Here's my Top 10 links from around the Internet at 7.30 pm in association with NZ Mint.
I welcome your additions in the comments below or via email tobernard.hickey@interest.co.nz.
I'll pop the extras into the comment stream. See all previous Top 10s here.
Jon Stewart and Joe Nocera think deeply about private equity and capitalism at #10.
1. 'Unconventional bridges to nowhere' - This week bond yields in previously distressed European government bond markets fell substantially.
The overwhelming noise is that the European crisis is over, or at least under control for now.
This is because the European Central Bank lent cash-strapped banks almost €500 billion euros just before Christmas and they quickly turned around and invested that money in government bonds, picking up a nice carry trade profit along the way.
America's stock market has started the year with its biggest rally since 1987.
Everyone can breathe a sigh of relief, says Mr Market.
So it's refreshing to read this assessment via Project Syndicate from Mohamed El Irian, the CEO of the world's biggest bond fund PIMCO.
It is today's must read. He says all this central bank lending to banks, which has more than doubled to 20-30% of GDP inside the last year is unsustainable and doesn't fix the basic problems of a lack of credit to those who need it and a lack of economic growth and jobs.
I have bolded the key line. Here's a sample:
From every angle, the extremity of this state of affairs – in which those with access to credit do not need it, and those who do cannot get it – is highly problematic. If left unattended, it leads to a gradual, and then accelerated, renewed deleveraging of the economic system, with the highest first-round costs – a longer unemployment and growth crisis – borne disproportionately by those least able to suffer them. In the next round, as the system slowly implodes, even those with healthy balance sheets would be impacted, accelerating their disengagement from a deleveraging world economy.
All of this slows social mobility, tears already-stretched safety nets, worsens inequality, and accentuates genuine concerns about the functioning and sustainability of today’s global economic system.
Effectively, the central banks have been unconventional bridges to nowhere, owing mainly to their imperfect tools and other government agencies’ inability or unwillingness to act. At some point – and we are nearing it – bridges to nowhere become a standalone risk: they can topple over. Rather than just pumping liquidity into clogged pipes, countries can and should do more to build a more effective network of compensating conduits.
It is high time to move on five fronts, simultaneously:
· Countries such as Spain and the US need to be more forceful in unblocking the housing sector by making overdue decisions on burden sharing, refinancing, and conversion of idle and foreclosed housing stock.
· Countries with excessive debt, such as Greece and Portugal, need to impose sizeable “haircuts” on creditors in order to have a reasonable chance to restore medium-term debt sustainability and growth.
· In several Western countries, public-private partnerships should be formed to finance urgently needed infrastructure investment.
· Regulators should stop bickering about the future configuration of key financial institutions, and instead set a clearer multi-year vision that is also consistent across borders.
· Finally, governments should inform their electorates explicitly and comprehensively that a few contracts written during the inadvisable “great age” of leverage, debt, and credit entitlements cannot be met, and must be rewritten in a transparent way that strikes a balance between generations, labor and capital, and recipients and taxpayers.
Such policies would allow healthy balance sheets around the world, both public and private, to engage in a pro-growth and pro-jobs process.
2. Australia's demographic problem - Leith van Onselen at Macrobusiness has done a good job looking at the stats on hours worked per head of the working age population in Australia. He finds it has been rising for much of the last 30 years, therefore boosting economic output and incomes. It has been expressed in a higher workforce participation rate.
But what happens when the number of workers starts to drop as they retire and those left working have to support a larger number of retirees? Economic output may drop and you'd have to think that tax rates (or public debt) have to rise to compensate.
Here's Leith:
One underlying reason for the upwards trend in the participation rate is that Australia’s population has, for the past three decades, reaped a demographic dividend from the large baby boomer cohort – those born between 1946 and 1964 and currently representing one quarter of Australia’s population. This group entered the workforce in in the 1970s and 1980s, resulting is a large increase in the ratio of workers to non-workers.
the ratio of workers to dependents peaked in 2010, but is now projected to decline each and every year going forward as the baby boomers enter retirement [the first of the baby boomers reached 65 in 2011]. This suggests that Australia’s participation rate should start trending downwards, which should reduce the average number of hours worked per head of population; although the likely impact on hours worked relative to the working age population is less clear.
3. A Chinese property crash by the end of the year? - Bloomberg reports with lots of juicy detail that China's previously booming housing market is creaking under the weight of unsold homes and property developers are struggling with finance.
Here's more:
Developers are looking for ways to preserve record sales last year as the impact of purchase limits and tighter mortgage requirements imposed by the government spreads. China’s home transactions will fall 10 percent this year, according to Daiwa Securities Capital Markets, while UBS AG says the curbs may boost supply to the highest in a decade.
“If the government doesn’t relax the enforcement on the house purchase restrictions and mortgages by the summer, then we could have a crash in the housing market by the end of the year,” said Andy Rothman, CLSA Asia-Pacific Markets’ China macro strategist in an interview in Shanghai.
Developers may be facing one of their toughest years in 2012, said Chen Li, head of China equity strategy at UBS. Their cash flow may be “exhausted to zero” by the end of the year as some companies struggle to get financing for projects, said Chen.
“The worst time will be the end of the first quarter or the second quarter because some non-listed developers will be forced to cut prices to get capital quickly,” said Eva Lee, a property analyst at UBS.
4. Plutonomy and Democracy don't mix - This is Bill Moyers, a former press secretary to US President Lyndon Johnson and long time commentator, signing off with an editorial on America's rich and powerful. It's 18 months old but is still worth a watch.
And here's the Citigroup research report on Plutonomy from 2006 that he refers to in the video.
Again, neither of these people are communists or anarchists trying to overthrow the 'system'. They are inside the system and are simply revolted or revelling in it.
5. The Chinese won - Here's the Economist with an excellent piece on the victory of state-directed capitalism.
OVER the past 15 years striking corporate headquarters have transformed the great cities of the emerging world. China Central Television’s building resembles a giant alien marching across Beijing’s skyline; the 88-storey Petronas Towers, home to Malaysia’s oil company, soar above Kuala Lumpur; the gleaming office of VTB, a banking powerhouse, sits at the heart of Moscow’s new financial district. These are all monuments to the rise of a new kind of hybrid corporation, backed by the state but behaving like a private-sector multinational.
State-directed capitalism is not a new idea: witness the East India Company. But as our special report this week points out, it has undergone a dramatic revival. In the 1990s most state-owned companies were little more than government departments in emerging markets; the assumption was that, as the economy matured, the government would close or privatise them. Yet they show no signs of relinquishing the commanding heights, whether in major industries (the world’s ten biggest oil-and-gas firms, measured by reserves, are all state-owned) or major markets (state-backed companies account for 80% of the value of China’s stockmarket and 62% of Russia’s). And they are on the offensive. Look at almost any new industry and a giant is emerging: China Mobile, for example, has 600m customers. State-backed firms accounted for a third of the emerging world’s foreign direct investment in 2003-10.
With the West in a funk and emerging markets flourishing, the Chinese no longer see state-directed firms as a way-station on the road to liberal capitalism; rather, they see it as a sustainable model. They think they have redesigned capitalism to make it work better, and a growing number of emerging-world leaders agree with them.
6. 'Aussie house prices may fall 60%' - This is entertaining. A few Aussies will be choking on the prawns over this one.
News.com.au reports US real estate analyst Jordan Wirsz saying Australian house prices could fall 60%.
He predicts that a flood of properties will begin to hit the market in Australia from next year as investors scramble to bail out, leading to a property crash of magnitude the country has not seen before.
“Right now is not a time to be buying real estate in Australia," Mr Wirsz said. "The market has slowed substantially but residential prices are likely to fall up to 60 per cent, possibly even more, within five years."
The outlook is even grimmer for land investments, which Mr Wirsz said are more speculative and will plummet by as much as 80 and 90 per cent in value.
7. Grecian spiral - Ambrose Evans Pritchard looks at Portugal's problems and concludes it is diving into a Grecian death spiral.
The ECB's LTRO carry trade may have stabilised the banking system, but most of Europe is sliding into an austerity driven recession or worse that can't be solved by money printing to roll over toxic government bonds.
Here's Ambrose reporting:
Jurgen Michels, Europe economist at Citigroup, said Portugal's economy will contract by a further 5.8pc this year and by 3.7pc in 2013, a far sharper decline than official forecasts. The peak-to-trough collapse would be 13pc, a full-fledged depression.
"As this gets worse it is going to be extremely difficult to go ahead with more austerity measures: political contagion will start to come through," he said.
8. The curious link between Africa's CFA and the Euro - I hadn't realised there was a currency in Francophone West Africa that was connected to the Euro.
Christian Science Monitor looks at what might happen in Africa if the euro fell over.
Fourteen countries use one of two euro-pegged CFA (commonly pronounced “say-fah”) francs as their legal tender. Comprised of eight agrarian West African nations and six resource-rich central African countries, the combined monetary zone stretches from Senegal on Africa’s western coast to the Central African Republic (CAR) at the heart of the continent.
If the euro collapses, the CFA zone wouldn’t tie itself to a resurrected French franc but likely peg to a basket of currencies. Low-growth Europe is no longer the prominent destination for CFA goods, rendering the euro peg less and less important. In 1995, approximately 49 percent of exports from the central African CFA countries were bound for Europe. By 2010, that number had dropped to an estimated 32 percent.
China’s rise as an export destination is most responsible for the turn away from Europe. It has an insatiable demand for natural resources, which makes African countries attractive trading partners. The growing strength of the Chinese renmimbi against the euro hasn’t hurt either.
9. Home grown money - CNN Money reports on a growing number of community currencies in America and plans by state governments to start minting their own coins as currencies.
While there were only about 20 active community currencies in the United States in 2009, there has been a recent resurgence, with at least a dozen communities developing their own currencies in the past couple of years, estimates Loren Gatch, a professor of political science at the University of Central Oklahoma who researches these alternative currencies. In addition, currencies that have been around for years have seen a spike in interest, with membership doubling in some cases.
Now, even state governments are exploring the option. Lawmakers in more than 10 states, including Virginia, Georgia, South Carolina, Idaho and Tennessee, have been circulating proposals to introduce alternative currencies -- many of which would be issued in the form of gold or silver coins.
10. Totally relevant video of Jon Stewart talking with business journalist Joe Nocera about the nature of private equity and lowly taxed capital gains. The whole interview is well worth watching.
The thing below on Mitt Romney paying 15% tax is a hoot.
The capital gains tax rate in America is 15%. At least they have one. There's no capital gains tax here.
113 Comments
I remember in the 80’ many families watched “Dallas” http://en.wikipedia.org/wiki/Dallas_(1978_TV_series). For many it was good fun to see hardworking, honest people go bankrupt and corrupt and greedy criminals - called clever operators getting richer and richer.
The situation isn’t much changed today.
Bank uses 51% of its revenues to reward staff despite making a loss in fourth quarter of 2011
http://www.guardian.co.uk/business/2012/jan/19/morgan-stanley-pay-half-revenue
Larry Hagman was lost in that show , without his curvaceous blonde Genie by his side ....... I think you've picked totally the wrong show to epitomise life in the USA , Walter ...
..... " Seinfeld " is closer to the mark ... An amiable meandering , directionless , but well meaning ........ full of foibles , oh yeah , foible city buddy , no one does foibles better than Jerry , Kramer & the gang .... No one !
....... foibles , yup , that sums up the good old US-of-A for me . It's become patriotic to embrace your foibles , stand tall , be proud . Oh yes . ...... Foible !
Seasons greetings , Les ........ truth be told , my favourite comedy has been " Southpark " for a year or three .......
..... " I Dream of Jeannie " was complete bollocks , of course it was ...... I mean , how could a guy live with her without plundering her hot little booty long before season 5 ......... totally unrealistic ........
100 % more realism in " Southpark " ...... almost a documentary , that one ...
Walter : Take a different viewpoint , simply ignore your age ! ...... take each day as a new chance to learn something & to have some fun ......
...... Mummy Gummy is always berating me : " boy , you reached 13 , and never matured from that point onwards " ...... and I say , " brilliant " .... who wants to get old & grumpy ...... you may as well become a clone of Bernard Hickey ! .. bugger that for a joke .
And if you're seriously pissed about something , take the 8 year old " Eric Cartman's " approach , stick up yer middle digit , and say " screw you guys , I'm going home ! " .....
... the hokey pokey ice cream is in the freezer box , yay !!!
..... a 80 -90 % fall in land values ! ...... I just ignored the guy as a nut job ...... obviously twice that of Bernard ......
Interesting that Bernie only highlighted the doomsters' gloomy guss outlook for Australian properly ...... scan down the article , and there is a rebuttal from Paul Bloxham , chief economist at HSBC !
......... selective snipping of the scariest bits again , Hickster ?
Gummy - 90% drop in farm values is not out of the question. Western districts grazing properties are all on the market for 2k+ and acre and any farmer around will tell you that they can't make money at more than 800 - 1000 an acre. It was the blue gum investment of peoples super funds that pushed land values to that level and now that they have realised that they will never ever ever make money out of blue gums things are looking pretty gloomy on the rural land front.
Now im not saying that 800 - 1000 an acre is the only way you can make money farming here - but I am saying it is the only way the farmers here can make money :) Pretty much nothing at all is selling. The town im in at the moment would have easily 40 % house vacancies and you can pick one up for 150 k - although the last sale was a dump on a 900 sq m section for 25 K ! imagine that in NZ. On a positive note found a box of Monteiths summer ale at the bottle store which just made my day... and probably ruined my spelling :)
Are you somewhere in NSW now , Simfarmer ? ..... the Gummy crew are on Eyre Peninsula , SA .... houses average mid to high $A 200 k's around here . About $A 140 000 cheaper than over in Adelaide .
..... not seen any farm prices . But there's plenty of clearance sales , so properties must be changing hands .
Keep your eyes open , on my last visit I snaffled some Mac's Hop Rocker beer in a country pub ( Ardrossan , SA ) ..... a truely crafted brew ...... but the Coopers Sparkling Ale will do as a stop-gap measure .
Cheers !
No Im in Western Victoria basically on the border to S.A bout an hour and a half inland. Lots and lots of sheep gummy - just how I like it :) The 3rd poorest post code in Victoria (not the cockies just the townspeople i spose!). I've heard its nice over the Eyre Peninsula might head over for a look there at some stage. Have driven past the turn off on my way up to Woomera ! Will probably head over Western South Australia way for a couple of months in May - June.
You have to keep your eyes peeled for the good NZ beer - once your on the carlton or VB things are heading downhill pretty quickly. The coopers pale ale is drinkable however. You gotta love the strict Auzzie 38 hr week though... plenty of time for finding refreshing beer !
We toyed with settling down around there , but the missus said no . I liked Warrnambool , Portland , Hamilton , the Grumpians ...... nice country that .
..
.... what is your closest town ?
We're over at Port Lincoln . I did a check on www.domain.com.au and found your farm prices to be indicative of wheat land to the north & west of us .....
The nearest town to us is Coleraine. Hamilton is 45 km away. In winter it looks a lot like NZ round here and its basically green from April till November good to be in a little bit of hill country.
Even though the rainfall is quite reliable here farm prices are discounted quite a bit as no-one likes 'hill' at all even though you can still get a tractor round 90% of the properties. Think we will probably settle down here somewhere for a few years as there is just SO much work to do and money to be made if you want to do anything in the Agricultural Sector here. And house prices are just dirt cheap - (even if some of the little towns are quite crappy).
Currently selling one house in NZ so must be pretty serious about staying here :)
Simfarmer, what are the sheep prices like over there? Im about to sell most of my ewes in the store and have a bit of time off. The prices are high I should average in the $160's for my sheep. Talked to a friend in the UK this morning she said things are dead and they are concerned, no one is spending anything, how we expect sheep prices to stay up baffles me. Aussie is lucky with such a big domestic market. Hope things go your way, good on you for looking around.
Andrew, Prices a little lower - just in Australaian dollars.
From Hamilton store sale on the 11th Jan - 17,189 lambs yarded. 16 - 18 kg = 87 - 113. 18 - 20 = 96 - 113. 22 - 24 kg 116 - 134. 24 - 26 = $126.
Unjoined mer ewes making 90 - 120
The 1st cross sales will all be starting soon with ewes scanned to lamb in april im guessing will make 180 to 200.
Some of the mer ewes going at the moment are quite good value as they have 5 - 6 months wool on them (2 - 3 kg @ $10/kg) and are going for $90 - 100 even if you got 90% lambing out of them and clipped $ 40 - $50 of wool off them in May there is a dollar in them.
There are just so many sales though and so much depend on who has grass and who doesn't. But with grain delivered on farm for under $200 a tonne this year everyone will be able to hang onto what they want until it rains in april.
Australia day is on the 26th so the supermarkets are full of lamb (its a tradition to have lamb on australia day) and they are running promotions with $10 of a leg of lamb if you take a coupon in out of the paper - that sells a lot of lamb !
The day GBH wears lycra is the day that Bernard Hickey dons Borat's " mankini "
...... love the cycling ...... but we're over in Tunarama City ! ........ gearing up for the fishing season ........
...... wonder if Captain Franseca Shettino could skipper a prawn boat ? ...... his days cruising the mediterranean are probably over ..... and the guy seems to be a bit of a prawn , himself ..
But Mac's is not a New Zealand beer anymore. It's owned by Kirin of Japan, so I suppose it is a Japanese beer manufactured by New Zealand wage serfs.
I've started looking up my favourite drops on Wiki and the results are rather sad. As regards Mac's, the genuine article is now called Stoke, brewed in Mac's old brewery by the next generation.
Check out this , Mr Scarfie : This is truely frightening stuff , and makes one wonder , what future for mankind or for Ken . Wither we go from here ? ....... I am all of a tremble , timorous , weeping into my gazpacho soup .......
Scarey !
Iran in particular , and the world in general , would be better places if Ken & Barbie replaced the Mad Mullahs in Tehran ........
....... viva le Barbie Revolution ......... getcha AK47 assault rifles , accessorize with gun-belts , a floral hat , and a skimpy bikini ..... and off we go ..... .....
...... oooh bugger , I just broke a nail , damn damn damn !
a bloke with a similar name had a bit of drama with the local wallopers in arizona in 2008 ----ponzi type misdemeanors---mr 60% is currently on an Australasian tour where his pearls of wisdom can be absorbed at a convention centre near you for a mere $89 bucks---good to see the media doing their bit to raise his profile and it hasn,t cost him a cent
The argument isn't so much whether house prices are overpriced ..... on most metrics , price to average incomes , they certainly are ........
.... the question is the method by which house prices come back into " fair value " territory ..... there is the " crash " brigade , led by Hickey & Keen , and then there is the " stag-flation " group , represented by the overwhelming majority .......
And lest we forget , Uncle Ollie & Big Daddy ... they're still denying overvaluation , and up until now , the real estate market has supported their assertion ...... Bugger !
Economic industry mix distorted.
The Real Estate industry in New Zealand is proportionally to others far too dominant.
Here a comparison: Singapore
http://www.singstat.gov.sg/pubn/reference/mdsdec11/excel/topic6.xls#'T6.1-T6.2'!A1
There is no wonder why prices are high in New Zealand. Our economy isn’t balanced, but one sided not diverse enough. As a consequence dominant industry sectors cause high prices – e.g. agriculture products and real estate become increasingly unaffordable for Kiwis.
http://en.wikipedia.org/wiki/Monopolistic_competition
In a monopolistically competitive market, firms can behave like monopolies in the short run, including by using market power to generate profit. In the long run, however, other firms enter the market and the benefits of differentiation decrease with competition; the market becomes more like a perfectly competitive one where firms cannot gain economic profit. In practice, however, if consumer rationality/innovativeness is low and heuristics are preferred, monopolistic competition can fall into natural monopoly, even in the complete absence of government intervention.
In addition to my article above:
A regressive CGT would be the right incentive to bring the Real Estate industry into better shape.
The longer people/ investors own houses/ real estate the less tax they have to pay.
Example: for a house/ building sold within 0-3 years of purchase/ construction a high CGT.
for a house/ building sold within 3-6 years of purchase/ construction a medium high CGT.
for a house/ building sold within 6-8 years of purchase/ construction a low CGT.
for a house/ building sold within 8- 10 years of purchase/ construction a 2% CGT.
for a house/ building sold within 10 - plus years of purchase/ construction a zero CGT.
Such an introduction would certainly decrease speculation and would help to calm down the markets, without targeting "real property investors".
you adelaide dwellers may find this site useful if you,re on the house hunting case ---it give,as sales history,s----the blue,s are for sale --the reds are history,s
The important point for you lot, is to suss out what the RBA AUgovt action will be once the property decline becomes the media focus....expect the aussie ocr to be slashed and don't put it past the govt to print and be dammed with handouts to all who promise to vote labour.
Then you need to figure what the Kiwifx will do since Bollard is close to zero as it is and the ocr here has stuff all to do with rates in general...all at the same time as the piigs farce spews its guts through the banks and into credit costs.
RBA cuts to 3% .....Kiwi to 95aus....think what that will do to tourism, to exports to aus, to Bill's revenue grab....to the promised fiscal surplus in our time.....
Now toss in the China property gut spewing event....ooolala.....and recession in all of Europe....and the Trillion dollar US deficit Godzilla load of BS splattering the market....
Aussie govt is paying people to buy houses, first homebuyer grant etc. Drop interest rates, increase the grants etc. NZ can do that too, special low doc/no doc home loans for cats and dogs. Pleanty of options to "explore". What I like about silver in addition to its high industrial usuage is that it's an implicit bet on govt stupidity, and irresponsibility. Until you see govt change the current attitude, silver has not peaked.
Mish has it in one!
"virtually everyone with a mortgage is renting debt-money from a lender and leasing the land from a local taxing authority. The mortgagees have a "dead pledge" in the value of the debt owed, not an "asset". The lenders and taxing authorities are the "owners" of a lien (a bond or constraint on the real property), which entitles them to income in the form of compounding interest and tax receipts in perpetuity."
http://globaleconomicanalysis.blogspot.com/
How you like them apples?.....worms aplenty....your local credit seller on the street corner just loves you so much....
If that was the plan, then why buy physical? Why not just trade paper? I'll be the first to admit, that as an investment in normal times, it's not going to give any returns, but as a hedge against, inflation, deflation, hyper inflation, stupid govt policy, bank failures, and peak oil, it has massive potential, I can't see a cheaper, easier or better way to hedge against all of these likely events. As an investor the answer is diversify, property, business, PM's and paper assets, I'm not diversified into paper at the moment, and don't plan to be for a long time, but a few PM's fits in well.
In the event of a major bank failure in this country, that is not resolved within 48hrs, a stash of physical metal will be of little use. A .303 will be more valuable. I somehow doubt the till jockies at Countdown will have adapted to accepting bullion in time.
Secondly, as a trader, a bid / offer spread of around 20% signals an extremely illiquid market and of some company asking me to drink their proverbial yellow stuff.
But I can see your point of view, and that a lot of others agree with holding physical metals, I just don't subscribe to it.
Horses for Courses I suppose.
Jeez Bernard, still banging the drum for a capital gains tax? The perfect suicide policy for a country so desperately short of capital
Have you not understood that there is an investment deficit in this land. Tax interest by all means but only tax saving and investment if you want to reduce or eliminate it entirely.
Yeah , you'd have thought those Labour guys would've learnt something from the last election ....... the public don't want a CGT , it is seriously dopey policy ..... no one here in Australia wants it either , except for the politicians .......
...... even in America there's talk to be rid of it , because it causes capital to flow elsewhere . You do want capital to flow into NZ , dontcha , Bernard ?
No he doesn't. He wants those nasty cheating property owning types to be Chinese. He just doesn't get it. Labour double think has addled his brain. Pity really, apart from that I rather like the guy. Mind you I could say the same of a lot of otherwise quite intelligent people. "Useful idiots" I think Comrade Stalin called them.
The deficit is in production investment not consumption and speculation.....a CGT does just what you want, it taxes interest or gains/profits.....lots of other countries have a CGT and are doing better than us.....because they have more of a level playing field.....
regards
Not what I meant. CGT taxes capital gains and therefore discourages equity investment of all types. It encourages lending for interest. I would discourage lending by taking away the tax deductibilty of interest on the grounds that it is a capital funding decision not an operating expense. This is exactly contra to how I am presently organised - at the moment the rules favour borrowing as much as you can safely manage, so that's what I do, along with everyone else.
The distinction that interest is a financial decision made by the owners of a business and not an operating expense is central. I also cannot see why GST is not charged on interest as it is a service, arguably less important than bread, upon which GST is of course charged.
As to the political difficulty of making such a change that relates to the process of changing, not to the desirablity of the change.
My assumption is that these ideas are far too radical to ever be implemented, but if they were I'd have to make changes pretty darn quick.
To compensate for the loss of interest deductibilty I would reduce the rate of business tax to say 14% (the Irish credit their prosperity to their low company tax rate and are fighting tooth and nail to keep it - the Germans think it is unfair competition). Lots of jobs would migrate over the Tasman.
We have suffered from a boom in lending so attack the tax treatment of that - interest deductibilty. It's not going to happen, so why worry?
Yup , it is simpler to remove that tax deductibility at the front end , than to attempt to tax capital gains profits at the back end .......
....... and removal of the tax on savings accounts may incentivise folks to be savers , rather than debtors .....
But don't hold yer breath waiting , the " commonsense " cog in Bill English's brain seems to have rusted up from dissuse , no chance of it kicking into gear ......
There are two ways to profit, business is about interest ie making a living day to day by investing your capital and.....not just capital gain, which an owner can realise when they retire. With no CGT there is an imbalance, this is the huge problem of speculation for gain without consideration of what is best for the long term health of a business...it distorts the investment decision....hence ppl buy property and lose on the income and get tax deductibilty on thoses losses....yet can profit on the final sale and pay no tax. Sorry this isnt balanced or fair. We can go into share price distortion....so a business can bump up the share price with short term gains like no R&D making their books look good and sell out before the price drops as the company can now no longer compete....not good for the business or its workers.....the speculators of course make a killing.....
Now I agree on the tax rates dropping.....a CGT by itself wont raise much money but it,
a) stops a business taking on bad practices say a huge debt to avoid tax....looking for a tax free cash out at the end.....this is a hugh liability, and im sure looking at company debt levels which are crazy is exactly what ppl are doing......the problem is when we get a severe recession those businesses fold quicker and jobs and value are lost making the recession worse....
b) Without the avoidence of a) more tax should come in....that means the PAYE and business tax rates could/should be reduced. I dont know about 14% but shaving off %s should be possible...
GST on interest, well that attracts 33% instead of 15% so i can see why the tax man says no....however I can see your point, especially as bank rates are so low........it maybe that the sensible thing to do is this provided its easy to work with.....ie no huge tax holes.
From what I can see teh rich in effect pay no tax in NZ as they live via capital gains....sorry but they should be paying their share of tax.....so lets get the system fair and even....and I think it will come with a new Labour Govn.....there is huge un-rest in "main street" as workers ie voters see others not paying any cost for their mistakes and indeed profiting and paying virtually no tax.....that cant acrry on peacefully........there will be either a fairer tax system or riots or squashing of liberty.....we are heading for a second Great Depression.....I cant see any other options.....carry on isnt one.....
Which brings me on to tobin taxes....these should be brought in as well, business ppl want stability IMHO.....certianly apart form investment types REAL business ppl want to get on with running a good business and not be looking at the share prices every 5secs......
regards
Steven, I don't know where to start, but I found itulip and Michael Hudson helped me enormously with this particular pile of trouble.
You are thinking about how finance works in the production/consumption economy, whereas the problem is the domination of the production/consumption economy by both the finance/real estate/insurance economy and by the government economy.
My concern is how to correct this imbalance and whilst I tend to express my current position with a certain energy the fact is I'm probably not 100% right. I do my best to look under the right stones though.
The danger of a CGT is massive - it tells those who are actually good at allocating capital to go elsewhere. So the baby is thrown out with the bathwater. The point is people who are good at allocating capital have more choices than those who are not. It is a hard skill to learn and our society needs people who are good at it.
Roger why not a land tax as a simple proxy for a cgt? It won't discourage capital investment, and it will encourage land (the most scarce resource) to be used productively. Levied on unimproved value, the valuation mechanisms are already in place. Simple to administer and impossible to avoid.Those who regard such as theft have, ironically, little insight as to how land came into private ownership in the first place!
Your ideas re interest expense are interesting. Personally I would favour some sort of inflation indexation for both savers and borrowers, it might level up the playing field a bit. However adding complexity to the tax regime is the negative aspect.
Yes well, Auntie Helen went down that rabbit hole quite far enough I think. We have a land tax, its called rates, just as we have a savings (ie wealth) tax called inflation. I think Helen and Michael did try to push as much central government cost down to local government for just this reason. Trouble is what I call the real intelligence deficit is even greater in local government than in a Labour government. (My take on why Helen and Michael had to control everyone else was because they were the only two who actually had a clue).
Yes but rates are usually levied on Capital Value not Land Value. Also most councils build in Fixed Charges so rates are not as progressive as they could be, I was thinking of replacing some income tax with a land tax, possible focussing on the lowest tax rate.
The problem with CGT is, on realised or unrealised gains? What about capital losses? What about factoring in inflation? My preference is for something far simpler, less manna for accountants and lawyers.
Yes, well, interest deductibility is the biggest rort as far as I can tell. That is why I structure my own business to borrow rather than structure it without borrowing. If interest was not deductible I would borrow less, property prices would be lower and as country we would owe less and be better off.
Government is unable to steer the economy through policy. This should be obvious, every action has an equal and opposite reaction. They could tax everything and it would solve nothing. Or target tax the problem areas, and it would squeeze out somewhere else.
Tax revenues are meaningless, when govt is spending 50% of GDP, the more they get the more they spend. 50% of GDP is crazy, and the trend is increasing, not decreasing.
To have an efficient economy, leading to prosperity, it takes education. Which would mean a total rewrite of the current education system, which was designed by the Rockerfellers to produce wage slaves. Logic and critical thought should be the heart of education, the fact that it isn't even taught says a lot. Logic would say that capital gains is risky, and investing for good cashflow is far safer. Yet we have a nation full of intelligent people pursuing capital gains, at the expense of cashflow, and wonder why our comparative standard of living is in decline. Take a good look at rich economies and you will see that they have a lot of cashflow producing assets. Even our biggest producer farming, is asset rich and cashflow poor. A smart farmer I know, still talks about negative gearing and capital gains. A better education is required.
Critical thinking skills are taught skudiv..trouble is the ability to think to reason to judge...these are developing capacities in brains that are these days saturated with tv garbage, drugs, idiot religions, noise pretending to be music, street racing and a host of other distractions and brain cell killers...
The fodder factories run from Kindy to Uni....pretty soon the scum will market 'Kindy loans' if they haven't already done so. "Give you baby a head start with a Kindy loan to ensure the very best education and put them on the road to a lifetime of success and achievement with above average incomes"
Ha, Kindy loans, we already have state funded early childcare, another election bribe. I found school was totally irrelevent to the real world, which is why I left. Ask a 14 year old what they want to be when they grow up. How the hell would they know, unless you teach them how to make money. Instead they teach how to work as an individual, and to obey, and repeat. If they taught people to think for themselves and question everything, society as we know it wouldn't exist, maybe.
Nah you miss my point skudiv....only a small % of brains can learn to think before the age of 20!...a large wad never develop that ability,,,look around you to see the evidence of that...Schools are sausage factories...these days the flavour are Tolleys....plain tasteless. The govt has changed the skin but not the muck in the middle.
Any parent able to think...! doh....will see the plain sausages as a poor choice..they will put the effort and money into buying and producing quality. Since only a few parents learn to think....it is not difficult to guess what the Kiwi Kulture is all about...dumb and dumber by the decade.
http://boombustblog.com/blog/item/5980-the-american-education-system-ex…
Reggie has a good rant about this, most of which I agree with. I find his style rather hard but he I have grown to really like him.
"The recession will not be mild in Italy (the third largest Eurozone country), Spain, Portugal, or Greece. In that group all but Italy face sure depression and Italy is likely headed there. For further discussion, please see Money Supply Figures Suggests Italy Headed Into Depression; Non-Performing Spanish Loans Hit 134 Billion Euros, 7.51% of All Loans, Highest in 17 Years; Eurozone Unemployment Charts.
Combined with slowing in China, a recession in Australia, and a recession in the UK, the odds that Germany bucks the trend are extremely slim.
The odds are high the US enters a recession as well. Thus I expect the IMF to lower growth estimates again soon"
http://globaleconomicanalysis.blogspot.com/
Got all that.......now tell me the fluff about recovery is not BS.....this is as good as it gets and likely as not it will get a dam sight worse....good news for the fatcats in the public service though...salary increases and bonuses for doing the job...and then there are the SOE income bloats wallowing in the trough...a breed apart they are...Just don't expect the govt to lift a finger on that issue...
Clatter rattle clink tonk....who dat kicking the can again!
"The Federal Reserve may implement a third round of quantitative easing this spring to bolster the economy, according to Credit Suisse Group AG’s Ira Jersey.
“We do think the Fed is going to do another round of asset purchases later in the quarter, probably aiming for April,” Jersey, director of U.S. rates strategy at Credit Suisse in New York, said today in a radio interview on “Bloomberg Surveillance” with Tom Keene and Ken Prewitt. “We are growing, we just don’t feel prosperous. It is a part of the job of the Fed to assure prosperity, one of the ways to do that is to kick- start housing,”
Have you ever heard such utter shite in your life...."the Fed should kick start housing"...how thick if Ira Jersey?
Oh and by the way, Ira thinks "we are growing"(usa)...this also is a total load of BS
Another article stating the obvious, who's responsible and who's not going to do a thing about it.
http://www.stuff.co.nz/business/money/6292164/Low-interest-the-good-the…
Of course he wouldn't mention that PM's are a good place to save money. With the consensus broadly in line, expecting lower for longer, it's time to be nimble, and cautious and well informed. Watch those rates very closely because if they start to rise, it means that all the crap has started to bubble to the surface, any rise will kill all long bond holders.
I doubt banks are that thrilled with the low interest rates either, and possibly slightly more reluctant to lend, when the low interest rates are below the risk premium.
This is just so cool , the founders of Megaupload.com were all hanging out in Auckland ! ... ... and the Kiwi police have assisted the yanks in stealing all these guys hard earned gains , a small fleet of luxury cars , including a pink cadillac .
.......... bloody sad day when the cops confiscate your pink caddy .....
Jeffrey Tucker : " Powers vs. People in the Digital Age " ( The Daily Reckoning ) is an excellent piece if you wish to follow this story .
..... what bothers me is the ease with which the NZ Police force acted upon US guidence , and arrested all concerned , and stole their assets ......
Yes , stole . The NZ cops stole goods ( those luxury cars ) which legitimately belong to Dotcom & his buddies . This is a dire warning for Kiwis , " Big Brother " will stomp all over you & your possessions , you're living in an age where you're " guilty , until proven innocent " .
.. The USA is at the leading edge of increased police statism , and it's mortifying to see the Kiwi cops join them so willingly ......
A bit cryptic there GBH, a bit anti-US maybe ?
According to his resume:- New Zealand authorities were cooperating with the United States' FBI and Justice Department, Hong Kong Customs and the Hong Kong Department of Justice, the Netherlands Police Agency and the Public Prosecutor's Office for Serious Fraud and Environmental Crime in Rotterdam, London's Metropolitan Police Service, Germany’s Bundeskriminalamt and the German Public Prosecutors, the Royal Canadian Mounted Police and the Canadian Department of Justice in the investigation preceding the arrests.
And in the interests of "fair and balanced" you forgot to mention the US authorities assisted the NZ police in the apprehension, extradition, and deportation of "Nai Yin Xue"
I got the impression that the old money incumbants within the entertainment industry were behind the push to shut down www.megaupload.com ........ conveniently ignoring the best interests of consumers ( who love the site ) and entertainers ( who were making money , via the site ) ........
....... the cutting edge of entertainment dissemination has been shut down temporarily . But the spirit of free enterprise will eventually overcome the old hacks , and the deluded judicial system ......
Shame when the authorities are so gullible as to yield to the lobbying by vested interests .. ... no one bothered to canvas the opinions of users & the entertainers themselves ..
.... one of the guys lobbying against megaupload actually has illegal downloads on the face page of his website ...... ooops !
Gummy
Are you really defending Kim Dotcom?
Have a read of this 72 page indictment.
All of it.
My sympathy levels dropped a lot after reading it all.
Kim Dotcom used our naivety to try to hide and laundered a whole bunch of money through here.
Including in NZ government bonds
cheers
Bernard
No Bernard : I'm defending freedom of business & innovation .... I don't particularly like the sound of these " Dotcom " guys personal private lives , but their in-roads into the stodgy old entertainment industry is to be applauded , not to be shut down ......
.... the indictment must be heavy duty stuff because both times I've clicked your link my laptop has seized up quicker than a cop on a wide-boy's pink cadillac .
Did you catch the Jeffrey Tucker article , on the Daily Reckoning ?
[ .... at least Kim Dotcom wasn't stupid enough to buy Eurobonds ..... that guy knows a good thing .. ]
I'm defending freedom of business & innovation. Yeah - Roger that brings me back to the debate we had about the “Dallas” TVprogamm, where criminal business activities were consider as clever by many viewers - and obvioulsy still are.
What would you consider a gang of 4 breaking into a bank stealing 10 million – innovative, freedom of business. ?
Me too !
Even innovatively bring down scientists from other countries is now considered as freedom of business and supported by millions. Where are we ?
We now have so many criminal activities defended by authorities, societies are getting increasingly confused what is right and wrong.
What is the next step ?
Walter : Not for a second would I defend actual bank-robbers ......
... in the case of Kim Dotcom & his buddies , their alleged crimes are monetary only ...... no one was physically assaulted or hurt by them . In fact , many customers of their site were benefited by their enterprise , as were some recording artists ......
Just as Kodak Eastman is near to being swept away , so should the media moguls of the past ....... we cannot allow them to stifle progress , just so they can keep their cushy businesses .... if they failed to remain relevant , that's their problem , not the consumers' responsibility ......
And for the incumbents to utilize the judicial system as they have , is the thin edge of the wedge for individual rights ..
Roger – the same can be said from bank robbers, the really “successful” ones don’t do any harm to people. I’m sure some are even donating to charities later.
On the other hand thousand’s of bankster’s should be in jail, because of criminal activities.
In today’s world it is embarrassing to see how corrupt societies are. We definitely need intellectual revolutions to bring back values and make societies understand and learn what ethical principles mean.
I'll reiterate Wolly's link to the "Un-Real Estate Mess" since it's a central concept to understanding our own economic distortions. One that's happily perpetuated in a cooperative lie by the politically dominant vested interests and PR channels in the mainstream media.
But no worries...it's all going to be ok onboard the Costa New Zealandia right? Smile and wave at the helm and entertainment officer Gummy's on lookout.....!
"virtually everyone with a mortgage is renting debt-money from a lender and leasing the land from a local taxing authority. The mortgagees have a "dead pledge" in the value of the debt owed, not an "asset". The lenders and taxing authorities are the "owners" of a lien (a bond or constraint on the real property), which entitles them to income in the form of compounding interest and tax receipts in perpetuity."
"Worse yet, in the process of favoring and enabling the rentier domination, we punitively tax labor, production, productive capital investment, savings, and productive capital accumulation while encouraging rentier speculation, waste, ecological degradation, and resource depletion."
http://globaleconomicanalysis.blogspot.com/
You'll enjoy this Gummy!
The Top Five Environmental Disasters that Didn't Happen
http://www.youtube.com/watch?v=67dcK5sjHsE
:-)
What a duh piece...great fodder for the gullible, ill-educated and moral deniers.....
GE, suicide crops...yet we can see there is enough evidence that genes cross over from GE crops to organic crops......therefore its not an impossible scenario......so the Q is do we need GE, the answer is not really it does little......so, why take the risk.
Species extinction.....so it didnt reach the levels that were projected....oh so thats alright then, its happening at a slower rate but no worries.
Energy crisis...oh it hasnt happened so all is well.....so we have had oil at $147, its back at $100~120USD a barrel and production stopped claiming in 2006.....no more growth without more energy....and our system has to grow, therefore its going to unravel....
Pesticides....yet there is growing concern that is the case....bee population collapsing and no one knows why.....time to ask some tough Qs on that one.
Malthusian...when you have an expotential population growth on a finite planet that eats oil to sustain 5 billion more ppl than it can naturally at some point its going to happen...its in-evitable just when.....
regards
Eco-mentalist
An intellectually misguided, rationally challenged neo-hippie member of the pseudo-environmental division of the loony left, dedicated to the advancement of radical socio-economic policies such as cultural Marxism, political correctness, and other post-Communist forms of state-enforced social equality, using of course the supposed frail state of the planet to forward their agenda using scare-mongering tactics and/or dramatized and falsified information.
http://www.urbandictionary.com/define.php?term=eco-mentalist
You just wonder how long the Oz economy can hold up?
Australia LNG boom fizzles
http://www.pretorianews.co.za/australia-s-lng-boom-fizzles-1.1217125
"Australian LNG projects typically come in with costs between $6 and $8 per million British thermal units (mmBtu), while most non-Australian projects cost less than $6 per mmBtu.
In addition, some analysts estimate that Australian LNG projects are typically delayed nine months to a year and come in around 15 percent over budget."
"US gas prices are under $3 per mmBtu, a fraction of what Asian buyers pay, with spot LNG prices around $15.75 per mmBtu in the region."
BHP are reporting that they are making loses on nickel and aluminium
http://www.smh.com.au/business/price-crunch-tests-base-metal-20120119-1…
"In its report, BHP highlighted that its nickel and aluminium divisions were not enjoying the boom prices it was still enjoying in iron ore and, to a lesser extent, coking and thermal coals."
The edge of the cliff is awful close now.....
"...tension ratcheted up in Greece over the country striking a deal with private bondholders on how big a haircut they would take.
As talks ended without a resolution on Friday night, sources close to the negotiations said bondholders would suffer a real loss of 65pc to 70pc.
The new bonds would have a 30-year maturity, with a 10-year "grace period" and a "progressive" coupon that averaged out at 4pc.
Greek politicians and the country's creditors will start talks again on Saturday morning.
Greece is running out of time to reach an agreement by Monday's deadline so it can secure the next €14.5bn tranche of its €130bn rescue package. The impasse saw European markets slip, with the FTSE 100, CAC 40 and DAX all falling 0.2pc."
http://www.telegraph.co.uk/finance/9028931/UK-rejects-German-olive-branch-of-exchange-tax.html
Haircut agreements for Greek debt will mean demands for the same by all the other piigs....and default processes will kick in...who will pay the insured losses on the bonds!...who has insured those who insured the bonds?
Watch now as the farce unfolds and the filth emerges from the slime....
One question not floated into this barrel of laughs....how much do the pension funds stand to lose!...which leads on to asking how many who receive a pension payout today, are likely to be told the payments are at an end....no more money....all gone...
Oh and let's not forget...as soon as the shite starts to splatter up the walls...the rush to sell equities to boost bank capital positions will do what on the equities markets....freefall anyone...no chute.....splatt.
Yes and Bollard has little room to keep playing his game...are we to see a return to the RBNZ swapping new cash for securities at inflated bubble values...to enable the banks to blow another property bubble!
Has anyone bothered to figure out whether average Kiwi has woken up to the scam....the farce of signing up to a bloated mortgage simply to support the bloated prices and save the profit bloated banks from a dam good market thrashing....thought not.
How about the much promised fiscal surplus...harrrrrrrrrrrrhahahahaaahaaa
Oh dear oh dear wool is sliding slip sliding away....whatever could be causing that....
Anyone care to put a price on that mansion of shite the police raided yesterday...because it's coming onto the market in an auction very soon...`Hey John....it would make an appropriate National Party party HQ don't ya think...huh...
Wolly i think us small bunch of loonies here are probably within the 0.05% of the nz population who have understood how screwed the world and nz is, and we've been saying these things a long time.
I guess when you have our esteemed leaders and economists talking things up then you gotta expect the sheep will lap it up.
The problem is people are going to get hurt again. Joe bloggs who mortgages up to the hilt on an investment property cos olly says another boom is coming, the boom doesn't come and Joe loses his job
SOUTHERN EUROPE PERMANENTLY CRIPPLED
http://www.marketoracle.co.uk/Article32731.html
"Mummy...what does per manent lee mean?"
.... it's not really a problem for the world at large , that the self-indulgent decadent western countries slip down a peg or twenty , and that they're replaced by emerging market economies ... economies built on hard work , thrift & innovation .....
Same-old-same-old if you study history ...... as you sow , so shall ye reap , they say .... the Greeks & their ilk have been sowing the seeds of their own miserable harvest ......
...... thus sayeth the Reverend Gummy ! ... Amen .
Just curious how the de-flationists argument stacks up against the Asian Financial Crisis, which resulted in high inflation, with a backdrop of mass defaults, and no real liquidity injections, via easing policy.
Thai Baht. The Baht fell swiftly and lost more than half of its value. The Baht reached its lowest point of 56 units to the US dollar in January 1998.
Indonesian Rupiah .Before the crisis, the exchange rate between the Rupiah and the dollar was roughly 2,600 rupiah to 1 USD.The rate plunged to over 11,000 rupiah to 1 USD on 9 January 1998, with spot rates over 14,000 during January 23–26.
South Korea. The South Korean Won weakened to more than 1,700 per dollar from around 800
Singapore. There was a gradual 20% depreciation of the Singapore dollar.
http://freegoldobserver.blogspot.com/2011/10/forgotten-crisis-and-what-every.html
By Satyajit Das
http://www.ft.com/intl/cms/s/0/dac141b0-4111-11e1-b521-00144feab49a.html#axzz1k3oAtLgy
This is brilliant.
http://www.mckinsey.com/Insights/MGI/Research/Financial_Markets/Uneven_…
Check out Exhibit 2.
there isnt an OR.....one of our biggest untappd sources is efficiency, however its still somewhat catching your tail....ie insulate to save money as fuel increases in cost, however insulation also takes energy to make so it its more expensive....
The biggest gain that will have the biggest effect is decreasing our population.....not even arresting the growth will work.
regards
another straightforward piece by John Kay of the FT from Wednesday
http://www.johnkay.com/2012/01/18/a-real-market-economy-ensures-that-gr…
Re "steven | 21 Jan 12, 9:20pm"
Stephen,
There are two ways one can get a capital gains:
- Making improvements to the asset by investement to increase income
- Inflation (asset price, and straight currency inflation)
The first can be controlled by an individual investor, the second one cannot.
The second one is controlled by the government, and shadow banking financiers who create easy money and provide it to the stupid to go into an asset bidding war.
Long term investors used to buy residential property for a conservative 10% return. During the boom (fueled by cheap money from government sponsored bankers and shadow banking), the property proces doubled and the return dropped to 5%. Not many of those long term investors bought property at that time.
Long term investors prefer rental return, and any improvements in rental return created by value added to property--honest work. They do not want inflation because feeling good about property price increases due to inflation is a mugs game. The increased value due to inflation does not buy you any more goods does it ?
How do you propose to eliminate taxation capital gains created by inflation - i.e. the fools' capital gain ?
If you cannot come up with a good suggestion, then are you not simply supporting another form of theft by the government ?
There are enough old / savvy investors I know who are pissed off by capital gains (asset value increases) from inflation. But for totally different reasons than you. That is why most of them did not buy anything during the "stupid phase" pre GFC.
Walk in their shoes a bit and think harder.
LOL, another theft by the Govn dude....it isnt theft.....its tax....if you dont like NZ laws....well you have options.
CGT, there are two issues,
a) a society is a complex thing and that needs energy and more energy the more complex...ie the "control" needs more energy/money....I suggest you study complex societies Dr Jospeh Tainter (I think) is fasinating.....
b) There are ppl who's income is all or mostly capital gains.....and they set their tax and business for this....this is un-balanced and unwise and it isnt fair on ppl who are paying 30% business or PAYE tax.....so the playing field has to be leveled....and indeed most other countries have a CGT and its not effecting their economy and in fact it seems better balanced....so so far for me the "honest work" is over-taxed while the speculators and "dis-jhonest" work is not only under or not taxed it damages our economy....
Labour doesnt propose a CGT tax at 30%....it suggests a lower rate of 15%?. Otherwise, yes I agree, what is an improvement and what is a fools gain........so if I spend $100k improving a business that capital shouldnt be taxed, but if the business is now worth $120k more the $20k should be taxed...however it has to be simple to determine and collect....
So we have to have tax at a high enough rate to meet costs...and we should be saving for rainy days, aka the Cullen fund and counter-cycle....beyond that tax should and could be reduced once everyone pays an equal share.....
Inflation is kept in check by policy.....so its 2~3% odd...
regards
Im enjoying this Hypertiger dude, as its a slow Sunday thought it add his latrest posting
-
In Topic: Taxes at the Top
Today, 02:15 PM
So the first thing the useful iidiot Libtards have to do is find a very rich person that isn't paying what seems like enough taxes...and then use that as an example or proof that the Libtard religion is the one true religion.Big deal...It's those lower in the hierarchy that create all the money wealth or power that the rich have access to...
Those lower in the hierarchy have to pay the I want to be a rich man tax...so that there are rich people for the Government to even extract money from....
ultimately as a whole...if you raise the demand for more on the top of the bottom or the richest servants....the only way the top can supply the demand is by increasing the demand upon the bottom of bottom...the lower class or the poor.
any increase in demand within a system...eventually spreads throughout the entire system.
It accelerates the flow of power or yeild extraction from the bottom to the top....
Because the lower class is already paid the minimum wage so the top can obtain the maximum income...the only place that the top can cut from is the middle class which is the top of the bottom...or the servant class within teh absolute capitalist hierarchy..
So ultimately the middle class will have to shrink and the lower class will have to expand.
The greatest demand for tax money subsidization by government is the lower class or poor slaves that support all above...
If the money extracted from the top is not directly supplied back to the who it was extracted from...It just creates a demand for even more to be extracted.
Paul Krugman doesn't work for a living...All he does is figure out nifty ways to promote belief in lies that those looking for lies to believe in buy.
If I attach interest to a loan to you which is basically a simple example of a I want to be a rich man tax...If i don't supply you with what I demand back...You are going to have to get it from someone or somewhere else...
All that taxes imposed upon the bottom by the top are...are whips....whips on the backs of slaves in the mud brick pits to produce more bricks to construct and maintain the delsuional lifestyles of teh wannbe rich and famous.
The positive environment created at the top is the cause of the negative consequences at the bottom of the hierarchial power amassing system.
the problem is not the whipping or taxing rate at all...the reason why the system is collapsing is because the slaves in the mud brick pits producing the money have reached their maximum potential to supply the demands of the top.
We at the bottom can no longer hold your asses up...really...sorry...The increased whipping strategy is not going to work...only a spoiled brat Libtard servant getting high off the fumes from the farts produced from their lazy ass could think that increasing the whipping of the slaves in the mud brick pits would magically equal greater production of mud bricks.
Who do you think produces all the money that your incomes are composed of?
The magic printing press is used in the monetization process...It's not the source of money...
The producers or lower class are employed by the master or top to produce everything and supplies it to teh top...the master then monetizes it...marks it up and sells it to the bottom...
The difference between the whoelsale cost of production and the retail price is the yield that the top lives off of....the yield that the top uses to pay the servants or middle class and what is left over is then supplied to the lower class.
The lower class or producers are supplied with the minimum so that the top can obtain the maximum...the top of course invest some into the social engineering of the bottom to keep on slaving away...the bright glorious future of wonderfulness is the goal and we are all most there...don't give up...never surrender...to infinity and beyond...
I'm talking real economics...Not the phoney baloney just think positve religious beliefs and social engineering you have embraced as your meal ticket.
Yield rates have been dropping for decades now because the lower class has been unable to supply the yields the top has been demanding...the solution for the past 30 years has been to engineer yields lower in search of volume.
The Quantative easing combined with the increased issuing of bonds...is the master or top basically attempting to force or whip the bottom or slaves to produce more yield because in 2008 the bottom reached the point where they could no longer supply the demand for yield by the top.
The tax raisng agenda is just another way to increase the whipping of the slaves....That where teh useful idiot libtards come in to play...you all need to be convinced that increasing teh whipping of slaves is going to be a benifit to you...
Raising the prices of Food and fuel globally is also being utilized as a whip.
sure yield rates are low...but quantative easing is a sign that the bottom or slaves are not supplying the top with the yield they demand...period and of story.
The current low rates are subsidized...meaning that without all the actions taken since 2008...the glorious 66 year delusion you all are currently enjoying would have shatterd to oblivion.
The yield rates from the bottom to the top would be negative...It would be like fulling up a gas tank to run a machine but teh gas in teh tank is not enough to sustain operation at all.
in an absolute capitalist hierarchical structure...the power requirements to sustain it constantly increase...the required amount of power to produce a yield grows exponetially until all the power in the Universe at any point in time is not enough to produce a yield.
of course teh systam implodes to oblivion long before it reach teh point where it requires all teh power in teh universe to continue to exist...
raising yield rates would be the same as rasing taxes...the taxes the top has been demanding the bottom to pay the past 30 years in order to sustain the delusion you all think is reality have actually be dropping...lower and lower...because teh bottom can't supply the yield teh top is demanding....So yeild rates have been engineered lower in search of volume..and in 2008 the maximum potential volume was reached...past that point and tehre is no volume.
there is no way to motivate the slaves into supporting all above...it's like whipping a horse to gallop to teh bright glorios future for 6 decades and then teh horse becoems tired...slows down and stops.
you can whip teh horse or bottom to to death but the top or rider is not going to be taken anywhere by the horse...it's over.
That is what is really going on when you all stop believing the lie you all currently believe is Truth.
But until you do...The foolish fantasy world you currently embrace as Truth will be what you think is going on.
and you all will operate as your beliefs dictate...
The top know about this...They know they are master and that all below are nothing more than servants and slaves that believe lies are Truth...
But in the end someone has to take the fall for it all...
The top hires you all to take the fall for it all...and when the dust clears...they hire the survivors to do it all over again.
"Trappped in a Roman...wilderness of pain...and all the children...are insane..."
the people ask..what is teh solution then.
teh solusion to teh take more than you give equation is collapse.
if you don't want to collapse...then the only way to avoid teh logcial conclusion of the take more than you give equation is to not take more than you give.
but once you choose to take more than you give...if you stop...you collapse.
that is why you all that have enbraced the lie and going to die by it...why yo ucan't stop...why you are doomed.
You all think the soluion is to continue taking more than you give until you reach teh point where it becoems impossible...when you are forced to stop...because you think that a miracle is going to show up to allow you all to be saved from teh logical conclusion.
A miracle that has never shown up in teh 6000 year recorded histroy of absolute capitalism.
Unfortunately the miracle you all hope shows up...can't...It's impossible.
basically teh collapse is teh miracle...
what you are all doing is basically evil...but good is stronger than evil and teh collapse is just what happens when lies are destroyed by Truth.
tah tis what teh systam you all have fallen deeply and hopelessly in love with is...
A Lie tah tis fighting against Truth.
there is never a lasting victory over lies while teh war agains tTrut hhas no exit strategy and always ends in defeat.
the top know this...it's a wave...
Tyhe top hire you all below and whip you all to slave away and supply power to teh lie fighting truth...the goal of absolute capitalism is to amas enough power to defeat Truth and transform a lie into truth.
Amass enough power to defeat Truth and obtain absolute power over all and everything...which is what Truth is...and what teh lie you all believe is Truth and suppling power to sustain is trying to accomplish.
Unfortunately it's impossible.
But the just think positive drones keep telling me...if at first you don't succeed...try try again.
You all can beg the master to whip you all harder...it's not going to save you.
I was in Athens last week with work (consumer products, not banking or finance), so I had chance to see the city and talk with Greek colleagues informally after work.
It is bad there, compared with anywhere else I've been in Europe or the USA it's clear that money has run out, the government has basically abandoned many services like road repairs, parks, immigration control, graffiti etc. About 50% of the shops and banks are empty, more abandoned than 'for sale'. A policeman told a colleague that about 40% of people have no car insurance now.
The ordinary employees have had massive tax rises taken from their salaries as well as rising costs, petrol is nearly €2 a liter now. There are refugees from the Middle East trying to sell stuff at traffic lights.
No one had good ideas for the future, and there was no consensus on staying in the Euro zone or getting out.
It's very sad, it's like the edge of Europe decaying away, can Greece recover? Who knows the Greeks have had bad times in the past and survived, but this time, it seems so unsolvable?
They need support not jokes, it's like in the UK, most of us never supported or voted for Tony Blair, I never knew what damage Sir Fred Godwin was doing, until after RBS collapsed. http://www.telegraph.co.uk/finance/financialcrisis/9030163/Greek-debt-d…
AJ - it was always going to be somebody.
It would appear that there is a flaw in our DNA - the ability to presume that the more you use of something, the more will become available, indefinitely. The reason, apparently, is that we would like it to be so.
Doesn't work with my bank account, doesn't work on a finite planet, and flies in the face of logic.
There is no way out from this point on, and the weakest will inevitably fail first. It's one thing, though, to say that, another to see the human face of it.
A curse on the head of all who have encouraged 'growth' in the last four decades, both of population and of consumption. And on those who think you can have a 'balance' - Key this morning being a classic example.
Time someone in the NZ media (the word between 'good' and 'reporter' should be 'investigative'). It's gonna be an interesting year.
"weakest" I think tainter's? comments on the Great Roman Empire's demise interesting....the only way they could keep going near the end was to lock the poor/weakest onto the land and bleed them dry.....I see this as the probable course we will take again.....in fact I suspect this has been happening for at least 20 years just its not been noticed for what it is, slavery where the chains are debt.....however IF rule of law and justice via the democractic process pervails I think this will not succeed....simply Plooies will be voted out in rapid succession until its balanced.....this suggets a quite hard left or socialist govn in the future....or if it succeeds in holding "us" down hard right or facsist....
"like it to be so" same with AGW...we'd like it not to be a problem so we wish it away......same with Peak energy....we'd like there to be easy and available alternatives that wont effect our lifestyle too much.....
Exploiting or growth is a moral bankruptcy fostered upon us by at the least christainity....god put it there for us to use......so therefore if we find we cant use it the entire falsehood of the bible etc falls over.....too many ppl with this crutch in place, in fact embedded to allow such a moral realisation to occur....easily.....
Journalists have the same issues as many of their readers....no one wants to look.....and as long as the few that do are very few it wont be reported......
Mother natue on the other hand will revert us to annual energy balance inside 2 decades....
Steven - too true.
We - I presume I had him rightly picked - had a senior NZ journalist hereabouts, and You and I and others gave him plenty of research options.
What we got was total denial, and an eventual leaving in a hissy-fit. As you say, 'don't want to look, but theyhave an obligation to ascertain the truth, irrespective of it's implications.
As it is, with the exceptions of Hill and Laidlaw (not surprising that the most intelligent get it first) there's not one NZ journo joining the dots. Not only that, but when you prod them, they baulk. No rebuttal or anything, just a closed door.
Very Good post Andrew sums up things quite well.
You can grab a good book on Amazon ot the mo called the cause of crime the income tax ;;
carnt beleive the rubbish posted on this site about whats going on in the economy most people think the Goverment will help ''
If the goverments got its foot on your throat it doesnt matter if its the left foot or the right foot there is a foot on your throat .
The new term is GOVCORP GO READ 1984 BY ORWELL ITS HAPPENING WAKE UP
SHEEPLE OF NZ .
BAZ
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