conversion of 401(k) savings and Individual Retirement Accounts into annuities or other steady payment streams, according to Assistant Labor Secretary Phyllis C. Borzi and Deputy Assistant Treasury Secretary Mark Iwry, who are spearheading the effort.

I have some comments that I will be sending their way. I will politely suggest that they forget about this crazy idea. I would encourage you to do the same and to suggest that everyone that you know do the same as well. I will also forward a like missive to my local Congress-Critter and my state Senators. This is the kind of horrifically bad idea that will get passed through a Democrat controlled Congress and White-House in the dead of night if we aren't aggressively vigilant.

If this thing can't be stopped, I will liquidate my 401k's and my IRA's rather then give those scum sucking, bottom dwelling, excrements any more control over my retirement then they already have. Its my money. I earned it. I am going to spend it however I see fit. I would rather take the tax hit for liquidating everything then give the Democrats anything else to hang over my head.

Voting to put Democrats in office is no different then voting to put thugs and thieves in charge of safeguarding your rights and your money. Only bad things will come of it.

See also:Class Warfare's Next Target: 401(k) Savings

See also:Are the Democrats Coming After Your Savings?

HT: JCM at CC

Tuesday, Massachusetts will elect a new Senator.

So far, Scott Brown, the Republican, looks likely to win in a landslide. A big landslide.

Elected Democrats are predictably freaking out. Well that they should. This race may be a bellwether for the next ten years.

If the establishment Democrat, Martha Coakley, loses big to a Republican in Massachusetts, then no Democrat will feel that their seat is “safe” anywhere. If a Democrat can lose “Ted Kennedy's seat,” then all bets are off on every Democrat “safe” seat.

If Coakley loses, and loses big, watch for a rebellion among elected Democrats who will realize that they could lose their cushy sinecures by being associated too closely with Nancy Pelosi's and Harry Reid's flavor of politics.

The polls are all over the place. There are many reasons for this. The whole polling industry is struggling with some huge changes that they must come to grips with.

The primary problem is cellphones and cellphone only households.

If you would like a first hand anecdotal feel for how big of a problem cellphones present to the polling industry, ask the following question in the next large group that you are in. “How many of you no longer have a land-line phone and only have cellphones in your household?” If your group is made up largely of people under forty years of age, odds are that half to over half of them will be cellphone only households. This is very significant. It is a game changer in the polling business. It is also a number that is very likely to increase over the next ten years. In twenty years, land-line phones may be as anachronistic as Telegraph machines.

There are rules for calling cellphone sample that make it very expensive to work with. Mainly, you cannot use any kind of automated dialing method. If you are knowingly dialing on cellphone sample, you must hand dial the phone numbers.

Robo polls will miss cellphone only respondents. The results of a robo poll are ever more doubtful due to the fact that the robot dialed poll cannot account for the opinions of respondents that live in cellphone only households. (Texting may be a way around this problem. So far as I know, there are no rules against using automated systems to send out text messages to cellphones.[Where there is a will, there is a way - especially if there is money involved.])

When it comes down to the wire in regards to elections, I find that I am much more trustful of the punters then I am of the pollsters.

The punters ask a different question. They do not ask “Who will you vote for?” they ask “Who are you willing to bet good money, your money, on to win?” Its a question of knowledge, not of opinion. Which makes its a very different question. The results can be significantly different and potentially far more accurate.

Predicting elections was once something that the odds-makers dominated. Scientific telephone polling changed the game and allowed telephone pollsters to take that role away from the bookies. Now the game may be changing again, giving the advantage in predicting election outcomes back to the gamblers.

Take a look at Intrade and watch the election numbers as they come in Tuesday. Election Markets may be the way of things to come. Time will tell.

And these are very exciting and interesting times indeed.

Get off your ass and get a job!

The truth behind much of the economic happy-talk that the Obama administration is putting out is that we are in hard times at the moment, with the probability of things getting far worse.

Nouriel Roubini has an article in the New York Daily News that is worth taking a few moments to read.

Think the worst is over? Wrong. Conditions in the U.S. labor markets are awful and worsening. While the official unemployment rate is already 10.2% and another 200,000 jobs were lost in October, when you include discouraged workers and partially employed workers the figure is a whopping 17.5%.

While losing 200,000 jobs per month is better than the 700,000 jobs lost in January, current job losses still average more than the per month rate of 150,000 during the last recession.

If you have a job, try to keep it.

If you don't, then you had better be busting your ass to get one. Every day that goes by that you remain unemployed increases the number of people that are in line with you looking for work. Many o these people will be better qualified and more desirable for a company to hire than you are.

Do not rest on your laurels – you don't have any.

Be prepared for some rough times.

The American Public “Getting Reamed.”

The Politico has a short piece about the 1,990 + page monstrosity that house Democrats are going to try to cram down our throats.

They cite a section as a caution to those that will clammer for it to be read before it is voted on.

“(a) Outpatient Hospitals – (1) In General – Section 1833(t)(3)(C)(iv) of the Social Security Act (42 U.S.C. 1395(t)(3)(C)(iv)) is amended – (A) in the first sentence – (i) by inserting “(which is subject to the productivity adjustment described in subclause (II) of such section)” after “1886(b)(3)(B)(iii); and (ii) by inserting “(but not below 0)” after “reduced”; and (B) in the second sentence, by inserting “and which is subject, beginning with 2010 to the productivity adjustment described in section 1886(b)(3)(B)(iii)(II)”.

Um . . .

Yah. . .

I got that.

A sane person, in the everyday life that you and I live in, would look at that pile of gobblygook and rightfully conclude that the person spewing it was trying to get one over on us.

For the Democrats in Washington D.C., it is how they hide what they are going to do to us.

At the end of the article, the Politico closes with the following paragraph.

But Republican Rep. Joe Barton, who is Texan, said the bill is “about four reams of paper” that add up to the American public “getting reamed.”

Thats Democrats just doing what they do best Joe.

Rationed Health Care is going to be just to die for.

Producers going on strike in New York

It is not exactly something out of Atlas Shrugged, but it has strong echoes.

Andy Soltis talks about a trend that few others in the MSM dare mention.

New Yorkers are fleeing the state and city in alarming numbers -- and costing a fortune in lost tax dollars, a new study shows.

More than 1.5 million state residents left for other parts of the United States from 2000 to 2008, according to the report from the Empire Center for New York State Policy. It was the biggest out-of-state migration in the country.

The vast majority of the migrants, 1.1 million, were former residents of New York City -- meaning one out of seven city taxpayers moved out.

"The Empire State is being drained of an invaluable resource -- people," the report said.

What's worse is that the families fleeing New York are being replaced by lower-income newcomers, who consequently pay less in taxes.

The parasitic welfare state can't keep raising taxes with out exhausting its hosts, namely the productive. The productive can move. They can even quit or just simply retire.

In New York, they are moving out.

In a few years when the retirement boom hits, they will probably just up and quit(retire).

In the long run, John Maynard Keynes is still dead

The ABC News website has an article by Mark Trumbull discussing the waning expectations that the "stimulus bill" will be able to help "stimulate" any future economic growth.

Americans hoping for a big economic boost from President Obama's economic stimulus programs got a douse of cold water Thursday: The White House's top forecaster said the largest impact of the stimulus on economic growth is probably in the rear view mirror.

That's the case even though unemployment continues to rise and many of the stimulus dollars haven't been spent.

"Most analysts predict that the fiscal stimulus will have its greatest impact on growth in the second and third quarters of 2009," Christina Romer, who chairs the President's Council of Economic Advisers, said in testimony prepared for Congress. "By mid-2010, fiscal stimulus will likely be contributing little to growth."

In the long run, John Maynard Keynes is still dead. Unfortunately, his economic prescriptions will not die.

When government spends money, it is spending other peoples money. There is a natural disconnect of the value placed on the money by those who earned it when it is spent by those who merely appropriated it.

Stolen money is cheap. Earned money is dear.

Earned money is far more likely to be spent with care than looted money.

No politician and no bureaucrat can ever be as invested in the outcome of the spending of an appropriated dollar then the person that originally earned it. Whether that dollar is spent on a pleasure or invested for the future, the one who earned it is the only one that is able to truly appreciate what that dollar cost him to earn.

To a person that earned a dollar, the notion that it should be used to pay one person to dig a hole and to then pay another person to fill it, sounds like utter madness. To a Keynesian that appropriated a dollar earned by someone else, it is eminently economically sound.

Dancing with the Devil in the pale moonlight.

The problem with accepting the Devils coin is that you will end up dancing to the Devil's tune.

This is proving to be undeniably the case for those companies who have accepted a portion of the 2008 - $700 billion dollar bailout.

It was a Faustian deal. For a pittance, they have sold their corporate souls to the Obama Administration.

Now, day by day, instance by instance, they are discovering that they no longer own themselves. They no longer can decide for themselves what they should do, what is best for their company or what is best for their shareholders. Those decisions now belong to the occupant of 1600 Pennsylvania Ave and his minions.

WASHINGTON (AP) -- The Obama administration plans to order companies that received huge U.S. government bailouts last year to sharply cut the compensation of their highest paid executives, according to a person familiar with the decision.

The seven companies that received the most assistance will have to cut the annual salaries of their 25 highest-paid executive by an average of about 90 percent from last year, said the person, who spoke on condition of anonymity because it has not been announced.

This person said Wednesday that the Treasury Department will announce the deep pay cuts within the next few days.

Kenneth Feinberg, the special master at Treasury appointed by Obama to handle compensation issues at the seven firms getting exceptional assistance from the government's $700 billion financial bailout package, is making the pay decisions.

The seven companies are: Bank of America Corp., American International Group Inc., Citigroup Inc., General Motors, GMAC, Chrysler and Chrysler Financial.

Total compensation for the top executives at the seven firms will decline, on average, by about 50 percent, according to the person familiar with the administration's decision.

Read these articles.

U.S. Said to Order Deep Pay Cuts at Bailed-Out Companies

Pay Czar to Slash Compensation at Seven Firms

US plans big pay cuts at bailout firms

Some people think that Fascism is when the corporations own the government. They have it back-ass-wards. In actuality, Fascism is when the government owns the corporations.

---

Have you ever danced with the Devil in the pale moonlight?

Feds threaten to "fire" BofA Execs for balking at a bad deal.

The Washington Times reports on the strange dealings of the BofA/Merrill Lynch deal of 2008. There is something very rotten at the core of all of this.

Bank of America's acquisition of Merrill Lynch - and the government's role in the deal - are the subject of a hearing Thursday before the House Committee on Oversight and Government Reform. Bank of America executives said they were told their top brass would be fired if they attempted to renegotiate their bid for Merrill by declaring what's known as a "material adverse change" (MAC) - a clause in their acquisition agreement that would allow them to walk away or renegotiate the price in light of Merrill's mounting losses.

"The Treasury and the Fed strongly stated that if we were to invoke the MAC clause and fail to close this transaction, they would remove the board and management due to the risk we would create in the system," according to draft talking points prepared by company attorneys for Mr. Lewis ahead of a Dec. 22, 2008, board meeting.

(Emphisis mine)

How does the Fed come to have the authority to fire the board and management of a private company?

If they can do this to BofA, who could resist them? (Calling Lord Acton . . .)


~~~

And remember, where you have a concentration of power in a few hands, all too frequently men with the mentality of gangsters get control. History has proven that.
- Lord Acton

What We Witnessed in the 1970s

Kudlow talks about the weak dollar.

We know that gold is soaring.

And we know the dollar is slumping. But, did you know that year-to-date, while the S&P 500 is up 18 percent—a great showing no doubt—gold is up even more.

The precious metal is up 21 percent. In other words, measured in true, gold-backed purchasing power, stocks have really done nothing this year. Zip. It is most disappointing.

I try to be optimistic about better earnings, a stock market rally and economic recovery. And I’m sticking to my guns. But what we’re seeing right now is pretty darn close to what we witnessed in the 1970s—the rise in gold and inflation really cuts into the stock market.

Kudlow is a supply-sider. His solution is to do what has worked in the past. Lower taxes and reduce Federal spending.

Fat chance that Obama will follow Kudlow's advice.