Euro Zone’s Mediterranean Banking Problem

March 27, 2013 Leave a comment

It’s amazing how little coverage the banking situation in Cyprus is getting here in the United States. Banks aren’t open for the second week in that country as pols and the EU debate how much money the EU is going to take out of savings accounts in Cyprus. The latest deal has only the “rich” seeing their money confiscated via a wealth tax. Even so, it isn’t preventing the legitimate fear of a massive bank run when and if banks reopen. Considering they wanted to initially tax the wealth of everyone in Cyprus, it should hardly come as a surprise that middle and lower class folks in that country don’t trust the banks, their government or the EU any longer.

It’s easy to dismiss Cyprus as an irrelevant little country that doesn’t affect us in anyway. It’s also easy to dismiss those who will lose money as a bunch of Russian oligarchs, as a good portion of the money to be taken out of accounts belongs to such people. It isn’t quite as easy to dismiss countries like Italy and Spain who are being threatened with similar wealth taxes by the EU. All of this is to prop up failing banks, which will of course will do little more than push failure off to sometime in the future.

If you’re a middle class depositor in Spain or Italy, you must be looking at what’s happening in Cyprus with absolute horror. The EU, largely led by Germany, is essentially destroying the nation of Cyprus. Their original plan would have gutted the savings of the middle class. The mere threat of such a gutting is going to cause bank runs once the banks reopen. No one trusts their government or the EU. If you’re a middle class Italian, you’ve got to be thinking about removing your savings from Italian banks. One might suspect that these days the notoriously secretive Swiss banking industry is opening a lot of accounts for the citizens of Spain and Italy.

This matters for us here in the US because the Euro zone is one of our biggest trading partners. It’s becoming increasingly clear that the Euro isn’t a viable, continent wide currency. The fiscally responsible Germans are rightly tired of bailing out the fiscally irresponsible Mediterranean countries. There is a great divide in Europe between the north and the south. At what point does Germany simply cut loose the Mediterranean countries from the Euro and/or return to the deutsche mark? How smart does Britain look at this point for staying out of the Euro in the first place?

Our deposits in the US aren’t necessarily at risk of a massive wealth tax, though there is precedence for the government shutting down banks. We need not be overly concerned about Congress passing a wealth tax and taking away middle class savings. We’re being affected by what’s happening in Europe because the Cyprus situation is dragging down the Euro zone. Our government should not get involved in the internal affairs of Europe. We should however hope for a quick solution and perhaps a return to multiple European currencies. The EU’s actions in Cyprus are nothing short of a disaster if one wants to have stable banking. Hopefully the EU will have learned their lesson. The safe bet is that they probably haven’t.

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Cyprus Wealth Tax A Dangerous Punishment For Saving

March 18, 2013 2 Comments

News out of Cyprus over the weekend should concern everyone. Cyprus is in need of an EU bank bailout. Not surprisingly the Germans are tired of bailing out fiscally unstable European nations. With Germany refusing to bail Cyprus out the EU came up with another plan: Tax savings. Just three weeks ago the President of Cyprus laughed off such a proposal as ridiculous. Early Saturday morning in a massive document dump the President’s plan to tax savings (10% for savings over $50k, just under 7% for those with less savings) was revealed. Only the press didn’t pay attention. It took individual citizens complaining on Twitter about not being able to use ATM’s for people to figure out what was going on.

American leftists such as Robert Riech are hailing the taxation of wealth as a great thing. In reality what Cyprus is doing is incredibly dangerous. They’re basically setting up bank runs all across the EU. The people in Cyprus learned too late that their savings were going to be taken from them. Don’t for a second think the folks in Greece, Italy, Spain and Portugal aren’t taking notice. If people believe their country might tax their savings, they’ll pull their savings out of the bank. Because of fractional reserve banking, most banks won’t have enough cash on hand to give back to depositors. Thus we could see bank runs that collapse banks in Italy, Spain and several other countries.

This is both good news and bad news for the United States. It’s bad because the Euro zone is one of our biggest trading partners. Bank runs such as what is likely to happen due to the situation in Cyprus will slow economic growth throughout the EU. Bank runs creat chaos and chaos is never good for economic growth. The only bright side to this is that some large depositors might move their money to the United States. Though having said that banks in Germany and Britain are as stable as ours.

This entire situation sets up a dangerous precedent. While we aren’t likely to see our savings taken from us via a bank enforced wealth tax in the US, there is legitimate concern that it could happen here. We’re a nation that has over $16 trillion in debt. It would hardly be surprising if one day the government decided to tax us in this manner to pay off debts to avoid financial collapse. It’s not likely now but it could be in the future. There have been talks from the left about nationalizing our 401k’s, which would serve a similar end. If people become fearful of banking, the entire financial system could be in major trouble.

In the short run the message being sent by Cyprus is that there is no gain in savings. Savings are one of the most important functions of the family and of an economy. It’s bad enough that governments discourage savings by creating artificially low interest rates and taxing middle class capital gains. With governments in the Euro Zone either taxing bank accounts or considering them, the incentive to save decreases. Without savings, families don’t have a hedge against unexpected unemployment or expenses. Thus they look to government, which of course doesn’t have the money to be our hedge anymore. Especially in socialist countries like Cyprus, Greece, Italy etc.

Make no mistake, the US government is engaging in the same mistakes concerning savings. The Fed keeps interest rates artificially low, thus there is incentive to consume today rather than save for tomorrow. Our national debt is such that at some point we will no longer be able to afford the massive government we’ve created. Our states and local governments are in debt as well. Taxpayers are being taxed to death, wealth is the only avenue the left haven’t explored via taxation. With people not saving and expecting personal bailouts from government, we’ll have a problem on our hands when we can no longer afford our national debt. It’s a matter of time. We can’t add $1 trillion a year to the national debt and expect that to be sustainable forever. We’re not Cyprus yet but we aren’t far off.

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Recent Stock Market Gains Are A Fraud

March 14, 2013 16 Comments

The stock market is booming, posting nine straight days of positive gains. The Dow is hovering around 14,500, NASDAQ and S&P 500 are all up substantially. You would think the economy is booming and  yet there really are no signs of a booming economy. Unemployment is still high, going down only because the government continues to remove the long term unemployed from the ranks of the workforce. Incomes aren’t up but food stamp use is. Manufacturing hasn’t increased, consumer confidence is nowhere near the level where one might say the economy is booming. In short, this increase in the stock market that we’ve seen over the last few months is nothing short of a fraud.

Those in the financial world will so much as tell you that the market is booming because of the Fed’s quantitative easing (QE) program. QE is a fancy word for printing money. In other words, the stock market is booming because investors are playing with newly printed money. They aren’t investing capital from a booming economy in the market. QE is why an otherwise stagnant economy is seeing a massive stock market boom. It’s essentially a gigantic fraud and like most Fed created gigantic frauds it’s going to collapse.

Of course when it collapses the Fed won’t get the blame. The media won’t even blame Obama for it, though the public has a tendency to blame stock market collapses on whoever the President happens to be. The media and the administration will blame Wall Street investors who are “gambling” Americans 401k money and squandering retirements. One wonders where those people are right now when 401k’s are ballooning due to fake, inflated money from the Fed. No one complains during a market boom, they only want to point fingers after the bust. This includes Obama, whose campaigns have been funded by the same people on Wall Street that he’ll blame when all of this busts out.

With the Fed printing money like a small time mafia counterfeit ring, it’s only a matter of time before serious inflation starts to hit. Arguably it already has. Gas is permanently above $3/gallon. Anyone who goes to the grocery sees a massive increase in the price of staples like meat and bread. New cars are getting out of the price range of middle class Americans. When the government determines inflation, they pick and choose which items get included in their basket. They try to minimize official inflation because it’s in the government’s best interest to publicly minimize how much inflation there is because the public tends to blame those in power.

While we’ve already seen inflation hit the middle class, it’s only going to get worse. Eventually investors will get jittery about inflation and an artificially high stock market. Then they’ll try to sell everything and the market will drop dramatically. It’s a matter of time because this market increase isn’t based on real economic news. It has nothing to do with the economy booming, it has nothing to do with anything tangible. Wall Street is playing with phony money and they’re making a fortune doing it. But it’s going to collapse, it’s a matter of time. We can’t expect endless stock surges when the underlying economy is fragile and stagnant.

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Obama Agenda Has One Year; Can Boehner Hold On?

February 22, 2013 2 Comments

According to the President, the only thing holding the GOP together is the “love of helping rich people.” The question of course is whether the President really believes this or whether he’s just playing class warfare games to gin up his base. In the past he’s called Republicans the “enemy” and then he wonders why John Boehner and Mitch McConnell are hostile. It’s one thing for the goons at MSNBC to make such statements, it’s another thing for the President of the United States. Especially when he needs Republicans to pass any of his agenda.

Obama recently lamented that he isn’t the Emperor. No doubt he wishes he had dictatorial powers like other leftists have had over the last century or so. That nasty Constitution keeps getting in his way, as well as the enemy. (read: Republicans) If it were up to the President he would simply eliminate the paltry sequester cuts and replace them with tax increases on the “rich.” Keep in mind Obama’s last tax increase less than two months ago defined rich as 80% of Americans. Thanks to Obama, the average middle class family has $1,000 less in their paychecks this year. It will only get worse when all of Obamacare kicks in next year.

Obama is planning on running around the country campaigning for an end to the sequester that he not only proposed and passed in 2011 but whose elimination he promised to veto just 16 months ago. Supposedly polls show the country would blame the GOP if the sequester isn’t eliminated. Boehner and the GOP have a massive messaging problem but let the country blame the House. The country blamed Obama for any number of issues in his first administration and re-elected him anyway. The country doesn’t think much of the House GOP and they were easily re-elected too. People don’t even know what the sequester is, they’ll forget about it in a couple of weeks no matter what happens.

The President thinks more of his campaigning skills than he should. Keep in mind, this President received millions fewer votes in 2012 and lost two states. He won not because he is personally a great campaigner but because his campaign got its base out to vote and the GOP had a dreadful liberal candidate. No one remembers his stump speeches, it’s his get out the vote and social media efforts that won the election. Let the President go to Virginia next week and give a stump speech. Boehner shouldn’t pay any attention to it.

Obama has but a year to make his second term count. If he can’t pass his major agenda items within this year, odds are he won’t ever pass them. Next year is an election year, nothing of substance is going to pass in an election year. After that, Obama truly becomes a lame duck as both parties begin focusing on the 2016 campaign. Let’s face it, the odds are against the Democrats winning the House. That’s his only hope for those last two years. Most second term President’s focus on foreign policy because their domestic policy largely gets shot down. If Boehner can hold on next week, we have a shot at completely derailing Obama’s second term agenda.

Of course, Boehner won’t hold on. Odds are he’ll cave because he’s a weak Speaker. He gave Obama sequestration in the first place. Rather than argue for what the President proposed, Boehner doesn’t seem to have any message at all. Honestly, what is the Republican message here? It needs to be along the lines of demanding the government cut spending, even if it means cutting spending at our sacred cow: The military. Instead our strange orange speaker is nowhere to be found and the GOP message is muddled. Boehner will probably cave next week in a preview of the next big “crisis” over the debt ceiling in May. One wishes the GOP would just let the world come to an end so everyone can see the world won’t actually come to an end.

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Paltry Sequestration Cuts Won’t End Civilization

February 21, 2013 9 Comments

Sequestration is the latest in a long line of mini “crisis” created by the Obama administration. Civilization as we know it will come to a screeching halt on March 1st if something isn’t done about roughly $86 billion in sequester cuts created by the 2011 debt ceiling deal. There are a few things we need to keep in mind about all of this. First and foremost the sequester was Obama’s idea. He thought the GOP wouldn’t go along with it but they did back in 2011. Second and almost as important all the cuts are choices made by the President. For example, Obama has to cut a certain amount from the Pentagon budget but he gets to decide what is actually cut within that budget.

In November 2011 Obama said he would veto any bill that sought to eliminate the sequester cuts. This is interesting because earlier this week he more or less declared the world would come to an end if the cuts took place. It goes to show you nothing this President says can be believed. Everything he says is calculated to maximize whatever temporary effect he wants at a particular time. In 2011 he was going to get tough with Republicans and not let them back down on sequester. Now he’s going to attack Republicans for going through with the cuts he proposed. There’s always a crisis with this President, caused in his mind by those dastardly Republicans.

We’re talking about a paltry $86 billion cut on a nearly $4 trillion budget. They aren’t even actual cuts, only a cut in the amount the government was going to increase the budget this year. Obama gets to make all the decisions concerning the details. So when Leon Panetta whines that 800,000 civilian military workers will get furloughed, that’s Obama’s decision. Obama can cut anything out of the military budget that he wants, he’s choosing to furlough 800,000 people. Probably because they’ll go on unemployment and render the cuts irrelevant.

There might be three hour waits at airport security checkpoints thanks to the sequester cuts, so whines the administration. Again, the President would be choosing to do that. He could cut anything from the TSA budget that he wants, he would choose to cut employment. Obama warned us that teachers, firemen and police officers would lose their jobs because of sequester. The world as we know it will end on March 1st unless we can put the pressure on those dastardly cutting Republicans. I for one would like to see what the end of the world looks like in Obamaland. It probably looks a lot like today.

Obama is making these decisions. Rather than cut fat out of the budget, he’s cutting employees and he’s cutting things that he knows will hit average Americans. In the alternative, he’s making stuff up about teachers, firemen and cops to scare people. It’s probably a bit of both. Obama’s message is clear, government is good and big government is better. Republicans want to cut what is good and better so here it is in your face. Obama has no intention of getting the Federal budget under control. If he wanted to do that, he could easily find $86 billion in unnecessary fat within the budget. Instead, he’s sending a message to the public that cutting anything out of government means 1 million unemployed and 3 hour security waits at the airport.

Hopefully the Republicans won’t give in. Obama has manufactured one crisis point after another during his years in the White House. It would be nice to see what happens if nothing is done. Then we can all see that the world doesn’t come to an end, civilization as we know it will somehow manage to continue. Obama will no doubt share sob stories with his adoring press when people see that the world doesn’t end on March 1st the sob stories will only matter so much. As for the Republicans, they should do nothing and on March 1st they should trot out Obama’s promise to veto any bill eliminating the sequester. John Boehner should just say, we did what you wanted. We believed you Mr. President.

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Long Term Economic Weakness A Near Certainty

February 1, 2013 10 Comments

The economy is a mess as the numbers we’ve seen lately tell us. Earlier this week it was reported that fourth quarter GDP dropped 0.1%. Back in 2007 the AP declared a quarter of economic decline was a sign of a recession. These days the AP whines that economic “jitters” are competing with Obama’s progressive agenda. Yesterday the government reported an increase in new unemployment claims of 38,000. Reuters tried to soften the number claiming it’s within a range for “job growth.” It’s a pretty substantial gain over the previous week to believe we’re looking at any kind of serious job growth. January unemployment increased to 7.9% with 157,000 new jobs. As usual during the last four years, not enough jobs to cover population growth.

This is all the Republicans fault of course. The media, Democrats and Obama administration all blame the GOP for poor economic news. They’ve done away with blaming Bush, now it’s just generic “Republicans” that are to blame. Harry Reid bloviated that the GOP needs to stop “bad mouthing” the economic recovery. Citing statistics is a sign of “bad mouthing” in the world of Democrats. We can’t have any of that because it might undermine the ability of the left to force through gun control and amnesty for illegals in the next 24-48 hours.

Everything Obama wants to do has to be done immediately, or so he’s been arguing. The less debate the better for him. Bad economic news ruins his ability to force though his progressive agenda, perhaps as much as Republican opposition in the House. None of this economic news is particularly surprising, which is why Obama is pushing so hard right now. His second administration is likely to be dominated by the economy. Obama’s tax increases on 80% of Americans is having a profoundly negative effect on the economy. Obamacare kicks in soon with the cheapest acceptable plan costing $20,000 per family according to the IRS. Can’t afford that? You’ll be taxed around $2,000.

We have massive economic problems and we don’t have a President or a Congress capable of tackling them. We have a mounting national debt that is projected to hit $20 trillion by the end of Obama’s term. We continue to have $1 trillion annual budget deficits. Taxes are crippling the economy, making it more difficult for middle class Americans to be upwardly mobile. The President and his party were re-elected by an underclass of people dependant on government for just about everything in their lives. Obama pays lip service to getting the long term unemployed back on the payrolls, all while increasing the number of people on social security disability more than any other President in history. It pays to have a dependant underclass when you’re a Democrat.

Our nation is facing a bleak economic future. Britain is entering a third dip recession, Europe generally is slowing down. China is slowing down. The US is facing its slowest economic recovery since the Depression. So slow, it’s not even a recovery anymore. Obama has no real economic plan, he lives in a fanciful world where he plays dictator to business, Congress and the masses of Americans. It’s a dream world that doesn’t exist but one that results in Obama offering nothing to fix the problems we have. We have a Congress that can’t deal with the lunatic in the White House and can barely deal with each other. As a group, Congress doesn’t have any solutions either. We’re in for a rough four years. One wonders if the American dream of upward mobility really is dead.

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The Obama Economy: Negative Growth

January 30, 2013 2 Comments

The economy stalled completely in the 4th quarter of 2012. The Federal government’s initial report shows a 0.1% annual drop in real GDP. This isn’t just a massive drop from the third quarter’s 3.1% annual GDP growth, we’re entering negative territory. In entering negative territory we’re seriously running the risk of another recession. Considering that Britain is dangerously close to a triple dip recession (thanks in part to tax increases) and Europe is on the edge of implosion, another American recession would hardly come as a surprise. One can only imagine how Obama will blame Republicans for all of this.

Those who have been following the economy knew that the fourth quarter probably wasn’t going to be terrific. There was tax uncertainty, Obamacare uncertainty and sequestration uncertainty. The only one of those issues that has gone away is the tax issue as Congress and the President increased taxes on 80% of American workers. Obamacare remains up in the air as to its tax increases and reach into business and taxpayer pocketbooks. Sequestration was put off several months along with the debt ceiling. Those two major issues create uncertainty in the economy and make the investment environment unstable.

If we go back and look at the economic data over the past several months we can see any number of problems with the economy. The unemployment rate has remained generally steady but if you look at the details there are less people working today than at this time last year. The reason the unemployment rate hasn’t gone up is because the Obama administration simply removes the long term unemployed from the employment market. First time unemployment applications routinely come in above 350,000 a week. There has been a massive increase in the number of Americans on Social Security Disability as the government seems to be moving the long term unemployed onto SSI. Durable goods orders which have been unsteady and have generally declined. It’s a perfect storm for a negative growth quarter.

What is interesting in all of this is that the stock market appears to be booming. The Dow is approaching 14,000, a number never reached before. Oil is approaching $100/barrel again and gold is approaching $1,700/ounce. Oil tends to follow the stock market and gold tends to go up when the economy looks unstable. Over the past decade the stock market has had the appearance of operating outside the general economy. When the recession hit the stock market dropped dramatically. But it worked its way back up to 13,000 at the Dow despite the fact that the economy was at best growing slowly and at worst stagnating. Then the Dow went down dramatically last year only to pick up again as the economy slows down. Your 401k may be doing well today but the same can’t be said of the economy.

We have a President who has no idea how fix economic problems. He believes in top down progressive fascism or the more banal term state capitalism. It hasn’t worked, the government has no idea how to manage an economy. Obama has no idea how to create regulations that result in actual growth, he has no idea how tax increases negatively affect the economy. The economy begins and ends in Washington in Obama’s world and if it doesn’t work out he’ll just blame the enemy. Apparently the American people like that approach. I hope the country enjoys the Obama recession.

UPDATE: As predicted Obama blamed Republicans for fourth quarter negative growth. The President doesn’t believe he’s responsible for anything.

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Consumer Confidence Dips As Middle Class Faces Tax Increase

December 25, 2012 2 Comments

Consumer confidence is at its lowest point since July. Holiday sales are nowhere near where they were forecasted. Much to my dismay it isn’t a sudden conviction concerning the unscriptural holy day of Christmas that is keeping people from the stores. It’s unemployment, which continues to top 8%. It’s the fact that most of the new jobs created have been part time work. It’s the fact that beginning in January the average American will have $200 less in their paycheck thanks to Obama’s refusal to negotiate with Republicans. Despite all the media hype about an improved economy, no one is buying it. The economy hasn’t improved at all, the rank and file are voting with their wallets.

The fiscal crisis is only part of the problem. Government spending is completely out of control, forecasted to increase 55% under Obama’s plan. A 55% increase in government spending cannot be offset by the paltry $80 billion a year tax increase on the rich Obama wants. It can only be paid for with more debt or massive tax increases on the middle class. Obama’s tax increases will hurt an already fragile economy but they’ll barely make a debt in our annual $1 trillion budget deficit. In fact, most of Obama’s proposals wouldn’t make a dent in the deficit. Remember the corporate jet tax Obama touted last year? That $100 million in revenue really would have made the difference this year!

The economy is facing the first wave of Obamacare taxes and mandates next year. This has also killed consumer confidence as companies threaten to make full time employees part time in order to avoid Obamacare. It has causes the thousands of middle class Americans who would be subjected to the Obamacare individual mandate tax to cut back substantially. No one is sure how Obamacare will play out, we seem to be learning more about the bill and its regulations as the days go on. What seems to be happening out in the private sector though is that this bill is having a negative impact on the economy all while not insuring a single extra person.

As we prepare to enter 2013 there are plenty of people predicting American decline. We’ve been in a decline economically for the better part of five years. There’s an argument to be made that American economic decline really begins on 9-11. For young professionals, of which I’m one, the decline has been going on since then as jobs have dried up and opportunities to move up in jobs have become few and far between. Most under 35 professionals have little hope of achieving what the previous generation achieved economically. College graduates in the last five years have been more likely to take up residence in their parents basement than in their own home or apartment. The end result of a decade of mediocre economies that have only gotten worse is weak consumer spending and decline for the country.

We’re getting to the point where there is legitimate concern as to whether America can ever be the economic power it once was. There is legitimate concern whether we could see economic growth like we saw for much of the 50′s and 80′s. We don’t seem to be on the brink of an economic revolution like the tech revolution in the 90′s (created by investments made in the 80′s thanks to Reagan’s tax cuts). Will we ever see 5% growth again? Why should we expect consumer confidence to increase when jobs are scarce? Why would anyone imagine a massive holiday spending increase when Americans are facing a massive tax increase in January? There is plenty to be concerned about heading into next year. Perhaps we should be more concerned with the long term. In a decade does anyone believe we’ll be in a better economic situation than we are now? It doesn’t matter who is elected in the future, the answer appears to be no.

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Obama Administration Manipulates Unemployment Numbers

December 8, 2012 15 Comments

At this point the unemployment rate shouldn’t even be believed anymore. According to the government it now stands at 7.7%. Of course to get to that low number the government had to drop 350,000 people from the labor market. This seems to be a monthly occurrence during the last year. It’s hard to believe that 350,000 people every month drop from the labor market. The government alleges 146,000 new jobs were created in November. That’s nice but it doesn’t even keep up with the 150,000 jobs needed due to population growth, to say nothing of replacing the millions of jobs lost during the recession. The fact is these are not very good economic numbers.

The private sector isn’t doing very well despite all the rah rah talk from the media. During the last 5 months 73% of the jobs created weren’t in the private sector, they were created by government. Around 850,000 new jobs have been created since June, 621,000 of them in government. Which means of course that actual new jobs created by the private sector don’t even hit 250,000 since June. Growth in the private sector is slow, things are not as great as the media is portraying them. The government is manipulating unemployment numbers all while creating jobs for itself and pretending they’re private sector jobs.

The economic outlook of the country is only going to get worse. Obamacare is already effecting how businesses are hiring. In some cases Obamacare is causing businesses to cut back on the number of hours their employees work so that the business isn’t hit with Obamacare taxes. In other cases smaller businesses aren’t hiring because they don’t want to be saddled with massive Obamacare taxes. Millions of middle class Americans are getting ready to be hit with the Obamacare individual mandate tax regardless of what happens with the fiscal cliff negotiations. All is not well in the private sector despite all the rosy rhetoric from the press.

The fiscal cliff negotiations aren’t helping matters at all. What we’re going to see in the next few weeks is a lot of cash shift in the marketplace with businesses handing out dividends early in anticipation of a tripling of the dividend tax in 2013. We’re going to see upper income Americans shift their investments around so they can avoid 2013 taxes. Tax exempt investments will suddenly go up in value because of the pending fiscal cliff. It appears the Republicans are going to cave on at least a portion of the tax cuts for the wealthy, removing at least $80 billion from the private sector. Likely it will remove a lot more because of investment shifts, which in the past tend to favor tax exempt government bonds.

The private sector is not in good shape. We have major private sector problems, most of which have been created by government. Great Britain increased taxes on the wealthy to 50% and a year later they’re going to cut them because it destroyed their economy. The same is going to happen here, increasing taxes isn’t going to help create jobs. When the government has to manipulate unemployment figures by removing 350,000 people every month from the labor market and when 73% of new jobs are government jobs that ought to be a clear indication that not all is well in the private sector. Obama is setting up another recession via government policy but we’ll pretend it isn’t happening as his government creates jobs for itself and manipulates workforce numbers.

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Another Recession Is Right Around The Corner

November 16, 2012 2 Comments

The fiscal cliff is just around the corner. New jobless claims increased 78,000 last week despite Obama’s re-election. Inflation is on the rise. Poverty has increased. Europe is in a recession. McDonald’s is seeing their sales decrease. Don’t be fooled, this doesn’t mean people are eating more nutritious lunches or that they’re spending money at higher end restaurants like Applebee’s. (did I just say Applebee’s is high end? oy) It means that people can’t afford to eat at a restaurant that historically performs well during recessions. It’s not like they’re running over to Burger King or Wendy’s, their sales don’t make up for McDonald’s losses.

At least one restaurant chain owner is going to charge an Obamacare surcharge. We’re beginning to see what’s going to happen thanks to Obamacare. Taxes are going up for thousands of middle class families thanks to Obamacare. Businesses are cutting back on employee hours in order to not be subject to Obamacare. Many small businesses are making sure they don’t have 50 employees and thus aren’t subject to Obamacare. They’re laying off employees and refusing to hire. All of this while stocks are dropping into recession territory, the dollar is falling, unemployment is going up and historically strong companies are losing sales.

We face a major tax increase on January 1st. Odds are that Congress and the President aren’t going to agree on much, if so middle class families will see a major tax increase. Meanwhile high income earners are pulling their money from investments so as not to subject themselves to higher taxes next year. All of this money is going to be taken out of the private sector, furthering a brewing recession. Nothing can be worse for an economy in recession than removing money from the private sector. How does Obama and the Democrats think businesses will hire people if they have no money?

But of course that question assumes Obama and the Democrats care about Americans working. The last four years suggest that they really don’t. Obama won re-election on food stamps and welfare. Voters on food stamps account for nearly 75% of Obama’s votes. So let’s not pretend like Obama particularly cares about jobs. In fact, the fewer people who are employed the better it is for the Democrats. After all jobs, especially good jobs, remove people from the welfare and food stamp rolls and thus those voters are less likely to vote for Democrats. All you’ll see from the left is more food stamps, more welfare, more handouts and fewer jobs. It’s their pathway to re-election.

For the rest of us, we’re looking at a looming disaster. The middle class is facing thousands of dollars in tax increases on January 1st. If we don’t have health insurance, there are thousands of middle class Americans facing the Obamacare tax. Our jobs are threatened as our employers cut back with Obamacare and upper class tax increases looming. We have nowhere to turn. We make to much to go on welfare and we actually want to work, lessening our will to join the ranks of welfare recipient. The country is facing a disaster and we have a President who just doesn’t care. He doesn’t have to, welfare and food stamps got him re-elected. Not even his dismal economic performance could overcome the freebies the government handed out.

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