Good Thursday morning. Be mindful and enjoy what little you have left of the workweek, be happy you are not hobnobbing with the oh-so-very annoying folks at Davos. And train reads:
• S&P Got a Little Casual With its Mortgage Ratings (BV)
• James Grant: The balance sheet that ate Switzerland (LinkedIn)
• She’s No Greenspan: Yellen Signals She Won’t Babysit Markets in Turmoil (Bloomberg) see also Unfazed by market swings, Fed sticks to mid-2015 hike scenario (Reuters)
• “I like… fat… tails and I cannot lie, You vol sellers can’t deny…” (Climateer Investing)
• No, Low-income households didn’t cause the financial crisis (CBS News)
• Very Rich Get Very Richer: Wealthiest 20% Hold 94.5% of World’s Money (Real Time Economics) see also The Pitchforks Are Coming… For Us Plutocrats (Politico)
• How Did The Muslim ‘No-Go Zones’ Myth Get Started Anyway? (Talking Points Memo)
• 15 Tweets That Will Make You Hate Davos (NY Mag)
• Raise the Millionaires tax: Return to tried and true policies that encouraged and grew our once-robust middle class. (USA Today)
• Crunch time for pet theory on dark matter: Thought to make up the Universe’s missing matter, WIMPs are running out of places to hide. (Nature)
What are you reading?
ECB’s QE Proposal Calls for €1.1 Trillion in Bond Buys Per Month
Source: WSJ
Muslim No-go’s, Regular folks caused the Great Recession, Tax cuts for the rich cut debt and deficits…
Are the Media standing up and saying we’re not going to let the Republicans continue to lie?
“Really rich people, paying rich people to convince middle class people that poor people are the problem….”
This will be our downfall…..
James Grant is using the wrong framework: A balance sheet perspective is misleading when analysing a country that issues debt in its own currency; the problem of the swissie has nothing to do with the SNB’s balance sheet.
This is mind-blowing: You have to pay Switzerland to lend it money
This isn’t really new, though, so much as Europe’s new normal. As the Financial Times points out, €1.2 trillion, or $1.4 trillion, of eurozone debt has negative yields that mean lenders are paying borrowers. But what it is new is just how long people are willing to pay governments to borrow. At first, they only did so for 1-or-2-year bonds. Then, in a sign of how dysfunctional Europe’s economy still is, investors started paying Germany to borrow for five or six years. But now, as you can see above, Switzerland has beaten everyone else to be the first to have negative ten year borrowing costs, at -0.2 percent. And by “first,” I mean in history. This has never happened before.
NB: The author provides two useful ways of looking at this to which I would add a third: there is an insufficient supply of safe assets in the world and the bid is rising.
Annoying ones at Davos – more like charlatans and philistines!!!
‘I like…fat….tails’
I’m dying laughing right now. More of a morning pick up that my coffee was today.
Must read of the day for the over 40 set.
Don Luskin’s on CNBC! ROFL
Given the question of if he would travel to Europe, Rome in particular, he said he doesn’t want to travel to Rome because it’s a government driven city.
I’m writing down all his predictions so I can be confident in doing the opposite.
Oddly enough, it appears that Republican women representatives don’t believe Republicans should wage war on women:
http://www.washingtonpost.com/politics/abortion-bill-dropped-amid-concerns-of-female-gop-lawmakers/2015/01/22/56ffafea-a24a-11e4-903f-9f2faf7cd9fe_story.html?hpid=z1
Introduction to the Analysis Engine: What’s the Most Popular XKCD Comic?
Jan 22, 2015
http://priceonomics.com/introduction-to-the-analysis-engine-whats-the-most/
Study Finds Local Taxes Hit Lower Wage Earners Harder
By PATRICIA COHEN
January 13, 2015
When it comes to the taxes closest to home, the less you earn, the harder you’re hit.
That is the conclusion of an analysis by the Institute on Taxation and Economic Policy that evaluates the local tax burden in every state, from Washington, labeled the most regressive, to Delaware, ranked as the fairest of them all.
According to the study, in 2015 the poorest fifth of Americans will pay on average 10.9 percent of their income in state and local taxes, the middle fifth will pay 9.4 percent and the top 1 percent will average 5.4 percent.
“Virtually every state’s tax system is fundamentally unfair,” the report concludes. “Unfair tax systems not only exacerbate widening income inequality in the short term, but they also will leave states struggling to raise enough revenue to meet their basic needs in the long term.”
….
http://mobile.nytimes.com/2015/01/14/business/local-taxes-hit-lower-wage-earners-harder-study-finds.html
Overheard on the intertubes: Isn’t it unreasonable, even unfair that corporate dividends are “taxed twice?”
A corp is a legal entity. It has an ‘accession to wealth’ when it earns a profit. In our system, we pay taxes when we have an ‘accession to wealth.’
A stockholder is also a legal entity. It has an ‘accession to wealth’ when it is paid a dividend. So it pays a tax.
Why is this so hard to understand? No one claims that when I make a wage, and pay a tax on my income, that when I spend that income paying a man to mow my lawn it is double-taxation for my landscaper to pay income tax.
This is really simple folks: money moves from entity to entity to entity, ad infinitum. Income tax applies not once, not twice, but ad infinitum.
And, if the argument is that the shareholder IS the corporation, then you don’t get what a corporation is. It’s a separate legal entity that exists to protect shareholders from the business’ liabilities. The fact that it pays tax is a consequence of the whole point of its existence. (Sam I Am)
“This is really simple folks: money moves from entity to entity to entity, ad infinitum. Income tax applies not once, not twice, but ad infinitum.
And, if the argument is that the shareholder IS the corporation, then you don’t get what a corporation is. ”
I guess you don’t get how taxation is a more or less arbitrary system.
Nor do you appear to have mastered the concept of ‘pro forma’ or ‘consolidated’. Or ‘municipal bond’.
Other than that you are in good shape.
Almost all of our income is wages and salary. I pay federal and state income tax on the money that has already been subject to FICA taxes. So I am paying income tax on income that is just passed through to the federal government for Social Security and Medicare.
I believe that corporations get to deduct their employers’ FICA contributions before they have to compute their corporate income tax, so they get a tax break that I don’t get. Like the dividend tax situation, those are just the vagaries of the tax system.
I wonder when ‘millionaire’ came to mean someone with $1 mm or income per annum. It used to mean someone who had a million dollars in assets and was therefore materially comfortable/well-off.