Jack Bogle was on PBS NBR last Monday telling everyone to calm down - the world was not ending - overvalued stocks would correct, and bargain hunters would come in and bounce back- which is exactly what happened. One of the few voices of reason
Believing magically a FDR will just appear and save the day is a pipe dream. There are some in Congress truly fighting hard and of course lose all of the time as they did Friday..
I think those Senators and Representatives are the ones who should be talked about and somehow try to get them more power...
It's pretty clear Goldman Sachs and lobbyists are running the country.
the encourages companies to focus on maximizing share value instead of providing dividends to shareholders. So we get companies searching for short term increases in share value as opposed to creating the type of long term value that allows companies to issue dividends.
Hell, I've got a headache.
I forget the book, but there's an argument that bank based finance leads to both greater long term thinking, and generates greater demand for government action because it smashes the myth of the "ownership society" that you get with finance based capitalism.
They actually leave it abroad...where they moved the jobs, factories and sometimes headquarters and then the move into the US through subsidiaries. I covered this a bit in this post and evaluating the truth of the campaign sound byte "tax incentives to offshore outsource your job" is on the plate to write about.
Back to Japan. We need more people writing on here for there are so many very complex topics and issues, seemingly imploding into one big fat mess before our eyes at one time.
but when they make a profit abroad, they have to repatriate it unless they want to spend it overseas. What good is an investment if you don't have access to it because it's locked up overseas? If you are running operating capital across international borders, you have a serious problem if your money to fuel US operations is locked up abroad because it faces a high tax if you want to import capital from Bermuda to run operations. If the transaction cost of crossborder transfers is higher than the value of taxes evaded, then a tax on capital imports penalizes a strategy of placing US operating funds overseas in order to evade taxes.
Get that money back into the US, and you can tax it, because there's greater transparency.
I don't have the numbers, but I think that there's enough money if we actually collected taxes that have been evaded to replace residential property taxes.
One important effect of dropping property taxes would be to raise property values, because the cost of ownership would be greatly reduced.
Let's say that taxes are $3000 annually on a $200K house. The future value of $3000 at 6.8% over 30 years is $21,590. Presumably, reducing the cost of ownership in this way would increase the total value of the asset by a similar amount. It would allow people to better afford the mortgage cost of a fixed rate loan over the long term, and it would slow the decline in housing values.
It's just a thought, no fully developed. I'm supposed to be writing about Japan right now.
that sounds like a real bad idea unless I"m misunderstanding something. US corporations have offshore outsourced hordes of capital, all to avoid taxes so if they tax repatriated capital that would stop even further from it returning to the US. Or am I misunderstanding something?
The problem at the moment is that there has been a long standing understanding of Article 1 Section 9 of the US Constitution:
No tax or duty shall be laid on articles exported from any state.
That export taxes are illegal. Arguably if this is placed in the broader context of the items surrounding it, this may have been intended to prevent Ohio from imposing a tax on exports of corn to New York, not from the United States to Mexico. Nonetheless, this has not been the way that it was interpreted.
Thus, the potential for a tax on exports of capital from US bank accounts to banks in Europe or elsewhere to be held unconstitutional are high.
So the only real way to go in an try to stem capital flight is a little bass ackwards. You have to place a tax on repatriated capital. About $600 billion is repatriated annually from abroad.
In the absence of a tax on repatriated capital, it's possible to imagine large scale capital flight by individuals holding accounts in excess of $250K, followed by daily or weekly withdraws. Hell, with ATMs, it's possible for a wealthy individual to fly to Dublin or elsewhere, open an account, transfer all their funds from the US, get a debit card, fly home, and use the ATM to withdraw funds from an Irish account from a US ATM. All in a single day.
The Malaysians employed capital controls during the East Asian crisis in the late 90s, and Dani Rodrick has argued that it allowed them to recover quicker with a smaller drop in wages. The current situation is somewhat different, because the danger is bank failure not speculative attack.
Nonetheless a 5-10% tax on repatriated capital would do much to prevent capital flight.
...I am just so, so, so glad we've got folks like 'Bankruptcy Bill' Joe Biden to reasure folks with his folksy tale of FDR going on the TV to reassure folks in those dark days.
I'm sure as hell reassured.
People I know are talking about the varied uses of rope.
If you know what I mean.
If we, as seems certain now, descend into a Depression I would hope that the citizenry, dumb though they be, would 'get it' to the point of cleaning house in the people's House.
For me at this point it's not so much the greed...
It's the utter stupidity of the Pelosi Democrats handing over the entire Treasury to Bush.
That is true. This was a bailout of the banks in the hopes that the banks will loosen up their cash so the credit can flow again. What is to guarantee that will happen?
Anyway, I saw this on a blog post and it pretty much sums it up for me!
I found this graph on Kedrosky, a VC, focus tech blog, showing bank failure is much less at the moment.
I can't find any other information and see any correlation to our lovely "bail out" to this Bespoke CDS index but seems to be.
How all of these metrics interact and what is really means, if someone else has more insight, please enlighten.
Check out his blog too, when I saw a reference of "rodents of unusual size" when describing CDS I thought this was pretty funny insightful...although I sincerely doubt someone focused in on VC/IPOs and tech world is too worried about workers, esp. Professionals. Very interesting site though!
Good point.
All that bankruptcies and defaults means a lot of money is being destroyed. That's why the Fed and the Treasury are expanding the money supply in such a hyperinflationary way.
The most heated debate on many economic boards is the debate about whether deflation or inflation will win. I'm still a believer that inflation will win.
As I'm sure you know there's a lot of lying that goes on in the creation of economic statistics. I mean just yesterday, I'm fairly certain, that the BLS "disappeared" over a million people from the labor force in order to drop the reported U-3 unemployment rate from what would have been a 6.7% unemployment rate, to a 6.0% rate.
In 2005, the Fed stopped producing the M3 money supply measure. For the crowd, the Fed Eurodollars, dollar denominated accounts outside of the US.
While the Fed ended the measure in 2005, outside groups have reconstructed the M3 with public data, and something odd happened this year, growth in M3 measure collapsed.
What's the relationship between this and the current crisis? We've got record trade deficits which means that we're bleeding dollars, yet growth in the M3 measure plummeted. Have the Chinese and Arabs been switching out euros for dollar deposits? Is this the origin of the liquidity crisis?
My 12 year old Ranger truck has seen better days, and I had been pondering buying a new (er) vehicle, but with the economy as it is and my income depending on the fortunes of US mfg, I decided to forego any major purchases at this time, and elected to put a grand in my old vehicle to keep it going another year or two
I have been wondering when we would dip back below $3, since the last time oil was around 95/bbl we were in the mid $2.90s
rockets and feathers......
buying some stuff....
Jack Bogle was on PBS NBR last Monday telling everyone to calm down - the world was not ending - overvalued stocks would correct, and bargain hunters would come in and bounce back- which is exactly what happened. One of the few voices of reason
bloomberg is showing a major stock market drop as it all sinks in the bail out isn't a cure all...or an at all.
Who knows if this will remain true tomorrow, time will tell but I'd say the early judgment on the bail out isn't looking too good.
Believing magically a FDR will just appear and save the day is a pipe dream. There are some in Congress truly fighting hard and of course lose all of the time as they did Friday..
I think those Senators and Representatives are the ones who should be talked about and somehow try to get them more power...
It's pretty clear Goldman Sachs and lobbyists are running the country.
If you see experts, other bloggers who have good insight, writing ability, invite them over to EP to share, blog.
That's yet another topic, this MBA quarterly profits only focus, no long term say 10 years out, 5 years out planning.
the stock market has become like heroin and people want their fix...flat earnings just won't do!
the encourages companies to focus on maximizing share value instead of providing dividends to shareholders. So we get companies searching for short term increases in share value as opposed to creating the type of long term value that allows companies to issue dividends.
Hell, I've got a headache.
I forget the book, but there's an argument that bank based finance leads to both greater long term thinking, and generates greater demand for government action because it smashes the myth of the "ownership society" that you get with finance based capitalism.
They actually leave it abroad...where they moved the jobs, factories and sometimes headquarters and then the move into the US through subsidiaries. I covered this a bit in this post and evaluating the truth of the campaign sound byte "tax incentives to offshore outsource your job" is on the plate to write about.
Back to Japan. We need more people writing on here for there are so many very complex topics and issues, seemingly imploding into one big fat mess before our eyes at one time.
but when they make a profit abroad, they have to repatriate it unless they want to spend it overseas. What good is an investment if you don't have access to it because it's locked up overseas? If you are running operating capital across international borders, you have a serious problem if your money to fuel US operations is locked up abroad because it faces a high tax if you want to import capital from Bermuda to run operations. If the transaction cost of crossborder transfers is higher than the value of taxes evaded, then a tax on capital imports penalizes a strategy of placing US operating funds overseas in order to evade taxes.
Get that money back into the US, and you can tax it, because there's greater transparency.
I don't have the numbers, but I think that there's enough money if we actually collected taxes that have been evaded to replace residential property taxes.
One important effect of dropping property taxes would be to raise property values, because the cost of ownership would be greatly reduced.
Let's say that taxes are $3000 annually on a $200K house. The future value of $3000 at 6.8% over 30 years is $21,590. Presumably, reducing the cost of ownership in this way would increase the total value of the asset by a similar amount. It would allow people to better afford the mortgage cost of a fixed rate loan over the long term, and it would slow the decline in housing values.
It's just a thought, no fully developed. I'm supposed to be writing about Japan right now.
that sounds like a real bad idea unless I"m misunderstanding something. US corporations have offshore outsourced hordes of capital, all to avoid taxes so if they tax repatriated capital that would stop even further from it returning to the US. Or am I misunderstanding something?
they just used fear like no tomorrow to hype that thing.
has come.
The problem at the moment is that there has been a long standing understanding of Article 1 Section 9 of the US Constitution:
That export taxes are illegal. Arguably if this is placed in the broader context of the items surrounding it, this may have been intended to prevent Ohio from imposing a tax on exports of corn to New York, not from the United States to Mexico. Nonetheless, this has not been the way that it was interpreted.
Thus, the potential for a tax on exports of capital from US bank accounts to banks in Europe or elsewhere to be held unconstitutional are high.
So the only real way to go in an try to stem capital flight is a little bass ackwards. You have to place a tax on repatriated capital. About $600 billion is repatriated annually from abroad.
In the absence of a tax on repatriated capital, it's possible to imagine large scale capital flight by individuals holding accounts in excess of $250K, followed by daily or weekly withdraws. Hell, with ATMs, it's possible for a wealthy individual to fly to Dublin or elsewhere, open an account, transfer all their funds from the US, get a debit card, fly home, and use the ATM to withdraw funds from an Irish account from a US ATM. All in a single day.
The Malaysians employed capital controls during the East Asian crisis in the late 90s, and Dani Rodrick has argued that it allowed them to recover quicker with a smaller drop in wages. The current situation is somewhat different, because the danger is bank failure not speculative attack.
Nonetheless a 5-10% tax on repatriated capital would do much to prevent capital flight.
Nor did they say much about the market rebounding 435 points the day after it dropped 777?
Or that the stock market ALWAYS goes up an down?
...I am just so, so, so glad we've got folks like 'Bankruptcy Bill' Joe Biden to reasure folks with his folksy tale of FDR going on the TV to reassure folks in those dark days.
I'm sure as hell reassured.
People I know are talking about the varied uses of rope.
If you know what I mean.
If we, as seems certain now, descend into a Depression I would hope that the citizenry, dumb though they be, would 'get it' to the point of cleaning house in the people's House.
For me at this point it's not so much the greed...
It's the utter stupidity of the Pelosi Democrats handing over the entire Treasury to Bush.
Man, he must be laughing his ass off.
That is true. This was a bailout of the banks in the hopes that the banks will loosen up their cash so the credit can flow again. What is to guarantee that will happen?
Anyway, I saw this on a blog post and it pretty much sums it up for me!
http://stressmanagementtips.wordpress.com/2008/10/03/wall-street-bail-ou...
Per the updated graph you can see here.
M1 is also increasing dramatically and by now may be increasing faster than the CPI (usually a sign that a recession is beginning to abate).
I found this graph on Kedrosky, a VC, focus tech blog, showing bank failure is much less at the moment.
I can't find any other information and see any correlation to our lovely "bail out" to this Bespoke CDS index but seems to be.
How all of these metrics interact and what is really means, if someone else has more insight, please enlighten.
Check out his blog too, when I saw a reference of "rodents of unusual size" when describing CDS I thought this was pretty
funnyinsightful...although I sincerely doubt someone focused in on VC/IPOs and tech world is too worried about workers, esp. Professionals. Very interesting site though!Good point.
All that bankruptcies and defaults means a lot of money is being destroyed. That's why the Fed and the Treasury are expanding the money supply in such a hyperinflationary way.
The most heated debate on many economic boards is the debate about whether deflation or inflation will win. I'm still a believer that inflation will win.
As I'm sure you know there's a lot of lying that goes on in the creation of economic statistics. I mean just yesterday, I'm fairly certain, that the BLS "disappeared" over a million people from the labor force in order to drop the reported U-3 unemployment rate from what would have been a 6.7% unemployment rate, to a 6.0% rate.
In 2005, the Fed stopped producing the M3 money supply measure. For the crowd, the Fed Eurodollars, dollar denominated accounts outside of the US.
While the Fed ended the measure in 2005, outside groups have reconstructed the M3 with public data, and something odd happened this year, growth in M3 measure collapsed.
What's the relationship between this and the current crisis? We've got record trade deficits which means that we're bleeding dollars, yet growth in the M3 measure plummeted. Have the Chinese and Arabs been switching out euros for dollar deposits? Is this the origin of the liquidity crisis?
My 12 year old Ranger truck has seen better days, and I had been pondering buying a new (er) vehicle, but with the economy as it is and my income depending on the fortunes of US mfg, I decided to forego any major purchases at this time, and elected to put a grand in my old vehicle to keep it going another year or two
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