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Chart Of The Day: How To Grow Your Way To Prosperity Through Tax Hikes
...or not! As can be seen in the chart below showing the change in Spanish retail sales, there is nothing like a tax hike, in this case "Value Added", to completely obliterate any hope of increased economic transactions, monetary velocity or, well, general prosperity. In the least surprising data point of the day, Spanish retail sales plunged at their fastest rate on record (12.6% YoY) to complete the 27th month in a row of YoY drops. This nation whose economy is struggling through its second recession in three years and plagued by chronically high unemployment, has seen only three months of positive YoY comps for retail spending since November 2007. Whether this is a nation retrenching pure-and-simple on the back of anti-growth policies or an increasing amount of retail sales are completed in the gray market is unclear (as we discussed here); one thing is clear, Spain is bad and getting worse (bailout or no bailout), and as Reuters reports: "It's clear there are no signs the crisis is abating," economist at Nomura Silvio Peruzzo said. "The headline (retail) figures show a sharp drop and indicate that domestic demand is not going to be anywhere near what the government is anticipating."
Chart: Bloomberg
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You sink the boat?
Trickle down economics has failed. We need to create a new system that takes care of the poor. It will be the same as the current system, except for one key difference: politicians will always spend within their means, there will be no corruption, and no corporate subsidies. Spending on social programs will be even greater than it is today however, with cuts made to the military and taxes on offshore corporate accounts to finance the increased spending, pay back the deficit and cover all unfunded liabilities. The math all adds up when you take into account offshore corporate accounts (estimated to be worth 100s of trillions of dollars, all of which is taxable), and the incentives for politicians to stay within their means are all in place, ensuring we never end up in the same predicament ever again.
A poisonous toad never changes its spots...
Coffee shootin laugh! Thanks MBD I needed some monday humor.
Coffee is hot, try vodka!
MDB is on his game today.
Why mess with all that MDB ? Just follow Cuba's example. 0% unemployment, best health care on the planet and people love it so much they're willing to float 100 miles of open ocean in an innertube to spread the word to the rest of the world.
So true. If you want socialism, then do it right with communism. Other than that, allow real capitalism instead of the fake one we got now.
Government, get the fuck out of the way! History has proven real capitalism works. Added benefit: much less power to politicians means much less corruption and the sheeple will simply behave much better because they no longer have an incentive to misbehave. How hard is this to understand?
MDB - the sinister thing about VAT is that it can bankrupt relatively strong companies. Regular tax is paid on profits. - no profit, no tax.
But VAT is a different beast. VAT is paid on all income. In Portugal, VAT went up from 6% to 23%. Not many companies, if any, made more than 17% profit last year, so you can bet (I'm sure GS and their ilk already have) that all small Portuguese companies are bankrupt and made zero profit this year, so regular tax income will collapse.
Same as the Franchise Tax in the State of Texas... 1% of everything beyond direct cost to the product of the company.... 1% of the revenue.... and you still pay if you did not make any money. Yes, that sucks.
All joking and snark aside (props to you, MDB for the ongoing funny), having the politicians always spend within their means isn't square one. Before then, we really need to reach some understanding of what the scope of government - mostly federal - ought to be. Only then, can the politicians develop a plan to raise enough revenue to cover those needs and only then can and should they stay within those boundaries.
The politicians deserve plenty of scorn, ridicule and perhaps even worse, but the general population of citizens bears the responsibility of having eviscerated the social compact and not having replaced it with a new one that can form the bedrock of what we want governments to do bad enough that we are willing to pay for it.
I'm not sure what sort of social compact, or scope of government, you think is coming off the next stagecoach. Are 21st century kleptocracies going to be any different from 11the century kleptocracies?
Wiser men than you or me know differently "those who profess to favor freedom, and yet depreciate agitation, are men who wwant crops without plowing up the grounds." Frederick Douglass Constitution, smonstituion, you are only going to be free to the extent you are willing to punch back.
Did you pack Kevin's lunch this morning?
yup - once we return to a gold standard & no more central bank, politicians will be forced to spend within their means so that over-taxation will be removed & the poor will be much better taken care of by means of job-creation AND charity.
Thanks for coming around, finally
Posperity, not Property, maybe?
VAT bitchez.
Yes, and it will be a boon for the black markets. Go long E-bay.
Weeeeeeee!!!!111
I guess the good news for us is that our wages are stagnant and so shitty, they won't be able to collect enough to begin with.
Well, that is until we will have to pay our employers to work. Or the state just takes their cut when it hits your bank account (oh wait, they already do that).
So that large-scale tax increase program to keep the status quo of the big government nanny kingdom alive and save the TBTF that Rajoy and de Guindos labelled 'austertiy program' is already off track and recovery seems improbable or even unpossible? I'm shocked!
And you thought that "Catch-22" was just fiction! :>D
Maybe they could borrow some of the falsified economic charts the authorities peddle in America as reliable and pretend that their economy is growing while unemployment sits stubbornly in the mid 20s...just like they do in America!
Stop it with the "growth" meme already. With over 7+ billion mouths to feed and numerous biological cycles to maintain without destroying life on this planet, at least as we know it, we need another significant energy source to come online before any additional growth, in the tradiational text book sense, can occur.
Now where the hell are those fusion reactors I ordered? Seems to me a major war and loss of life would restore "growth" faster at this point, oh wait...
hedge accordingly.
Long bicycles, windwills, and black markets.
Humans are just parasites, with Earth behing the host. And London and Wall Street (protected by Governments) being the biggest leech of them all.
I am always amazed that nobody ever gets this …. Are they that dumb? Seriously … how do these people get into these positions of decision making?
They study marx and their parents write for communist papers in the U.S and then they get called Red Diaper Babies.
Staring into the abyss.. Lou Manheim WS.
When Lou puts his hand on your shoulder and takes you aside....you know you're not going to have a good day.
domestic demand is not going to be anywhere near what the government is anticipating."
Ya think? They are predicting 4-5% growth for 3 straight years in 2014-2015-2016... they are loonies! Maybe if they really start dropping money from helicopters for 3 years straight... nominal GDP will rise but other than that... no way in hell.
i know it is a bit off-topic, but look at the air pumping in the /es. up,up,up. and my thinkorswim stopped at 9:14. must be having some problems.
Raising taxes is not about prosperity. It's about protecting the state. And it's about incentives. When the state increases your taxes, they increase your incentive to dig faster.
Spainards are moving back to the middle age villages and becoming self sufficient.. I'm serious.
http://www.youtube.com/watch?v=91pBFyLWIx4
The jobs to get will be working for the TBTF banks who will own everything soon. As the fed crushes the private economy, the banks Bernank works for are patiently sitting on the side line ready to pounce on anything worth owning via free money... but it's still too soon. They are waiting for a complete hyper-deflationary collapse of all assets not already in their hands so they can swoop in for pennies on the dollar. At some point a great job to have for the common man will be working at a tbtf bank packing brown bag lunches for the slave laborer class. It's safe, steady work and will be the few places offering any sort of benefits.
so how does is feel for europe to A start the euro at 117 to the dollar and now its imposible to hammer this euro down to normal levels like 1 to 1 to the dollar ,,,, asian nation sucking up the euro just to keep it not from falling so export are not falling of a cliff..
want to fix europe , euro 1 to 1 to the dollar problem solved , almost .
They used to be quite an empire not so long ago. The Conquistadores are now the Conquistados.
Tax increases rarely if ever achieve the desired ends. All that income goes up in a puff of smoke when people alter their behavior to avoid the tax, either through adjusted consumption (hurts biz) or alternative purchases that circumvent the tax, or in extreme cases purchasing what they want outside the system or outside the area imposing the greater tax.
Historically the increased income via taxes never materializes and those who proposed it quietly brush their failure under the rug and move on...
I wonder when and which government will be the first to "lower" taxes and try to get ahead of its neighbors in capturing as much growth as quickly as possible?
That will probably be the first county invaded, but, hey, it will be fun while it lasts.
Of course the real answer is for the thieving and killing bastards, government, to stop and go away.