UPDATE 3 (7:42 PST): According to this new video, released by an Occupy Oakland activist who witnessed the incident, the shooting occurred during a fight over “a bag of weed.” He concludes: “It’s gotten real nasty down here, real fast.”
Read the rest and see the video here.
Comments »Nov 9 2011, 4:38 PM ET 575
When I was a young and naive economics writer, I used to write about developing countries a fair amount. Time and again they would make these bizarre and pointless moves, like suddenly and for no apparent reason defaulting on a bunch of debt. They would engage in obviously, stupidly unsustainable fiscal practices that caused recurring crises. They would divert critical investment funds into social spendingwhich was going to become unsustainable when underinvestment reduced government revenue. And the other journalists and I would cluck our tongues and say “Why can’t they do the right thing when it’s so . . . bleeding . . . obvious?”
Then we had our own financial crisis and it became suddenly, vividly clear: democratic governments cannot do even obvious right things if the public will not tolerate it. Even dictators have interest groups whose support they must buy.
This has come home to me forcefully several times over the last few years, but never more than now. The leaders of the eurozone have a dual mandate to keep the euro intact, and to not do the things which could keep the euro intact. They cannot fiscally integrate to the extent necessary because, as I wrote for the Daily the other day, the Greeks do not want to act like Germans, and the Germans do not want to share their credit rating with anyone who won’t.
It is obvious that either Germany is going to have to guarantee massive ongoing fiscal transfers to the PIIGS, or Greece and probably Italy are going to have to undergo a massively contractionary austerity program, or they will have to leave the euro. Yet in the face of these three choice–which exclude both each other, and any other mathematically possible outcome–their governments have chosen d: half measures. No, half-measures is too generous. Quarter measures. Window dressing that only covers a single pane.
With Berlusconi’s obviously counterproductive antics tanking markets worldwide, the sort of hopeful pessimism that has pervaded the economic commentariat has now turned to open despair. Their cri de coeur is ably summed up by Brad DeLong:
I have been complaining for some time now that Reinhart and Rogoff think that the time is always 1931 and that we are always Austria–that the great fiscal crisis is about to erupt and send us lurching down toward Great Depression II. Well, right now guess what? The time is 1931, and we are Austria. The Federal Reserve needs to buy up every single European bond owned by every single American financial institution for cash before the increase in eurorisk leads American finance to tighten credit again and send us down into the double dip. The Federal Reserve Needs to do so now. Paul Krugman: >This Is The Way The Euro Ends: Not with a Bang, But with a Bunga-Bunga: [W]ith Italian 10-years now well above 7 percent, we’re now in territory where all the vicious circles get into gear — and European leaders seem like deer caught in the headlights. And as Martin Wolf says today, the unthinkable — a euro breakup — has become all too thinkable: >>A eurozone built on one-sided deflationary adjustment will fail. That seems certain. If the leaders of the eurozone insist on that policy, they will have to accept the result. >Every even halfway plausible route to euro salvation now depends on a radical change in policy by the European Central Bank. Yet as John Quiggin says in today’s Times, the ECB has instead been part of the problem. >I believe that the ECB rate hike earlier this year will go down in history as a classic example of policy idiocy… the sheer stupidity of obsessing over inflation when the euro was obviously at risk boggles the mind. I still find it hard to believe that the euro will fail; but it seems equally hard to believe that Europe will do what’s needed to avoid that failure.
For all my cynicism, I too want to cray [sic] out, “For the love of Mike, why?”
Why can’t they do the any of the obvious things–not even necessarily the right ones? Why are they picking the only path that is obviously not going to work?
But I come back to the answer above: they can’t. Government, like soylent green, is people. And people are not always rational.
Read the rest here.
Comments »KANSAS CITY, Mo. (AP) – A suburban Kansas City woman was left sitting in a vinyl recliner for so long that her skin had fused to the chair and she had to be pried out to be taken to a hospital after suffering an apparent stroke, authorities said.
Read the rest here.
A British CEO will give £250,000 (roughly $400,000) to the person who comes up with the best plan for one or more countries to leave the euro.
That’s a lot of money — the second biggest economics prize after the Nobel, according to the think tank that’s administering the award.
Then again, figuring out how a country could exit the euro without unleashing economic havoc on the world may be nearly as hard as winning a Nobel.
For most of the brief life of the euro, nobody gave any thought to how a country might leave. Even today, European leaders still rule out the possibility.
But what if?
What if Greece, say, wanted to go back to the drachma, so it could devalue the currency and make its exports more competitive?
In the absence of an orderly plan, it could get very ugly, as we heard in our podcast Europe’s Worst-Case Scenario — bank runs, political riots, financial disaster.
If you want to enter the contest, you’ll have to explain what to do about everything from private savings accounts to sovereign debt to the stability of the banking system.
The prize is funded by Lord Wolfson (Full name: Lord Wolfson of Aspley Guise), CEO of the British clothing store Next.
The FT addresses an issue that crossed my mind:
Lord Wolfson admitted the prize – coming from a non-eurozone country and soliciting ways to break up the currency bloc – could be received badly in Europe. But he insisted he wanted the euro to continue.
On that note, here’s Lord Wolfson speaking to us through the official announcement announcing the prize:
I, along with most European businessmen, hope that the Eurozone will stabilise, but in the event it does not Europe must not sleepwalk into a policy vacuum. This prize aims to incentivise the world’s brightest economic minds to help fill that policy void: their endeavours may well prevent Europe from descending into a financial chaos that would destroy savings, jobs, and social cohesion.
The entry deadline is Jan. 31, 2012. Good luck!
This research shows an overall effective corporate income tax rate of between 32.1% and 33%. Be sure to view the slideshow.
—————————————————————————————————————————-
October 13, 2011
View the slide presentation from this event.
Much attention has been focused lately on American corporations “not paying their fair share” in taxes. Some members of the media as well as elected officials have gone through great effort to point out that although the U.S. corporate statutory rate, at 35%, is the second highest in the world; U.S. companies pay a much lower rate. The latest Tax Foundation research and IRS data however says otherwise.
Join us for a lunch briefing on October 17th as Scott Hodge and Will McBride present our latest findings using IRS data and shed some light on the myths that exist regarding U.S. corporations.
Highlights:
The Sheriff’s Department said an internal investigation unit is reviewing the incident, but it’s unlikely the identified deputies caused Olsen’s injury. Spokeswoman Eileen Hirst said 35 of the 37 Sheriff’s Department personnel on site for the raid were not carrying projectiles, and the two who were equipped with them did not fire.
IT’S one of the hottest feuds in science – climate chance zealots insist that we’re still destroying the planet but now another scientist has warned the cast-iron evidence just isn’t there.
FOR a minute there it seemed the global warming debate had finally been resolved.
While for years scientists and sceptics have raged against each other on the crucial topic, new research hailed “the most definitive study into temperature data gathered by weather stations over the past half-century” seemed to come to an authoritative conclusion. Global warming IS real it said, strengthening the need for us all to reduce carbon emissions and boost efforts to try to save the planet.
And this research was headed by a physicist who had previously been a sceptic of global warming and an outspoken critic of the science underpinning it, lending the results even greater credibility. Prof Richard Muller had spent two years trying to discover if the mainstream scientists were wrong but concluded they were right. Temperatures are rising and his results, he concluded, “proved you should not be a sceptic, at least not any longer”. Case closed.
***THE VOICE OF THE CLIMATE CHANGE SCEPTICS***
But is it? Not according to Prof Judith Curry, a member of Prof Muller’s team, who claims the same findings have shown that global warming has stopped – plunging the rest of us into a quandary of what and who to believe. When Prof Curry heard that Prof Muller was saying that the Berkeley Earth Surface Temperature (BEST) findings would put an end to climate change scepticism for good she was horrified. “This isn’t the end of scepticism,” she exclaimed.
“To say that is the biggest mistake he has made. When I saw he was saying that I just thought, ‘Oh my God.’”
Prof Muller, of Berkeley University in California, and Prof Curry, who chairs the Department Of Earth And Atmospheric Sciences at America’s Georgia Institute of Technology, were part of the BEST project that carried out analysis of more than 1.6 billion temperature recordings collected from more than 39,000 weather stations around the world.
Prof Muller appeared on Radio 4’s Today Programme last Friday where he described how BEST’s findings showed that since the Fifties global temperatures had risen by about 1 degree Celsius, a figure which is in line with estimates from Nasa and the Met Office.
When asked whether the rate had stopped over the last 10 years he said they had not. “We see no evidence of it having slowed down,” he replied and a graph issued by the BEST project suggests a continuing and steep increase. But this last point is one which Prof Curry has furiously rebuttted. In a serious clash of scientific experts Prof Curry has accused Prof Muller of trying to “hide the decline in rates of global warming”.
She says that BEST’s research actually shows that there has been no increase in world temperatures for 13 years.
She has called Prof Muller’s comments “a huge mistake” and has said that she now plans to discuss her future on the project with him. “There is no scientific basis for saying that global warming hasn’t stopped,” she says.
“To say that there is detracts from the credibility of the data, which is very unfortunate.” New research also seems to back up Prof Curry rather than Prof Muller. A report published by the Global Warming Foundation, which is based on BEST’s findings, includes a graph of world average temperatures over the past 10 years and it is absolutely flat, suggesting that temperatures have remained constant.
This issue is crucial because the levels of carbon dioxide in the air have continued to rise rapidly over the last decade and if temperatures have remained constant during that period it would suggest there is no direct link between carbon gas emissions and global warming.
Previously carbon dioxide emissions – from the burning of fossil fuels and from deforestation – have been considered one of the biggest causes of climate change, the most damaging effects of which are thought to be the melting of the polar ice caps and the rise in sea levels as well as an increase in extreme weather events such as floods and droughts.
“Whatever it is that is going on here it doesn’t look like it’s being dominated by carbon dioxide,” says Prof Curry.
Prof Muller has made it clear that the BEST study was not conducted in order to gauge the causes of global warming, saying the study “made no assessment on how much of this is due to humans and how much is natural”. He and his scientists – who also included this year’s physics Nobel winner Saul Perlmutter – set out purely to determine once and for all whether climate change had occurred.
The group had been suspicious of previous results which confirmed a rise in global temperatures , believing that their work may have been skewed by the “urban heat island effect” where increasing urbanisation around weather stations was causing the temperature increases recorded over the past 50 years. But their exhaustive research discovered that the urban heat effect could not explain the global temperature increase of about one degree Celsius since 1950.
IT IS well to point out that Prof Curry is not disputing the one degree Celsius increase. She is disputing Prof Muller’s suggestion that temperatures haven’t levelled off in the last decade.
Indeed she says this global warming standstill since the end of the Nineties – which has been completely unexpected – has wide-reaching consequences for the causes of climate change and has already led many climate scientists to start looking at alternative factors that may have contributed to global warming, other than carbon gas emissions. In particular she has mentioned the influence of clouds, natural temperature cycles and solar radiation.
What she also seems furious about is the way that Prof Muller went about publishing BEST’s results without consulting her and before a proper peer review could be carried out. “It is not how I would have played it,” she has said. “I was informed only when I got a group email. I think they have made errors and I distance myself from what they did. It would have been smart to consult me.”
This is, you can be sure, not the last we will hear on the debate.
Comments »Colorado voters have rejected an attempt to raise state income and sales taxes to fund education, The Denver Post has declared.
With 61 percent of precincts reporting, Proposition 103 was going down in flames across the state, with 35 percent in favor to 65 percent against.
That was also true in Denver. With 86,978 ballots counted through 8:30 p.m., the measure was failing 45.3 percent to 54.7 percent.
Even in liberal Boulder County — home to the measure’s chief supporter — the measure was struggling. Most recent results showed it was winning there, but just by 1,804 votes.
State Sen. Rollie Heath, D-Boulder, the face of the Support Our Schools Bright Colorado campaign in favor of the ballot measure, conceded defeat less than an hour after polls closed.
“It’s clear the people of this state aren’t ready right now to tax themselves to solve this problem,” Heath said to supporters. “But I hope the people of this state will come together and say, ‘We need to make some changes. We need to find a way to finance our education in a different way.’
“If we have accomplished anything, we have set that conversation in motion.”
Heath almost single-handedly led the effort to put the issue on the ballot, drawing only limited support from fellow Democrats and unable to get Gov. John Hickenlooper, the state’s top Democrat and one who pledged to remain neutral, on board.
Heath personally gathered signatures and even donated $10,000 of his own money to the campaign. Supporters raised more than $600,000 in the effort to pass 103, while opponents raised less than a tenth of that.
“The voters of Colorado have spoken loud and clear that this is a measure that would have killed jobs,” said former state Rep. Victor Mitchell, R-Castle Rock, who led the Save Colorado Jobs campaign.
Read the rest here.
Comments »New evidence suggests there’s a reason why this economic “recovery” hasn’t felt much like a recovery. Figures from the Census Bureau’s Current Population Survey, compiled by Sentier Research, show that the “recovery” has actually been harder on most Americans than the recession from which they’ve allegedly been recovering.
According to Sentier’s report, the median American household income has actually fallen during the “recovery.” Not only that, but it has fallen even more than it did during the recession. Gordon Green, former chief of the Governments Division at the U.S. Census Bureau and co-author of the report (with fellow Census veteran John Coder), says, “Real income fell by 3.2 percent during [the recession]. And during the recovery it went down by 6.7 percent.” So “income [has] declined twice as much in the recovery as in the recession itself.”
According to the report — which has been referenced by both the Wall Street Journal and the New York Times — in early 2000, Americans’ median annual household income was $55,836, in real (inflation-adjusted, June 2011) dollars. By the start of the recession (in December 2007), Americans’ real incomes had fallen 0.9 percent, to $55,309 — a decline of $527. During the recession (which ended in June 2009), their incomes fell an additional 3.2 percent, to $53,518 — a decline of another $1,791. During the first two years of the “recovery” (from June 2009 to June 2011), they fell an additional 6.7 percent, to $49,909 — a decline of another $3,609.
So, from the start of 2000 to mid-2011, the typical American household’s real income dropped nearly $6,000 — and more than 60 percent of that drop (over $3,600) came after the start of the “recovery” and thus squarely on Obama’s watch.
Read the rest here.
Comments »By Yann Le Guernigou and John Irish
PARIS | Tue Nov 1, 2011 4:47pm EDT
(Reuters) – French President Nicolas Sarkozy and German Chancellor Angela Merkel will hold an emergency meeting with Greece on Wednesday to push for a quick implementation of Athens’ bailout deal, the “only solution” to its debt crisis, Sarkozy said on Tuesday.
Markets tumbled across Europe in response to the announcement by the Greek government to hold a referendum on the agreement which is expected to take place in a few weeks.
Last week’s 130 billion-euro ($180 billion) bailout package had raised hopes a line could be drawn under banks’ Greek losses and euro zone bonds could be sold to China and other investors.
“This announcement took the whole of Europe by surprise,” Sarkozy said in a rare televised address on the steps of the Elysee palace in Paris.
“The plan … is the only way to solve Greece’s debt problem,” he said after a lengthy meeting with his top ministers and the central bank governor to discuss the referendum decision.
Sarkozy said a hastily arranged meeting for Wednesday in the Riviera resort of Cannes with his German counterpart Angela Merkel, Greek Prime Minister George Papandreou, European Union and IMF officials would “examine the conditions under which the commitments made could be maintained.”
Sarkozy, Merkel, Eurogroup President Jean-Claude Juncker, European Council President Herman Van Rompuy, European Commission President Jose Manuel Barroso, IMF chief Christine Lagarde and an ECB representative will first meet at 1730 local time (12:30 p.m. ET). They will then meet Papandreou and his finance minister at 2030 local time.
The meeting comes just before a Nov 3-4 gathering of G20 heads of states in Cannes and will attempt to reassure world powers that the euro zone can resolve its crisis.
After an earlier call with Merkel, Sarkozy’s office said the two countries were “determined” to ensure, the full implementation of the October 27 deal in the quickest time frame.
Read the rest here.
Comments »On FOX News’ “Special Report” tonight presidential candidate Herman Cain told the panel, after being asked, that he believes the charge of sexual harassment against him has to do with his race.
Charles Krauthammer: “Mr. Cain, when Clarence Thomas was near to achieving position of high authority, he was hit with a sexual harassment charge. You contending for presidency, the office of highest authority, leading in the polls for the Republican nomination, all of the sudden get hit with a sexual harassment charge. Do you think that race, being a strong black conservative, has anything to do with the fact you’ve been so charged? And if so, do you have any evidence to support that?”
Herman Cain: “I believe the answer is yes, but we do not have any evidence to support it. But because I am an unconventional candidate running an unconventional campaign and achieving some unexpected unconventional results in terms of my — the poll. We believe that yes, there are some people who are Democrats, liberals who do not want to see me win the nomination. And there could be some people on the right who don’t want to see me — because I’m not the
‘establishment candidate.’ No evidence.”
Read the rest and watch the video here.
Comments »By James Pethokoukis
October 31, 2011, 3:36 pm
Over at the Columbia Journalism Review blog, Ryan Chittum takes issue with everything I wrote about income inequality in a recent post. (I don’t think he cared much for the font, either.) My piece merely pointed to several studies — ones rarely mentioned by the mainstream media — that suggest a) income inequality is hardly “exploding,” and b) the past 30 years have hardly been a lost three decades for the American middle class. My response:
1. Chittum thinks I have misused a study by Northwestern University economist Robert Gordon. Does Gordon believe inequality has increased? He does, indeed. The first sentence of the study, which Chittum highlights in his post: “The evidence is incontrovertible that American income inequality has increased in the United States since the 1970s.”
But lots of studies make that claim. It is the next part that I found interesting:
This paper shows that the rise in American inequality has been exaggerated in at least three senses. First, the conventional measure showing a large gap between growth of median real household income and of productivity greatly overstates the increase compared to a conceptually consistent alternative gap concept, which increases at only one‐tenth the rate of the conventional gap between 1979 and 2007. … Second, the increase of inequality is not a steady ongoing process; after widening most rapidly between 1981 and 1993, the growth of inequality reversed itself and became negative during 2000‐2007.
Chittum, nor other liberal economic pundits such as Ezra Klein, Jonathan Chait, Kevin Drum, Ryan Avent, have made an effort to dispute Gordon, hardly a conservative economist. Liberals don’t even like quoting that above bit.
2. Chittum really likes studies from the union-backed EPI. But when I looked at the issue of middle-class stagnation, I went with analysis from the Federal Reserve, more likely free of political influence. And here is what a Minneapolis Fed researcher found:
I calculate that median Census income per person rose by 50 percent. … The claim that the standard of living of middle Americans has stagnated over the past generation is common. An accompanying assertion is that virtually all income growth over the past three decades bypassed middle America and accrued almost entirely to the rich. The findings reported here … refute those claims. Careful analysis shows that the incomes of most types of middle American households have increased substantially over the past three decades.
Maybe Gordon and the Fed and many other academics are just “deniers,” unworthy of serious debate. But to me that sound like a clumsy effort to silence debate rather than encourage a competitive marketplace of ideas.
Comments »By PAUL SPERRY, FOR INVESTOR’S BUSINESS DAILY Posted 10/31/2011 08:05 AM ET
President Obama says the Occupy Wall Street protests show a “broad-based frustration” among Americans with the financial sector, which continues to kick against regulatory reforms three years after the financial crisis.
“You’re seeing some of the same folks who acted irresponsibly trying to fight efforts to crack down on the abusive practices that got us into this in the first place,” he complained earlier this month.
But what if government encouraged, even invented, those “abusive practices”?
Rewind to 1994. That year, the federal government declared war on an enemy — the racist lender — who officials claimed was to blame for differences in homeownership rate, and launched what would prove the costliest social crusade in U.S. history.
At President Clinton’s direction, no fewer than 10 federal agencies issued a chilling ultimatum to banks and mortgage lenders to ease credit for lower-income minorities or face investigations for lending discrimination and suffer the related adverse publicity. They also were threatened with denial of access to the all-important secondary mortgage market and stiff fines, along with other penalties.
Bubble? Regulators Blew It
The threat was codified in a 20-page “Policy Statement on Discrimination in Lending” and entered into the Federal Register on April 15, 1994, by the Interagency Task Force on Fair Lending. Clinton set up the little-known body to coordinate an unprecedented crackdown on alleged bank redlining.
The edict — completely overlooked by the Financial Crisis Inquiry Commission and the mainstream media — was signed by then-HUD Secretary Henry Cisneros, Attorney General Janet Reno, Comptroller of the Currency Eugene Ludwig and Federal Reserve Chairman Alan Greenspan, along with the heads of six other financial regulatory agencies.
“The agencies will not tolerate lending discrimination in any form,” the document warned financial institutions.
Ludwig at the time stated the ruling would be used by the agen cies as a fair-lending enforcement “tool,” and would apply to “all lenders” — including banks and thrifts, credit unions, mortgage brokers and finance companies.
The unusual full-court press was predicated on a Boston Fed study showing mortgage lenders rejecting blacks and Hispanics in greater proportion than whites. The author of the 1992 study, hired by the Clinton White House, claimed it was racial “discrimination.” But it was simply good underwriting.
It took private analysts, as well as at least one FDIC economist, little time to determine the Boston Fed study was terminally flawed. In addition to finding embarrassing mistakes in the data, they concluded that more relevant measures of a borrower’s credit history — such as past delinquencies and whether the borrower met lenders credit standards — explained the gap in lending between whites and blacks, who on average had poorer credit and higher defaults.
Read the rest here.
Comments »(Reuters) – A Greek referendum on the bailout deal would be a vote on its euro zone membership, a Finnish minister said in a TV interview on Tuesday.
Greece’s Prime Minister George Papandreou on Monday called the unexpected referendum, citing the need for wider political backing for the fiscal measures and structural reforms demanded by international lenders.
The vote is seen bringing uncertainty back to markets and threatening Europe with a new crisis after euro zone leaders only last week agreed on the last-minute bailout deal.
“The situation is so tight that basically it would be a vote over their euro membership,” Alexander Stubb, the Finnish minister of European affairs and foreign trade, said in an interview with Finnish broadcaster MTV3.
Read the rest here.
Comments »Greek Prime Minister George Papandreou called a referendum and a parliamentary confidence vote, raising the prospect of derailing the European bailout effort and pushing Greece into default. Stocks and the euro tumbled.
Papandreou’s gambit risks pushing the country into default if rejected by voters, and raises the ante with dissidents in his own party. Papandreou’s popularity has plunged after a raft of austerity measures cut pensions and wages, increased taxes and sparked a wave of social unrest. An opinion poll published Oct. 29 showed most Greeks believe the accord on a new bailout package and a debt writedown is negative.
“Papandreou could lose the referendum, which means that new elections would have to be called,” Thomas Costerg, European economist at Standard Chartered Bank in London, said in an e-mail. “Heightened Greek uncertainty could propagate to other fragile euro-area countries, in particular Italy.”
The 17-nation euro fell versus the dollar, dropping 0.6 percent to $1.3770 as of 8:49 a.m. in Berlin from yesterday in New York, when it sank 2 percent, the sharpest slide since August 2010. German government bonds opened higher, pushing the yield on the 10-year bund 16 basis points lower to 1.86 percent. The Euro Stoxx 500 Index sank as much as 4.2 percent.
Pacific Investment Management Co. Chief Executive Officer Mohamed El-Erian said the referendum call “is material and consequential.”
Read the rest here.
Comments »Income Declines for Top Earners, While Effective Tax Rates Creep Up
Washington, DC, October 24, 2011–The income earned by the top 1% of Americans has declined for the second year in a row while their average tax rate has increased, according to a new Tax Foundation study. The average federal tax rate for those reporting at least $343,927 in income has increased from 22.5% in 2007 to 24.0% in 2009, while the average income for the top 1% has declined from $1.4 million to $1 million over the same period.
The Tax Foundation’s analysis is based on new data from the Internal Revenue Service on individual income taxes, reporting on calendar year 2009. The amount of individual income tax paid steeply declined by $166 billion, twice the decline from 2007 to 2008. Nationally, average effective income tax rates were at their lowest levels since the IRS began tracking them in 1986. The average tax rate for returns with a positive liability went from 12.2% in 2008 to 11.1% in 2009.
“During a time of economic downturn, we expect to see significant changes in both total income reported and the share of taxes paid by those with the highest incomes,” said Logan. “Unlike middle-income wage-earners whose incomes and tax liabilities are fairly steady, high-income people tend to realize significant capital gains that fluctuate wildly with the economy, causing their income tax liabilities to fluctuate as well.”
In 2009, the top 1% of tax returns earned 16.9% of adjusted gross income and paid 36.7% of all federal individual income taxes. In 2008 those figures were 20.0% and 38.0%, respectively. Each year from 2005 to 2007, the top 1 percent’s constantly growing share of income earned and taxes paid set a record. The 2008 reversal of this trend continued in 2009.
The study also takes a look at the very highest earners, the top 0.1 percent of tax returns, which the IRS only began singling out in recent years. In 2009, those 138,000 tax returns accounted for nearly 7.8% of adjusted gross income earned (down from almost 10% in 2008), and they paid around 17% of the nation’s federal individual income taxes (down from 18.5% percent in 2008).
“The very highest income group—the top one-tenth of one percent—actually has a lower average effective income tax rate than the rest of the top 1 percent of returns because these extremely high-income returns are more likely to have income from capital gains and dividends, which are typically taxed at lower rates,” said Logan. “It’s worth pointing out that in the case of capital gains and dividends, however, income derived from these sources has already been taxed once by the corporate income tax, which is not included in the current study, meaning the average effective tax rate numbers can be somewhat misleading.”
See the research here.
Comments »Why the latest eurozone bail-out is destined to fail within weeks
Liam Halligan, Economic Agenda
I want last week’s European bail-out to work. My sincere hope is that collective and decisive action by the eurozone’s large member states will stabilize global markets, at least for a while, so allowing the global economy to catch its breath.
As someone who works in financial services, I follow the markets – in the West, across Asia and the entire world – closer than most. Since the Bear Stearns collapse in March 2008, through the demise of Lehman Brothers and its ghastly aftermath, much of my professional life has been dominated by the angry flashing of those little lights on a Bloomberg screen.
In recent years, the violent gyrations on financial markets have been deeply discomforting, causing angst among market professionals, like me – but that is the least significant aspect. For those little lights represent, of course, the ebbs and flows of cash which, in turn, determines the fate of real businesses. It is at the sharp end of employment and livelihoods, dispossessed homes and broken families that the human impact of financial turbulence is most keenly felt.
So, yes, I want such turbulence, which will never be fully-eradicated, nor should it be in a free-market system, to now lessen to more manageable levels. Yet the responses of our politicians to recent financial troubles – hiding behind complexity and kicking the can down the road – have not only failed to temper the volatility, but have actually made it much worse.
Last week’s eurozone “agreement”, for all the related fanfare, was a case in point. Far from making the situation clearer, allowing investors to make considered assessments, this latest announcement made Western Europe’s grotesque debt crisis even more acute, sowing further infectious spores of confusion.
The deal itself, unveiled dramatically in the early hours of Thursday, was met with the now obligatory “relief rally”. The FTSE All-World equity index soared 4.1pc, helped by signs of renewed US economic growth. European bank shares spiked no less than 12pc on Thursday, as traders recognised, for all the official obfuscation, the latest dollop of government largesse.
By late Thursday, though, and certainly on Friday, the warning signs were there. Global bond markets, by character more sober and smarter than the excitable equity guys, were voting against the deal. This is alarming. For it is only by selling more bonds that the eurozone’s deeply indebted governments can roll-over their enormous liabilities and keep the show on the road.
Some say Western governments shouldn’t “accept” what the market says. “Who do these trading people think they are,” I hear from the lips of the educated but financially-illiterate political elite. Let’s be clear – if global bond markets stop lending to a number of large Western economies, we are in the realms of unpaid state wages and pensions, transport chaos and closures of schools and hospitals – sparking the prospect of serious civil unrest. Forgive my intemperate tone, but these are the dangers we face. And I’m afraid the only rational response to Thursday’s announcement is that the probability of such undesirable outcomes has just been increased.
European leaders have reached an “agreement”, we were told, with the private holders of Greek debt, who now accept a 50pc write-down on their stakes. This is predicated on an additional €120bn (£105bn) cash-injection by EU member states and the IMF. By paying bond-holders less, and making other savings, the hope is that Greece can cut its sovereign debt from 150pc of GDP to 120pc in the next few years.
This deal was presented as a “victory” by the eurocrats. After all, back in July those nasty private creditors agreed only to a 21pc “haircut” on their Greek debt. The deal is “voluntary”, though, nothing having been decided except the “50pc haircut” headline. In reality, by bargaining hard over coupons and maturities – how much the bonds will pay annually, and for how long – those who so unwisely lent money to Greece (eager to reap high yields, while always expecting a bail-out) will get a much sweeter deal. This is the discussion that will take place, behind closed doors, during the coming months. But that sweeter deal will need to be paid for with yet more sovereign borrowing, by some eurozone government or other, plus further sack-loads of taxpayers’ cash.
It is telling that Greek bond-holders themselves were on Friday reassuring their investors that the reduction in the net present value of their stakes, compared with the “21pc haircut” deal, “will not be overly onerous”. In addition, the July agreement, while also “voluntary”, included a 90pc creditors’ participation. Thursday’s variant cited no such number.
So, the centre-piece of last week’s “package” is far less decisive than meets the eye. It was, in fact, singularly indecisive. The hope that Greece will clean-up its balance sheet autonomously now relies even more on a privatization programme that is already laughably behind schedule. So the moral hazard will go on, making it tougher still for the governments of Portugal, Ireland and the other eurozone “peripheries” to sell to their electorates the virtues of fiscal responsibility. These are not clever-clever academic points. I’m pointing-out, quite simply, what the bond markets will have noticed.
Read the rest here.
The S&P 500 is now up more than 14% this month, putting the index on pace for its best month since October 1974 and its ninth best month ever. So for a lot of people this is the best month for the market in their entire lives. In order to exceed October 1974’s return of 16.30%, the S&P 500 would have to close out the month of October above 1,316, or 2.1% above current levels.
Read the rest here at Bespoke (and see the graph).
Comments »Despite having over 500K in the bank, the Occupy crowd is now refusing to feed those that don’t contribute in some way to the Occupation. Hmmm…Wonder if they see the irony here? Nah….
————————————————————————————————————
The Occupy Wall Street volunteer kitchen staff launched a “counter” revolution yesterday — because they’re angry about working 18-hour days to provide food for “professional homeless” people and ex-cons masquerading as protesters.
For three days beginning tomorrow, the cooks will serve only brown rice and other spartan grub instead of the usual menu of organic chicken and vegetables, spaghetti bolognese, and roasted beet and sheep’s-milk-cheese salad.
They will also provide directions to local soup kitchens for the vagrants, criminals and other freeloaders who have been descending on Zuccotti Park in increasing numbers every day.
As the kitchen workers met with the “General Assembly’’ last night, about 300 demonstrators stormed from the park to Reade Street and Broadway, where they violently clashed with cops. Officers made at least 10 arrests when rowdy demonstrators refused to get out of the street and stop blocking traffic. A dozen cops on scooters tried to force them back to the sidewalk. There were no reported injuries. The demonstrators said they were angry over the violence in Oakland.
After making their way to Union Square, many of the protesters returned to Zuccotti. The Assembly announced the three-day menu crackdown announced earlier in the day — insisting everybody would be fed something during that period. Some protesters threatened that the high-end meals could be cut off completely if the vagrants and criminals don’t disperse. Unhappiness with their unwelcome guests was apparent throughout the day.
“We need to limit the amount of food we’re putting out” to curb the influx of derelicts, said Rafael Moreno, a kitchen volunteer. A security volunteer added that the cooks felt “overworked and underappreciated.” Many of those being fed “are professional homeless people. They know what they’re doing,” said the guard at the food-storage area.
Today, a limited menu of sandwiches, chips and some hot food will be doled out — so legitimate protesters will have a day to make arrangements for more upscale weekend meals. Protesters got their first taste of the revolt within the revolt yesterday when the kitchen staff served only peanut butter and jelly sandwiches and chips after their staff meeting.
Organizers took other steps to police the squatters, who they said were lured in from other parks with the promise of free meals. A team of 10 security volunteers moved in to the trouble-prone southwest section of Zuccotti Park in a show of force to confront them.
“We’re not going to let some members of this community destroy the whole movement,” a volunteer said.
Some arguments broke out as the security team searched tents — but no violence erupted.
Overall security at the park had deteriorated to the point where many frightened female protesters had abandoned the increasingly out-of-control occupation, security- team members said. Rumors swirled that one homeless man had pulled a knife in a dispute the night before — and that there had been yet another case of groping. But protesters and a cop on duty told The Post that most of the crime goes unreported, because of a bizarre “stop snitching” rule.
“What’s happening in there is staying in there,” said the cop.
Comments »From Quantifiable Edges via ETF Prophet:
SPY volume came in at the lowest level in over a month on Monday. Very low SPY volume when the market is at or near highs is often a bearish sign. A few studies related to this appeared in the Quantifinder this evening. I decided to examine the combination of a 20-day low in volume combined with a 50-day high in price.
Read the rest here.
Comments »
