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Collapse In Tax Withholdings Refutes Improvements In Either Unemployment Or Corporate Profitability
Even as the BLS and the administration are trying to cover up the real state of unemployment affairs using assorted semantic gimmicks of just what it means to be unemployed, and as companies provide adjusted EPS numbers, while actual earnings continue to collapse, the true barometer of spending, provided by the Financial Management Service, tax withholdings (net of refunds), continues to paint the truest picture of just what is really happening with both America's consumer and the corporate world. And it ain't pretty. On a rolling 12 month basis, individual tax withheld has dropped by nearly 8% YoY, from $1.42 trillion to $1.31 trillion, while company witholdings are down a whalloping 64%, from $274 billion to just under $100 billion! This is money that will never be used to pay down the skyrocketing US deficit, because both the US consumer and average US company are simply not collecting the required cash to line the Treasury's pockets with the one traditional way to pad the deficit: taxes. Expect much, much, much more debt issuance in America's short, medium and long-term future.
Reader Michael provides some perspective on the above data:
A perspective on the level of US unemployment is not whether someone is employed or partly employed (and varying obtuse definitions) but the level of wages being generated by the consumers. Only wages pay the bills (and generate economic activity), not employment definitions. An insight into National wages is the daily (cash) tax collections published by the Financial Management Service. The rolling 12 months figures show a consistent decline, with Nov 2009 showing a 7.6% decline from Nov 2008. Drilling down into actual monthly figures does not indicate any trend change. The rolling 12 Month Company tax payments shows a 63.95% decline to Nov 2009. Monthly net collections again show no change in trend, with the month to 4th December showing a further refund of $14 Billion.
And even though we missed the President in his daily address to the nation earlier, we hope this a topic he will bring up tomorrow or later this afternoon, whichever comes earliest in his next scheduled TV appearance.
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Good work ghostface. Small peaceful steps like these - i.e. completely REJECTING the way "they" want us to live - is what will bring down the status quo.
I agree, there are so many peaceful ways we can take down the system. I have long advocated doing no business with any TBTF institution. Don't bank at JPM, BAC, etc. Don't buy a GM car, don't buy insurance from AIG, etc.
On the political side, there are plenty of good candidates running for office in 2010. Can you imagine a Senate with Peter Schiff and Rand Paul? That would be awesome. So give them some money, or if you are in their states, volunteer.
Any call to violence is foolish. that would give the Fascists exactly what they want - an excuse to take away more civil liberties.
And stop fucking watching Dancing With The Stars and start reading, The Case Against The Fed is available free on the internet, there are no excuses.
http://mises.org/books/fed.pdf
+100
would also recommend reading Creature from Jekyll Island and Atlas Shrugged
Lots of good books out there with which to educate ourselves. I hated Atlas Shrugged, but it is for that reason everyone should read it. Unbridled, unregulated capitalism based on Rand's "objectivism" is a failed system. But then, so is socialism and that would be the point for reading it.
I wonder if you actually read AS, but since I will never know I will simply ask if you know that 'unbridled, unregulated capitalism' is being redundant, twice?
It's like saying voluntary, utopian communism in the USSR failed. It was never communism - it was just corruption.
The problem with our countrymen, or I should just say zombies, is that they don't understand that the call to violence was made long ago. It was the first time a civil liberty was 'taken away'. How many have we 'lost' so far?
And who cares if they take another one - this march towards full tyranny won't be stopped by thinking the Ballot and Jury boxes are still effective - that's what they want you to think!
You're right, making dangerous statements is foolish because they will take you off the streets one by one, waiting for your patience to run out. Go ahead, stop paying taxes. Feel good about your 'activism'. But as long as the status quo exists your time will come, and my time will come. No shortage of SWAT teams.
Either way we do what they 'want' - what a Catch-22: deer in the headlights or pissed off motherbear - a jackboot trophy either way.
We're all alone in a room full of people. Today is July 3rd, 1776. The problem is that anyone that shows up tomorrow goes to jail. What Would Jefferson Do?
Here's a real Nobel Prize winner:
If everyone withholds their income taxes until tax time comes then the system will collapse. Everyone withholding will destroy the system because the government will have to finance everything with debt.
Try none of em, Ghost. Any cash transactions go right into the pockets of the owners or to the all-too-happy-to-be-paid-in-cash employees that the government doesn't know about.
Now if I could just get my employer to pay me in gold...
Just be sure to pay by easily traceable credit card at the big businesses, especially of the TBTF variety.
One of the few places I still use my credit card is at the pump, mostly because it is convenient, but also because I know it would be hard for the gas station owner to fudge the numbers.
Local restaurants have been the ones to thank me the most for using cash, I know damn well they aren't declaring half of what they take in. Good for them.
Wait until you see the financial condition of the U.S. 5-10 years from now, after Obama turns the country into a free walk-in health clinic.
Sure looks and smells like Argentina. But the US$ being a reserve currency will probably take some time to be replaced. Any money that's in the system may be subject to govt access. Get gold and hide it somewhere.
a good rebuttal to the BLS numbers.
http://blog.atimes.net/?p=1260
WHAT IS THE ECONOMY?
------------------------------
The common question I like to ask is;
Is the S and P 500 index a good indicator for economic health?
The answers are usually very interesting. Some rooted perhaps, in the interpretation of the word economy.
How do we know the workings of the engine of America? What is this engine? and is it out of gas?
----------
What is the US economy?
Making money on the spread, or being on the right side of the trade can produce a gain, but it is really one of shrewdly pricing an underlying asset. Uncovering some inherent intrinsic value. We look for comfort and trust in a stable market, unencumbered by corruption and theft.
Without trust, there is no macroeconomic effective use of capital. To attract private investment, trust and order must be re-established in the market. Without healthy investment, business cannot grow.
We look to ourselves to understand our place in the effective use of capital. We strive to better our lives and the lives of our neighbors and children. But, without properly functioning markets, capital is constrained, and to a large extent so is growth.
Investors feel frustrated that our Government is ineffective at addressing market corruption, and in some instances, even an active participant in their destruction.
Perhaps the real economy has finally succumbed to big government, and its inability to effectively use resources. Both, in terms of capital and the publics trust. When is the aggregate cost of government to big to be effectively supported by its tax base? What happens?
----------
What is the US economy?
When government becomes too big, and squanders capital investment, essentially the real economy is the government. A reflection on the policy makers and their mismanagement. This is what happens when government stupidity is so big, it can bully the peoples common sense.
The economy is not some separate thing from the fabric of America. The government cannot squander the wealth of the nation in some grand experiment, and then apologize when it all goes wrong. For at some point, there will be nothing left to toy with.
Mark Beck
How much of this is attributable to the (soon to be first) Stimulus Package messing around with the witholding tables?
That little gem is going to slap a huge number of taxpayers on their 2009 taxes. They don't even know it's coming...
Sure wish I knew just the FICA or better yet contributions/witholding. That would really be a good # to compare.
declining receipts makes interest payments on the annual deficit trillions intractable, utterly so.
We are going to devalue or default. There is no other option unless we invent fusion power within the next year.
To stave off default, expect the government to get creative. If you do cash out the IRA, be prepared to leave the country. They will probably try to clawback, but only if there is a significant portion who got out. Argentina lived with certain people's fortuity and if they get 95% of the 401ks out there, they're unlikely to waste significant time going after those who got lucky and got out.
Can't get blood out of a turnip tho. They can garnish and harass, but should not directly imprison right away. That is something that should be able to be seen coming.
Don't ask me how we see default coming...the treasury auctions are still going off at 0% and gold has not moonshotted. The problem with a devaluation is not just international trade and international trust, it's that the prescriptions for it that mirror those made in 1934 and the graphs showing immediate increased economic activity do not account for the fact that we have a declining peak supply curve overhead. If we succeed in goosing consumption via a monetary solution of heavily negative rates or high inflation, we will smash headlong into the oil supply ceiling again and all hell will literally break loose there.
IMO the signal will be that the looting stops; when there is almost nothing (big) left to steal, the system will be allowed to collapse. This is the ultimate means of foisting the mess onto the masses.
Yes. We have to wait until it is in the news, everywhere, before we acknowlege that it is happening. I imagine the most obvious example is when they take you away - but then it's too late, right? And they will be saying glowing things about you in the press, oh yes they will, just like an obituary.
A nice little history you can Google, "Short history on banking and money" offered at mises org. Short blurp from writing. "The bank was saved but the money was ruined."
I found a pdf online and read the book written 1833 by William Gouge (1796-1863).
Something that struck me was when the nascent US government forced the citizens to use paper money upon pain of death also to be cast out of the country into the "wilderness". Using metal was illegal and punishable by death.
Look also at FDR during the great depression on citizens possession of gold, not lifted until 1974.
Don't put your trust in anything but God.
In God We Trust!
History repeats itself!
The Treasury reports the daily and monthly receipts and spending. More debt is on the way. It remains to be seen how much of the hoke stimulus overcut wage tax withholding. If the kicking the can down the road is good, kicking it down the road for the wage earner must be better.
Another indicator is the Medicare tax receipts which are collected on all wages. Only down about 3.5 percent year to year.
Yes, we are kicking the can down the road. And with Obama's announcement today of all the infrastructure projects that road will be pot-hole free and smooth! Should speed up the process.
I'm amazed withholding is down only 8 %. Furloughs alone chop 10 % off wages and withholding, yet don't feed the jobless number.
Let's not ignore what this figure means to the States. Lots of gubmints raid the taxpayer wallet. States are in deep shit, too.
Different kinds of withholding, FICA is hardly down at all, income tax withholding for fiscal 2008-2009 was 861 Billion down from 970 Billion. 98 Billion of the decrease was in calendar 2009. Now estimated tax payments are much lower still, and corporations are taking back more in refunds than they are paying in taxes.
The proverbial straw that broke the camels back.
How much bad debt can you forcefully load into a global economy before the whole thing implodes?
It's not even all the monopoly money they're printing, it's the bad debt itself. What it shows is that the price of many things is simply too high. Why should a decent house cost 360k. It's overpriced. The world economy was doing fine but the problem is overproduction. Obviously we worker drones are too productive and can easily produce enough for everyone without the exchange of too many $ to do so. THis is not good. How can the bankers get their skim if not enough $ changes hands to let them take their FAT ASSED GREED DRIVEN POWER HUNGRY percentage because
you know what it's not even about that they want to have a bigger house than you and a ski trip to vales and drive a nicer car than you. It's not. It's about brute domination and power control ego mania so really it's they'd rather suffer themselves living in a world of shit provided that you live in a bigger world of shit than they do.
It's not a race to the top it's a race down provided they're the one stomping on your head all the way down.
Orwell was right.
The picture of the future? A military boot stomping on a human face forever.
-MobBarles
Those who want to see the government BK are wetting themselves. Hope they can deal with the consequences.
Gubmint won't go BK. It bankrupts its citizens instead.
Time to change my Depends.
The US can never go bankrupt. It issues debt in its own currency. Furthermore, they don't even need anyone to purchase the debt. They can do it themselves. However, what can happen is the the currency can weaken and there is a possibility of inflation. But one also has to consider what other countries are doing. If everyone is racing to devalue their own currency, the US will probably be the winner.
When the citizenry sees the government breaking (or selectively not enforcing) it's own laws - they lose all respect for that government along with any moral incentive to pay their taxes and obligations. That point seems to be upon us now.
Washington won't go as far as to completely seize 401(k) accounts. That would be counterproductive, a one-shot deal that would destroy the retail investment industry.
No, they'll just start by eliminating the 401(k) tax exemption, followed up by taxation of any account growth by counting it as income or capital gains...pre-retirement.
Wherever there's a geese laying golden eggs, always count on Washington to bleed it but to stop short of slitting its throat.
I think the opposite. Washington will eventually allow you put as much money in your deferred accounts as you want to. At some point after that they will protect all those accounts by taking them over and eliminating any risk loss for you by putting them under the Government umbrella, as in Government bonds. They will pay you a monthly interest on your holdings. Of course it will all be done to "protect" you from losses in those risky equity markets.
The Donner Party Conservatives who have engineered our situation and are in a state of nirvanna over the virtual collapse of salaries for non professionals and look forward to the return of those glorious days of the 50's before liberals and hippies and the poverty rate sailed along in the low 20% range have of course not taken this into account. Oh sure there are the Grover Noquist's who want starve the government until it is small enough to drown in the bathtub but most assumed when we motivated workers with some good old fashioned fear a new age of prosperity would ensue. Could be, I suppose, once the troubles are over.
http://examinedlife.typepad.com/johnbelle/2003/11/dead_right.html
For you survivalists a good air rifle is a must too. Some shoot a .177 round 1400 fps and a .22 round 1000fps. You can carry a 1000 rounds in your back pocket and its quiet too. I've killed deer with the things so it can provide food without alerting every other nut in the woods that you are out and about.
Bob Chapman really claims to have some new scoop from a highly placed banking insider--- I don't know about collapsing the FDIC, but some of the other stuff seems plausible)---???
http://www.youtube.com/watch?v=bPkmP8Utirs
Dear Marla and Tyler,
First, thank you for your work.
I deeply appreciate it.
Second,
I believe you will find the following document
well worth reading.
I feel quite strongly that everyone and anyone
interested in the continuing economic course of
our country will find the following of the utmost
importance because I think it's an example case
of what is the truth behind all municipalities,
states and cities in our union today.
http://www.scribd.com/doc/21619848/Lemer-Farb-Roberts-assessment-of-City...
Respectfully,
MobBarley
It's funny how the city paper manages to brush this under the carpet with "no biggie, just a couple of $100M short due to downturn". It seems liabilities to pension funds are simply not a level of credit that needs to be taken seriously. City gov't channeling the Sex Pistols - there is no future...
http://www.chron.com/disp/story.mpl/business/steffy/6754479.html
If anything, an 8% decrease withholding in individual wages is conservative. Regarding 401k's, don't forget the mandatory 20% federal income tax withholding, and possibly state tax withholding. I'd love to see those individual number's broken down further into withholdings from payroll wages vs sponsored retirement plan withdrawals. This can buy another year or two of positive employment numbers.
82 K people aquired the H1N1 flu in one day in the Ukraine.
two of the resortments are now very dangerous and transmitting.
i.e. grab your ass it's gonna be a wild ride
What's with all the doom and gloom? Y'all are looking at this all wrong: "WASHINGTON—In what is being touted by the Labor Department as extremely positive news, the nation's available labor rate has reached double digits for the first time in 26 years, bringing the total number of potentially employable Americans to an impressive 15.7 million." The trend chart is pretty good...
http://www.theonion.com/content/news/labor_dept_available_labor_rate (h/t Ritholz)
Too old, too sick, too close to retirement, already collecting social security but must work at walmart as a greeter to pay the mortgage.
Too many 40 somethings applying for mcdonalds with teens still in school trying to apply for the same.
Some people have been on unemployment SOOOO long that they have managed to calcify onto their sofa and LIKE it. Until that runs out.....
Others have lost unemployment but did find riches among thier family, churches, charity, food kitchens etc and live simply but survive.
There are those of us who armed ourselves, laid in food, plans and other measures to deal with anything from failed utilities to zombies or nuclear war that might happen with China realizes that the United States is unable to pay their bills.
The trend chart means NOTHING. I see the 15.7 million, thier friends, family and ex-employers with THeir ex co workers etc as a force that will be called back to hire first when jobs re-open.... someday, some years or never.
BEFORE any college graduate, student or young adult gets hired for these same jobs.
At some point in... 10 years none of this will matter. We will either be living in the United States of America or find ourselves learning the new rules when the White House is turned over to another Nation with the money that is needed to run the old USA.
Anyone can sprout good news like the Pied Piper. Many will follow that music.
When those Wagnerian Pipes stop roaring and there is silence with the cold reality of hunger, nakedness and need for shelter... we will find out what it will take before the people will rejoice and be truly happy.
But first, get ready for the big kaboom of finances and the resulting fallout that will rain from the sky for years to come.
never mind the workers in the USA. They dont matter anymore. Not with cheaper workers in faraway lands overseas that only need to learn enough english to obey commands and how to convert USD to thier local money.
Add to that Wells Fargo Securities economists' call for a reduction in the minimum wage "'cause $5.00 an hour is better than making nothing" and look for a return to the mainland US near you of all of the manufacturing outsourced to China, to keep the peasants here at subsistence wages.
We should have had, and should have now, some sort of smart policies that protect and encourage manufacturing here for all consumer and durable goods. Fuck free trade - a favored tool of the global elites that have twisted it to the detriment of the American middle class, the prosperity of which is a pre-condition to a stable Republic. We should wake up and re-cognize who benefits from our so-called "free markets" and trade policies.
I said it before, and I am going to say it again: What we need in this country is vigorous economic growth. If other countries can grow at 10% a year, so can we! It is all a matter of putting in place the right policies and tax incentives.
This is the only way out of this mess that we are in. Strong growth reduces unemployment. This is a prerequisite for homeowners to have a paycheck to pay the mortgage, so that real estate stabilizes and the banking crisis abates.
It will also increase company profits and help the stock market move higher to help people's retirement plans catch up. Why don't we do it? Wish I knew. All the focus has been on irrelevant issues and not on this important one. Hopefully it will be addressed soon.
time123
http://invetrics.com
P.S. Its daily DJIA index trading signal is up a respectable 77% for the year (as of December 2, 2009) and it is free of charge for individual investors.
yes...let's grow forever. It's not like we live in a finite system.
The economics models we rely on were hashed out sometimes more than 100 years ago.
THEN, there was no perceptible ceiling to growth.
I put this question to people to get them to understand how quickly ceilings come on - you have a bottle with bacteria. It starts with one in it at noon and it is full at midnight and these bacteria double every minute in population. At what time is the bottle half full?
The point of all of this is it is clear the economy shrunk more than they admit. Employment shrunk more than 3.5% of the workforce and instead more like 7% or more.
How much of a lagging indicator are these figures?
Regards.
As much as it takes.
Engineer a crash in the equity market by instituting a sudden liquidity squeeze (see Sep 08), as all the mice panic and rush into treasuries announce a generous provision 'allowing' 401K holders to convert their shares into treasuries at 1:1.05. As it proves so enormously popular make it mandatory after a few weeks. Not only will there not be any rioting the sheeple will love them for it. Jeez you guys have got to start giving the pigmen a bit more credit, they didn't become oligarchs by accident you know. Guns and gold? lol
tnx anon mon...
Democratic plan to stimulate employment:
1) Raise the minimum wage
2) Raise mandated costs like health care
3) Raise existing taxes
4) Add new taxes
5) Increase unionization
6) Spend money on pet projects
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If one goes here: http://www.fms.treas.gov/mts/index.html and downloads the latest Monthly Treasury Statement (Oct. 9, 2009) they will see that the data in the charts above are not supported.
what it means to be unemployed
http://www.youtube.com/watch?v=Ulu3SCAmeBA
I haven't been collecting gold. I have been collecting food, water filters, ammo and etc. Need a few chickens still. Try to envision living life in 1900.
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