Tax Revenue

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Guest Post: Did You Miss Your IRS Agent Today?





The major headline of the day is the pending government shutdown in the Land of the Free. This is nothing more than an obvious symptom that they have passed the point of no return. As we have routinely discussed, the US government now fails to collect enough tax revenue to pay interest on the debt and cover mandatory entitlement spending. They’re already in the hole before they write a single check for anything we consider ‘government’, from national parks to the Internal Revenue Service. Basically all the stuff that will be shut down now. Unless you missed your IRS agent today, it should be clear that all this stuff they waste money on is completely... unnecessary. Or can/should be privatized.

 
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Guest Post: Five Reasons Why Gold Prices Will Decline





This morning we received a research note from a private bank. Buried in the text was a call for lower gold prices, and the analysts listed five reasons why they think gold prices will decline. Our analysis? These guys are completely missing the point. Precious metals are like an insurance policy. It’s a policy you hope you’ll never need to cash in. But if the need ever arises, it’ll probably be because the financial system has collapsed. If that day ever comes, you’ll be thankful that you had the foresight to trade away some paper currency for real savings.

 
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"A Scam Of Unmatchable Balls And Cruelty" - Matt Taibbi On Wall Street's "Triple-Fucking Of Ordinary People"





"This is the third act in an improbable triple-fucking of ordinary people that Wall Street is seeking to pull off as a shocker epilogue to the crisis era. Five years ago this fall, an epidemic of fraud and thievery in the financial-services industry triggered the collapse of our economy. The resultant loss of tax revenue plunged states everywhere into spiraling fiscal crises, and local governments suffered huge losses in their retirement portfolios – remember, these public pension funds were some of the most frequently targeted suckers upon whom Wall Street dumped its fraud-riddled mortgage-backed securities in the pre-crash years.... It's a scam of almost unmatchable balls and cruelty, accomplished with the aid of some singularly spineless politicians. And it hasn't happened overnight. This has been in the works for decades, and the fighting has been dirty all the way."

 
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To Challenge These Statements Is Blasphemous





“Truth. noun. The quality of state of being in accordance with fact or reality.” This is how the dictionary defines truth: it can be ‘fact’. But it can also mean ‘reality’. The people who control the system have figured this out - if they can change someone’s reality, they control the truth. This is also the case in finance and economics. For example, I heard the following statements just in the last 48-hours while visiting the Land of the Free: “America will never default on its debt.” , “The debt doesn’t matter because we owe it to ourselves.” Again, these statements are totally unsupported by the facts. The notion that the US government won’t default on its debt is simply historically inaccurate. Such close-mindedness is dangerous, especially in economics. People’s lives and livelihoods depend on an objective understanding of the facts, not this altered reality.

 
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What Time Would You Leave The Party?





In mathematics, the term ‘linearity’ describes a relationship in which the rate of change for a variable is constant. However, just like the erosion of civil liberties, the destruction of financial privacy, the growth in world population, the expansion of the money supply, and the demand/depletion of natural resources, debt is an exponential challenge. The danger with exponential problems is that they can really sneak up on you. The numbers do not lie. Debt grows exponentially. Tax revenue grows linearly. So the only question is – what time would you leave?

 
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"Nobody Knows What The F**k Is Going On..."





Financial circles in Hong Kong are buzzing today on the new Goldman Sachs projection that gold may drop below $1,000 an ounce. The central thess: since the US economy is out of the woods, there’s no longer a need for gold as a risk hedge. But as one senior-level manager at a major investment bank noted, "Nobody knows what the f**k is going on..." However, this mentality entirely misses the point of precious metals. When the hopes and dreams of the entire global financial system rest on the lies of politicians, the whims of central bankers, and the mountains of debt they have all accumulated, things could turn on a dime... tomorrow. Gold is an insurance policy. It’s a form of money that you might never need to use. But should that need ever arise, you’ll be so much better off for owning it.

 
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This Is Panic: Smuggling Diamonds Out Of India





Asia is a damned excited part of the world. And Singapore is the financial epicenter of all of it. For the last 24-hours, banker and fund manager friends of mine have been telling me stories about oil refinery deals in North Korea, their crazy investments in Myanmar, and the utter exodus of global wealth that is finding its way to Singapore. In the last few weeks we are seeing two new groups moving serious money into Singapore - customers from Japan and India. The contrast is very interesting. From Japan, people who see the writing on the wall just want to be prepared with a sensible solution. They’re taking action before anything happens. From India, though, people are in a panicked frenzy. They waited until AFTER the crisis began to start taking any of these steps. As a result, they’re suffering heavy losses and taking substantial risks... some wealthy Indians are trying to smuggle out diamonds... anything they can do to skirt the government's capital controls.

 
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"It’s The Law"





lawJohn Adams famously described the American government as being “of laws and not men.” The managerial state has wiped clean that wisdom in favor of countless and arbitrary dictates enforced by worthless bodies. The narcolepsy-inducing USA Today recently reported the Federal Bureau of Investigation granted informants immunity to break government law in certain circumstances. Newly disclosed documents reveal that thousands of so-dubbed “crimes” were committed in 2011 by the FBI’s pet players. The misdeeds include drug trafficking, plotting robberies, and bribery. Last year, the New York Times published a damning report on how the good-natured agents of Washington’s infamous law investigator work tirelessly at foiling terrorist plots they go to great lengths at concocting. These faux plots of destruction are used to beef up the reputation of the agency so as to solidify its monopoly of police power.  The selective enforcement of law negates the very purpose of social order. How can there be a universally recognized limits to mankind’s behavior if a minority are permitted to disregard governing laws? The result is a contradiction – either the law applies everywhere or it does not.

 
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China Is Ending Its "One-Child Policy" - Here Are The Implications





Back in 1978, the Chinese politburo enacted the "one-child policy", whose main purpose was to "alleviate social, economic, and environmental problems" in China as a result of the soaring population. According to estimates, the policy prevented more than 250 million births between 1980 and 2000, and 400 million births from about 1979 to 2011. And while not applicable to everyone, in 2007 approximately 35.9% of China's population was subject to a one-child restriction. Regardless of the numbers, things are about to change: with the Chinese economy now having peaked and suddenly finding itself in rapid deceleration with excess credit growth providing virtually no boost to marginal growth, the Chinese government is forced to reexamine 35 years of social policy in order to extract growth from the one place where for nearly 4 decades it had tried to stifle: demographics.  According to the 21st Business Herald which cited sources close to the National Population and Family Planning Commission, China may relax its one-child policy at end-2013 or early-2014 (read end) by allowing families to have two children if at least one parent is from a one-child family.

 
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A Different View Of The Iceland "Recovery"





Without doubt, Iceland was the canary in the coalmine for the sovereign debt crisis that is unfolding across the world right now. Today, Iceland is held up as the model of recovery. 'Famous' economists like Paul Krugman praise the government for rapidly rebuilding the economy without having to resort to austerity. This morning’s headline from The Telegraph newspaper sums it up: “Iceland has taken its medicine and is off the critical list”. It turns out, most of these claims are dead wrong. Despite being so widely reported by the mainstream financial media, Iceland is not a story of model economic recovery. It’s a story of how to fool people. And for now, it’s working.

 
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25 Facts About The Fall Of Detroit That Will Leave You Shaking Your Head





It is so sad to watch one of America's greatest cities die a horrible death.  Once upon a time, the city of Detroit was a teeming metropolis of 1.8 million people and it had the highest per capita income in the United States.  Now it is a rotting, decaying hellhole of about 700,000 people that the rest of the world makes jokes about. Detroit is only just the beginning.  When the next major financial crisis strikes, we are going to see a wave of municipal bankruptcies unlike anything we have ever seen before. All over the nation, our economic infrastructure is being gutted, debt levels are exploding and poverty is spreading.  We are consuming far more wealth than we are producing, and our share of global GDP has been declining dramatically. We have been living way above our means for so long that we think it is "normal", but an extremely painful "adjustment" is coming and most Americans are not going to know how to handle it. So don't laugh at Detroit.  The economic pain that Detroit is experiencing will be coming to your area of the country soon enough.

 
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Confessions Of A Keynesian Debt Serf





"Things are different now. I’ve turned my savings into spending, rung up thousands of dollars’ worth of purchases on my credit cards and in the process paid a lot more in taxes. And I’ll probably keep spending like this until I nearly run out of money. In other words, I’ve bought a house. Since the recession materialized in 2008, policymakers in Washington have been urging Americans to buy homes, because no single purchase does more to generate economic activity. The housing market and everything associated with it accounts for around one-sixth of the entire economy, which is why a housing bust can drag the whole nation into a recession (basically what happened starting in 2007) while a housing boom can make nearly everyone better off, including people who don’t even own homes."

 
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Photo Album From The "Main Streets" Of A Dead City





Congress: "Is it fair to say that Wall Street has benefited more [from QE] than Main Street has?"

Bernanke: "I don't think so... I want to emphasize that we're very focused on Main Street... Our low interest rates have created a lot of ability to buy automobiles..."

 
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The Death Of A City: Detroit's Eulogy As Delivered By Kevyn Orr





"For years, the City has spent more than it takes in and has borrowed and deferred paying certain obligations to make ends meet. The City is insolvent" - Kevin Orr

 
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Detroit May File For Bankruptcy Overnight





Presenting default you can believe in, as the largest municipal bankruptcy in US history, involing the one-time iconic "motor city" which now has a population of 700,000 and some $20 billion in liabilities, is about to become reality. But fear not: the Detroit bankruptcy, like rising rates, are entirely due to the economic recovery.

 
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