Wall Street Protests

You see what happens when real Capitalism is sold out (bank bailouts).

You are not seeing this in the mainstream press, but when you lose your integrity (which our economic system has) you get attacked from all sides.

If we do not take a "balanced" approach to our fiscal problems, we are in big trouble.

What Obama Doesn't Get...And What He Does

Marx said religion was the opiate of the masses. (and in many times it has been)

Now I say: oversimplification is the opiate of the masses.

Obama is catering to the masses when he describes the "Buffet Tax":

Ok, that was the best clip I could find... I can't find the video of today's speech.

I will tell you this: I watched the speech, and ironically, Obama makes the same mistake so many Republicans are guilty if when discussing their opposition to ANY tax increases.

Obama seems to believe that the tax on capital gains (which is why Buffet pays a lower "rate" than his secretary) should be the same as tax on income, or earned salary and wages.

When Buffett says he pays a lower rate that his secretary, the primary reason is that most of his income comes from long-term capital gains (taxed currently @ 15%). I assume his secretary makes a pretty good salary, so is probably at least in the 28% bracket. This is the "unfairness" Obama and Buffet are talking about. If all of Buffett's income was in the form of wages, instead of capital gains, he would be taxed at the highest marginal rate...35%...which would, indeed be higher than his secretary.

So, to buy Obama and Buffett's reasoning, which is a pitch for a massive increase in the capital gains tax...you must believe that capital gains and income are the same thing...or that they at least have the same contribution to society.

This is not true. Investment, which drives capital gains income, involves more risk. It also provides the foundation for investment and growth in an economy...i.e. it is the seed of innovation...without it, there would be no wage income.

So, the question becomes...should we, as a society value capital investment over labor? Yes we should, and we could, if these were normal times...but they are not.

Wow...classic Capitalism vs. Socialism. Scary...battle of the classes coming...

So, what Obama doesn't get is that income from capital gains is taxed at a lower rate because our society has made a value judgement that since it involves more risk, and because the rest of the economy wouldn't grow without it, we should tax it at a lower rate than income.

Here is what he does get:

We are living in very hard times, our country is basically insolvent (without major tax increases combined with massive entitlement cuts).

If we cut entitlements, it will be political suicide and may spark revolution if we do not have offsetting tax increases on the rich. Furthermore, ideology aside, we simply cannot balance this budget without tax increases. The middle class is already squeezed, they can't pay any more...and the poor already pay nothing. 94 % of Americans are NOT in the highest tax bracket...the rich that Obama is targeting for revenue. Therefore, 94% of Americans are NOT RICH, by Obama's calculations. He is right.

Wall Street traders, Goldman Sachs liars and government favor seeking non-capitalistic blood suckers...fail to contribute their fair share to fix the problems they created at their own peril. The middle class simply has nothing left to give.

The poor and middle class will not stand for cuts in entitlements that are not matched by tax increases on the top 4%; whether their income is from wages, profits, or capital gains. They don't give a shit where the wealth came from...they just don't want to be screwed over anymore.

So, Wall Street...gig is up....

Next time, do better, and you might get better. Don't ask for bailouts...don't take on too much risk because the government told you to. If you want to be treated like Capitalists by the tax code, you have to be real Capitalists, not pro-government fascists, who reap profits off of excessive risk taking, but want bailouts upon failure, and a guaranteed government return on your assets.

If you were real Capitalists you may deserve the special capital gains rate...but for now...you don't.

Everything Is Relative And Timebound

Thank God 9/9/11, and the next few days proved safe. I still have a weird feeling, though, especially after the attacks in Afghanistan over the last few days.

Anyway, to the title...let's gain some perspective on our place in history.

The S & P 500 closed at 1106.40 on 9/6/2001.

Today, 9/13/2011, it closed at 1172.87.

Wow...it took 10 yrs to gain 67 points...approximately .6%/yr, less than 1% a year.

If I adjusted for inflation, the results would be pathetic. In fact, they would show a loss.

Let's take it back 20 yrs...

In 1991, the S & P was trading around 300 (yes...300). If you bought an index fund in 1991, and held it until now, you made approx. 391% over 21 years, or 19.55% per year. Of course, the number would be less if we adjust for inflation. But, spectacular, nonetheless.

This explains why the baby boomer generation has so much faith in the stock market. Gains are almost all they have known. They were in their 40's...their prime earning years, when the boom began... and there were lots of them. They didn't start seriously investing until about 1988, and over the next 20 years, they made money, for simply handing their money over to a smooth talking, chart producing broker with black hair and white teeth. (perhaps a nice suit)

They attributed this gain in wealth to their "smarts". In truth, most of them had no idea why the value of their investments was going up, they just took credit for it. We all want to believe we make the wave move, in truth we are just riders...riders on the storm.

This tells us what?

Everything reverts to the mean. We have just experienced a 20-25 yr bull cycle, driven by debt, population, central banks, demographics, and speculation.

It is over. We are sitting at the far right side of the right shoulder of the largest head and shoulders top in known history. (graph above)

The cyclical bull market is over.

It will take a while (perhaps 2-3yrs), but the DOW is headed toward 4,000. Raise cash so you can take advantage.

9/9/11

I have a weird feeling about tomorrow...maybe paranoid...but Fri, 9/9/11?

You don't have to be a numerologist to see the significance of that date.

In addition, I worry about Bin Laden retribution.

Also, tonight Homeland Security says there is increased chatter, and breaking news alerts are saying there are credible threats have been confirmed.

Hillary Clinton will ring the opening bell on Wall Street in the morning. I hope security is very, very good.

I have been having bad dreams...there is palpable stress in the air. Things feel...off. Don't tell me 9/11 didn't change us, it did, all of us.

Let's keep our eyes and ears open tomorrow...

Run Giuliani, Run...PLEASE!!

Pro-Choice...get out of the bedroom...free market (with a moral twist), rational.

He is my guy:

http://politicalticker.blogs.cnn.com/2011/07/17/giuliani-to-gop-stay-out-of-gay-marriage/

Roubini Not A Communist

Part of any good intellectual debate includes a critique and analysis of opposing points of view. This is what Roubini was doing in his latest interview, referenced in the link below. He was not stating his approval or support of Communism.

http://www.cnbc.com/id/44147922/

Roubini is being labeled a communist for correctly pointing out that Capitalism appears to be collapsing under its own weight, just as Marx said it would.

Capitalism does appear to be collapsing, if you think what we have now is Capitalism. I don't.

As I have said in the past, ever since 1914, with the establishment of the Federal Reserve, we have not been living in a truly Capitalist society.

You can not, and do not have a free enterprise system when money, the very foundation of an economy, is controlled by central government planners.

The only way around this is to either return to the gold standard, or pass a constitutional amendment that requires central banks to adhere to a set of principles designed to mimic the gold standard. (which is more practical)

In a true Capitalistic society, government would not be allowed to subsidize ANY industry. Government would run only national security, basic infrastructure, and social and health services for the very poor, mentally unstable, orphaned and disabled; those who were unable, through no fault of their own, to care for themselves. The playing field would not be rigged by a group of lobbyists supporting men and women business people who would not make it in business without government support.

We do not have a free market, and have not, for a VERY long time. Even the Wall Street bankers and traders who claim to be Capitalists are not true Capitalists. They are speculators on government provided steroids who attribute their wealth and success to themselves, when in truth, they would be penniless (and their places taken by real, moral, value creating Capitalists) if Bernanke hadn't saved their asses by expropriating wealth from the taxpayer.

So, Roubini is right that the current system we are living under is on the verge of collapse, but he is wrong to say that it is Capitalism that is collapsing. What is collapsing is a debt hungry, leverage driven, drugged up, pseudo-capitalist-socialist-fascist hybrid monster; I can't even think of a good word to describe it.

And, no, he is not a Communist.

Know A Radical When You See One

There are people who want to take away your freedom and liberty...on both sides of the isle.

Lately the Republicans are scaring me the most. The religious rhetoric of the front runners is nothing short of disturbing.