Economist: Why the Middle Class Is Declining - CNBC - Justin Menza - February 24, 2013 -
The American middle class is "hollowing out" as the U.S. economy fails to compete effectively in a globalized world, Harvard economist Michael Porter told CNBC's "Closing Bell" this week.
"America used to be a uniquely productive, low-cost place to do business," Porter said on Thursday. "We had efficient infrastructure. We had limited regulation. We believed in the market."
But bit-by-bit this position has eroded. Regulatory costs have gone up, Porters said, the legal system is more cumbersome, infrastructure is eroding and the country is falling behind on skills.
That means the many Americans do not have the skills needed to earn a decent living and for the first time in 50 or 60 years, incomes are stagnating and the middle class, which Porter called the bedrock of America, is "hollowing out." "Being an American doesn't mean that you're guaranteed a high wage," in the era of globalized competition, Porter said. "You have to be productive, and we have to create a very low-cost efficient place to do business and we've let all that slip in America." The country's budgetary problems are largely a symptom of this lost competitiveness and economic weakness. Without rising incomes and an improvement in the fundamental performance of the economy, there's been less tax revenue, he said. To offset declining incomes, the government has had to make promises to help pay for health care, retirement and housing, but the economy can't afford them because it isn't performing, according to the economist. America can return to competitiveness, Porter said, if the corporate tax code becomes more efficient, there's a sustainable budget compromise and the U.S. takes advantage of the shale revolution to move toward energy independence.
Which Tax Deductions Are Most Likely to Go? - CNBC - Mark Koba - February 24, 2013 -
... Congressional hearings have begun on the most well-known, and according to some experts, most likely to be reformed or eliminated. Among them: charitable deductions, deductions on home mortgage interest, the so called carried interest — the tax break for private equity and hedge fund managers — and limiting tax deductions on corporate profits. Loopholes and tax breaks cost the Treasury more than $1 trillion each year, according to government estimates. Among the biggest losses come from tax breaks for U.S. corporations — $114 billion — the mortgage interest deduction — an estimated $77 billion — and charitable donations — $38 billion. Each of the parties at risk are fighting back. Several charitable groups testified before Congress recently, saying that if their deduction is lowered or eliminated, people will stop giving. The housing industry — most specifically builders — say the mortgage interest deduction is necessary for the housing market to recover from its recession lows. Corporations say their U.S. tax rates are the highest in the world, at 35 percent. Hedge funds and private equity firms say part of their fees are based on risk, and therefore their tax rate — which was just raised with the fiscal cliff deal from 20 to 25 percent — should be treated like an investment instead of a salary, and therefore taxed at a different rate. (Read More: Home Builder Confidence Falls)
Why Do US Taxpayers Give the Big Banks a $83 Billion/Year Subsidy? - AgainstCronyCapitalism.org - Nick Sorrentino - February 22, 2013 - As the attached article explains, the banks deemed “too big to fail” get to borrow money at artificially low rates. Creditors know that if a TBTF bank gets into trouble that bank will always be bailed out by the government (taxpayer.) The TBTF designation, now codified in Dodd-Frank, is an implicit subsidy paid for by We the People. The below article argues that the big banks wouldn’t even be profitable if they did not enjoy the designation of bloated financial whale bombs. Additionally the TBTF subsidy puts smaller banks at a strong competitive disadvantage. Borrowing costs are comparatively higher for non-TBTF Tinytown Community Bank for instance, than for a behemoth like Bank of America. This means that over time more and more money moves from Main Street to the big banks. This is probably not the best thing for the country... (From Bloomberg) - The top five banks — JPMorgan, Bank of America Corp., Citigroup Inc., Wells Fargo & Co. and Goldman Sachs Group Inc. – - account for $64 billion of the total subsidy, an amount roughly equal to their typical annual profits (see tables for data on individual banks). In other words, the banks occupying the commanding heights of the U.S. financial industry — with almost $9 trillion in assets, more than half the size of the U.S. economy — would just about break even in the absence of corporate welfare. In large part, the profits they report are essentially transfers from taxpayers to their shareholders.
Economists Warn Fed Risks Losing Control Amid Budget Deficits - Bloomberg - Joshua Zumbrun - February 22, 2013 - Four economists, including a former Federal Reserve governor who has co-written research with Chairman Ben S. Bernanke, warned that losses from the central bank’s more than $3 trillion balance sheet could lead to the Fed losing control of monetary policy... The conclusion from economists, including Frederic Mishkin, a governor at the central bank from 2006 to 2008 and an academic collaborator with Bernanke before that, will be presented at the U.S. Monetary Policy Forum in New York. Their paper serves as a high-profile warning to an audience including Boston Fed President Eric Rosengren, Fed Governor Jerome Powell and St. Louis Fed President James Bullard. The central bank is currently purchasing $85 billion a month of Treasuries and mortgage-backed securities, following two previous rounds totaling $2.3 trillion, in an effort to lower an unemployment rate stuck near 7.9 percent. Once the economy strengthens, the central bank plans to unwind its balance sheet by raising interest rates and selling many of the assets acquired over the past four years... The conclusion from economists, including Frederic Mishkin, a governor at the central bank from 2006 to 2008 and an academic collaborator with Bernanke before that, will be presented at the U.S. Monetary Policy Forum in New York. Their paper serves as a high-profile warning to an audience including Boston Fed President Eric Rosengren, Fed Governor Jerome Powell and St. Louis Fed President James Bullard. The central bank is currently purchasing $85 billion a month of Treasuries and mortgage-backed securities, following two previous rounds totaling $2.3 trillion, in an effort to lower an unemployment rate stuck near 7.9 percent. Once the economy strengthens, the central bank plans to unwind its balance sheet by raising interest rates and selling many of the assets acquired over the past four years. The economists say that the Fed could incur substantial losses that might occur when U.S. deficits are still high and Congress and the White House have been unable to put fiscal policy on a sustainable trajectory. “This unfavorable fiscal arithmetic might tend to push the Fed toward delaying its exit from the extraordinary easing measures it has taken in recent years; it could even affect decisions this year about how much further to expand the Fed’s holdings of longer-term government securities,” the authors said. “The Fed could cut its effective drain on the Treasury significantly by putting off asset sales and delaying policy rate increases. But such a response would presumably feed rising inflation expectations.”
The Spending Crunch Is Official: "We Are Confident There Is An Issue With The Consumer" - Zero Hedge - Tyler Durden - February 20, 2013 - Think the Walmart "disastrous" sales memo was a one-off event, which net of Walmart's damage should be completely ignored (something the market has been perfectly happy to oblige with)? Then listen to a separate perspective on the US consumer, this time from a very different angle: that of Town Sports International which operates such gyms as New York Sports Club, and specifically its CEO David Gallagher, who in last night's conference call just confirmed what everyone knows: "As we moved into January membership trends were tracking to expectations in the first half of the month, but fell off track and did not meet our expectations in the second half of the month. We believe the driver of this was the rapid decline in consumer sentiment that has been reported and is connected to the reduction in net pay consumers earn given the changes in tax rates that went into effect in January."...
40 Ways That China Is Beating America - The End of the American Dream.com - Michael - February 10th, 2013 - China is wiping the floor with the United States on the global economic stage, and most Americans are so clueless that they have absolutely no idea what is happening. The number one global economic superpower is in an advanced state of decline, and the number two global economic superpower is becoming stronger with each passing day. Unless something truly dramatic happens, it is only a matter of time before China overtakes America and become the dominant economic force on the planet. In fact, China is already exercising economic superiority over the United States in a whole host of ways. China produces more goods than we do, China does more total trade in goods with the rest of the world than we do, China produces more cars than we do, China produces more gold than we do, China consumes more energy than we do, China produces more coal than we do and China produces more steel than we do. Every single year, we buy far more from them than they buy from us, and this has made them exceedingly wealthy. Our politicians regularly make trips over to China to beg them to lend us back some of the money that they have taken from us. Today, we owe China more than a trillion dollars and the Chinese are sitting on the biggest pile of foreign currency reserves that the world has ever seen. All of this wealth has fundamentally transformed the nation of China over the past couple of decades. Just check out the startling photographs of China from space in this article that show how China dramatically changed between 1992 and 2010. As China continues to become stronger and as America continues to become weaker, will our children some day wake up in a world where the Chinese are telling them what to do? China became the number one exporter of goods back in 2009, but now China has reached another milestone on the road to global economic dominance. When you total up all exports of goods and all imports of goods, China now conducts more total trade in goods with the rest of the globe than the United States does. China’s emerging role as the dominant player in global trade is shaking things up all over the planet. The following is a brief excerpt from a recent Bloomberg article…
20 Signs That The U.S. Economy Is Heading For Big Trouble In The Months Ahead - The Economic Collapse.com - Michael - February 20th, 2013 - Is the U.S. economy about to experience a major downturn? Unfortunately, there are a whole bunch of signs that economic activity in the United States is really slowing down right now. Freight volumes and freight expenditures are way down, consumer confidence has declined sharply, major retail chains all over America are closing hundreds of stores, and the "sequester" threatens to give the American people their first significant opportunity to experience what "austerity" tastes like. Gas prices are going up rapidly, corporate insiders are dumping massive amounts of stock and there are high profile corporate bankruptcies in the news almost every single day now. In many ways, what we are going through right now feels very similar to 2008 before the crash happened. Back then the warning signs of economic trouble were very obvious, but our politicians and the mainstream media insisted that everything was just fine, and the stock market was very much detached from reality. When the stock market did finally catch up with reality, it happened very, very rapidly. Sadly, most people do not appear to have learned any lessons from the crisis of 2008. Americans continue to rack up staggering amounts of debt, and Wall Street is more reckless than ever. As a society, we seem to have concluded that 2008 was just a temporary malfunction rather than an indication that our entire system was fundamentally flawed. In the end, we will pay a great price for our overconfidence and our recklessness. So what will the rest of 2013 bring? Hopefully the economy will remain stable for as long as possible, but right now things do not look particularly promising.
The Men Who Built America: Remembering The Gilded Age Part 1 - Zero Hedge - Tyler Durden February 21, 2013 - It is perhaps time to look back at what once was. In Part 1 of the 4 part History Channel series, a new war begins as out of the turmoil of the Civil War, America enters an age of enlightenment that will change the landscape of the country forever. The growth is driven by five insightful men who will change the world forever. John D. Rockefeller, Cornelius Vanderbilt, Andrew Carnegie, Henry Ford and J.P. Morgan rose from obscurity and in the process built modern America. Their names hang on street signs, are etched into buildings and are a part of the fabric of history. These men created the American Dream and were the engine of capitalism as they transformed everything they touched in building the oil, rail, steel, shipping, automobile and finance industries. Their paths crossed repeatedly as they elected presidents, set economic policies and influenced major events of the 50 most formative years this country has ever known. From the Civil War to the Great Depression and World War I, for better or worse, they led the way.
The Men Who Built America: Remembering The Gilded Age Part 2 - Zero Hedge - Tyler Durden - February 24, 2013 - Continuing to look back at what once was. Following Part 1's emergence
from the civil war and the age of enlightenment, In Part 2 of the 4
part History Channel series, America continues to recover from the Civil
War, undertaking the largest building phase of the country s history.
While much of the growth is driven by railroads and oil, it's built
using steel. From the Civil War to the Great Depression and World War I,
for better or worse; for richer or poorer, in ethical and societal
sickness or health; these five men - John D. Rockefeller, Cornelius
Vanderbilt, Andrew Carnegie, Henry Ford and J.P. Morgan - led the way.
Futurist Ray Kurzweil with Glenn Beck ~ Artificial Intelligence & Reverse-Engineering the Human Brain
|Join To Get Blog Update Notices|
|Visit the Hickory Hound Group|