First thing out of the bag this morning, gold had dropped about $10 bucks, but silver was trying to hang onto its recent push over $41 – and just a shade under $42 briefly, which gets us to our first observation of the week. The inflation battle is full-on with oil also popping up to over $112 on a combination of trading pressures, not the least of which is Libya.
Bunch of damn “Nervous Nellies”, if you want the truth of it. What most people haven’t figured out is that in a real sense, hyperinflation is already here, it’s just that raising the national debt ceiling has the effect of perpetuating inflationary pressures. Oh, sure, the talk is that some budget cuts will be coming – but have you noticed how those are always for some future years? Fact of the matter is that the recovery is not real – since when when I talk to real people, they still can’t find jobs for which they were trained. One of Elaine’s boys is a journeyman electrician up in Colorado. Think he can find suitable work? Not since the housing bubble imploded – things have been on a big slide in his area ever since.
The reason the unemployment picture is not improving now – when it should be – is that normally, government employment acts in ‘flywheel effect’ during a major recess. Which is to say, government spending carries on (regardless of local conditions) and so that keeps things from going from bad to worse.
Except now: What has happened is that back in the Bush 2 time, the country was slipping into recession/Depression with the Housing collapse and there’s been no new job generator brought online to produce prosperity. Instead, we notice the main artifact of the recovery has been changes to the statistical basis on which public policy rests.
Like walking into a casino, losing, and then moving over to the nickel slots with your last dollar: You’re going to lose that, too, and so it goes for the nation’s [alleged] political leadership. They keep making dumb bets when they should be hanging onto what is left of their dough and consider the possibility that we’re as addicted to inflation as any compulsive gambler.
What everyone and his uncle seems to have missed is that not one job has been created in America since…2004!. Don’t believe it? Get thee over to the Labor Department’s data dispenser, quick!
A sane person (as in one who doesn’t read this column) might be able to figure out “Say, if there’s no new jobs (just replacements) since 2004, how can we have anything approaching prosperity?”
Right question! So, when we see companies start to post earnings for Q1 ’11, I’d expect more surprises to the downside than up, and that oughta make it hard for big companies to sell ‘blue sky’ stories in coming weeks.
Constipated Supply Lines
Although it won’t have a major impact on this month’s foreign trade numbers, as ports get ready their monthly confessionals for next week, we nevertheless are wondering how long the earthquake damage in Japan starts to seriously impede production lines in the US. With everything from computer chips to carbon composites to aircraft assemblies, the outlook for a ‘quick fix’ to the Japanese earthquake trouble is turning into this year’s first good mirage.
Worse: The situation at the melting-down nuke plants isn’t anywhere near ‘solved’ – and as a result, the evacuation zone is being increased – all the while the problems of what to do with contaminated water continue to accrue.
What was first billed as a 7.1 shaker, but then downgraded to a 6.6 (details here if you’re interested) didn’t cause a tsunami, but everyone’s still jittery – and perhaps with good reason.
If It Works for Libya…Department
Noticed that the Arab League is planning to push for a no-fly zone over Gaza, which has been populated with a lot of Israeli aircraft (killing 18 since last Thursday) in response to a big surge in rockets fired into Israel last week.
Of course whether no-fly zones are really working depends on where you’re sitting: NATO and US commanders would have one view, what’s-his-name Gaddafi would have another, while the survivors of the rebel tank column bombed last by NATO forces would have yet another. NATO has fessed up to the mistake… but if the anti-Gaddafi side expects an apology, seems it’ll be a cold day in hell before they get it.
Near as I can tell, the smell of C4 (or maybe Cordite) causes brains to malfunction, and run purely on stored testosterone. Jet-A may have similar effects and I am constantly amazed the FDA hasn’t regulated all three as threats to the public health.
Talks at the moment seem to suggest that Gaddafi will stay until elections, whenever those happen.
The Weak Ahead
Financially, we might as well skip Monday. The real news flow doesn’t kick off until the Balance of Trade figures tomorrow and for fiction readers, the ever-popular Treasury budget update.
I think I pointed out to you that last month’s on-budget outlays were around $333-billion, while personal income taxes came to $91.63 billion. Which got me to penciling out “Ure’s Collapse Ratio” which is the ratio that results from dividing total personal income taxes paid into the total budget outlays in the Treasury confessionals and it looks like this…
I figure somewhere up around 10-15 times as much spending as [net] personal income taxes, the whole thing blows up because even an idiot would figure that a country spending five times as much as is coming in front doot is headed straight to the poorhouse. What they don’t have figured is how much oil and gas we will lock up for future years on the way, but then again, we haven’t exactly won any of the warring for that stuff yet. Does work marvels for unemployment figures though…
All the talk about “poor, abused, over-taxed corporations” is one of those often-repeated lies back in Beltway Bandits country. Want to see something that will make your blood boil?
See the personal taxes net line? Now, see the corpgov tax line (both lower right…).
Tax Fog Week.
Say, meant to mention this one, too, since we’re at the time of the year when the radical right’s media shills go around repeating on of their favorite mantras…
“Double Taxation, ” they will claim “Is what happens when corporate dividends are taxed and then the dividends are taxed again by the individual taxpayer…”
This came up because a reader last week asked me my thoughts on this [purported/alleged] “double taxation” issue….
Simply a lie. Each entity pays taxes exactly once. If a corporation makes money, they have an income tax liability. Simple as that.
The individual taxpayer is a separate tax entity which also pays tax on income, right?
So here’s the point: each entity pays tax once no matter how hard the corpgov shills would scream otherwise.
But, if you are having a problem with this, think of this making as much sense as complaining about triple mark-ups in the pricing of goods and services.
Just look at farmers: They get paid a mark-up on what they grow, there’s a mark-up on the cost of transporting goods, the store marks it up, too. So isn’t that triple mark-ups? See how stupid the question gets?
Next next time some tries to foist “double taxation” as a logical argument, call ‘em out on it: “Think YOU deserve a tax-free income, stoogie?”
T’other side of it is the question “Think CORPORATIONS deserved a tax-free income, stoogie?“ Hardly worth asking this, since as shown in last month’s Federal budget numbers, they’re already not paying taxes (net, net) last month.
The IRS filing date is the 18th of April this year. Not out of compassion but because the (so-called/alleged) leadership in the District of Confusion screwed around for so long figuring out what to do.
Just as soon as PIMCO’s rumored short position vis U.S. Treasuries hit the wires, the dollar started to climb this morning.
With the end of QE2, a LOT of currency gurus are saying the dollar will resume its decline. One reader asked if the budget deal was effectively QE3….I guess one could look at it that way.
I don’t mind the government going bust, just as long as we get our tax refunds and have enough time to turn them into physical assets.
Futures point to an upward opening this morning. I’ve still got my money on left-field for unexpected developments….but don’t think of me as a leftist…
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