May 2009

about that deficit... IRS Tax Revenues Fall 34%

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Beyond our absurd deficit, what is more scary in this story of tax revenues falling 34% from one year ago, is that amount of money is only $138 Billion dollars. That is 34% drop off, which implies last years IRS total revenues were $405 Billion.

Think about $1 trillion. Multiple that by 12 and then see what 34% of our tax revenues in a year is. Last year's tax revenues were $405 billion. That means to just pay off $1 trillion dollars, no interest, just the principle, would have taken 2.5 years and this is before the 34% drop in tax collections. Yet the government committed to $12 trillion total in financial bail out commitments.

Oh yes, the reason IRS revenues have dropped is once again, Americans are broke and we need jobs, jobs, jobs, jobs. So here is yet another factor where everything depends upon employing the U.S. labor force.

When math meets political dogma

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"The Church at the time of Galileo kept much more closely to reason than did Galileo himself, and she took into consideration the ethical and social consequences of Galileo's teaching too. Her verdict against Galileo was rational and just, and the revision of this verdict can be justified only on the grounds of what is politically opportune."
- Cardinal Ratzinger (now Pope Benedict XVI), 1990

You would think in today's world that people would accept that simple math isn't something you debate. You would think that people would accept that 2 + 2 = 4 and then move on.
But that's not how the world works. Galileo failed when he tried to argue physics with theologians. The problem today isn't physics - it is simple addition - and the theologians of today are political.

U.S. Health Care System is A Blood Sucking Leech

I changed to the title because this is cross-posted at RebelCapitalist. Our health care system is killing us financially. We spend more on health care then any other country and have very little to show for it. It is causing inefficiencies in the job market. The system itself is incredibly inefficient. So, why, with all these problems, can't we reform our health care system?

VAT or Value Added Tax is Getting a Look in D.C.

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The Washington Post is covering the VAT or value added tax and suggesting the concept is gaining support in Congress. Unfortunately WaPo characterizes this tax completely incorrectly as a national sales tax. It's not frankly, it is a legal method by which to address the trade deficit.

Fortunately Trade Reform has a better understanding of what a VAT really is:

Create Your Own Money Governor

On May 22, 2009 Governor Arnold Schwarzenegger quoted in Time

"I understand that these cuts are very painful and they affect real lives. This is the harsh reality and the reality that we face. Sacramento is not Washington -- we cannot print our own money. We can only spend what we have."

Why not? Private banks do it all the time and its legal. According to the Federal Reserve Bank of Dallas

Banks actually create money when they lend it.

According to Huffington Post there is a State owned bank that has been doing this since 1919.

Banks want to sell to themselves Toxic Assets and have Taxpayers foot the bill

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The Wall Street Journal is reporting, Banks are trying to sell toxic assets to themselves.

Banking trade groups are lobbying the Federal Deposit Insurance Corp. for permission to bid on the same assets that the banks would put up for sale as part of the government's Public Private Investment Program.

Banks want to sell themselves back their toxic assets (for a profit I will assume), via the PPIP program, which is (cough, cough) the gift that keeps on giving already. So, remember, the PPIP will have U.S. taxpayer subsidies available to clear the books from these worthless (i.e. toxic) assets many banks currently hold.

The "H" word for the U.S.? - Hyperinflation

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When I first read about the Federal Reserve printing money and lowering interest rates to an effective -5% interest rate, images of Argentina and the Weimar Republic flooded my head. Rest assured I believed my fears were just that.

Now we have investor Mark Faber saying hyperinflation is guaranteed. Happen here? Well, there are a lot of things, which are stuck on stupid happening in the United States, but with the U.S. as a reserve currency and the number one economy in the world?

The U.S. economy will enter “hyperinflation” approaching the levels in Zimbabwe because the Federal Reserve will be reluctant to raise interest rates, investor Marc Faber said.

We're Sorry, 8% Permanent Unemployment is not Acceptable!

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Imagine my disgust at this headline: New Normal of 2% GDP Growth where experts are claiming America just had to get used to it with permanent 8% unemployment numbers.

Americans may have to get used to unemployment greater than 8 percent for the first time since 1983 and an economy that won’t grow much beyond 2 percent as a consequence of the lost confidence in consumer credit that shattered financial markets.

Who is saying this? Pimco, the biggest bond trader and it's co-founder, Bill Gross, who is becoming more powerful by the day.

I'm sorry Pimco but that is unacceptable and we really do not care what full employment does to your portfolio.

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