From Bloomberg:
New Jersey’s Property Taxes Increased 1.7% Last Year to Record
The average property-tax bill in New Jersey, which already has the highest in the U.S., rose 1.7 percent last year, Governor Chris Christie said.
More than 80 towns, school boards and other local governments saw their taxes drop, while about 160 had increases of less than 1 percent, according to an e-mail from the governor’s office.
New Jersey’s property taxes, which are collected by local governments, increased about 7 percent annually in 2004, 2005 and 2006 before the rate began to slow. Christie, a second-term Republican, has controlled the growth after enacting a 2 percent annual cap. Still, the tax climbed to a record of more than $8,000 per household, from the previous high of $7,885 in 2012, according to calculations by Bloomberg.
“This is the lowest rate of growth in 24 years in this state,” Christie said yesterday at a town-hall meeting in Mount Laurel.
From the Record:
In view of tax hike, Little Falls officials give up salaries
In a gesture of solidarity with frustrated taxpayers, Mayor Darlene Post and the Township Council are forgoing their $2,000-a-year salaries in a lean 2014 budget that all but cuts essential government services.
The $15.7 million budget, introduced by the council Monday night, calls for a $97 property tax increase for the owner of home valued at the township average of $302,000. It scales back new initiatives, reins in legal expenses, and for the second year in a row withholds raises for non-contractual employees.
The flood-prone township’s finances are so tight, officials say, that it can’t afford a new truck for the public works superintendent so his old one can be passed on to the emergency management coordinator for use in extreme weather. The coordinator has no vehicle.
“There were cuts made and there were requests that weren’t made so we could keep [taxes] flat,” Post said. She said under the circumstances, the budget is “as good as it gets, as bitter as it is.”
From HousingWire:
Flood insurance rate-hike delay passes Senate handily
In a strong bipartisan vote on Thursday, the Senate passed a bill to ease big flood insurance premium increases faced by hundreds of thousands of homeowners and allow below-market rates to be passed on to people buying homes with taxpayer-subsidized policies.
The bill now goes to the White House for inevitable signature into law.
H.R. 3370, the Homeowner Flood Insurance Affordability Act of 2014, rolls back previous reforms passed just two years ago with the Biggert-Waters Act and most importantly, a contentious planned rate hike.
“I am thrilled the Senate was able to come together in a bipartisan manner today to protect millions of hardworking families across the country from the steep increases in their annual flood insurance premiums,” said U.S. Sen. Johnny Isakson, R-Ga. “Today’s critical action will bring relief for many Americans and Georgians who were facing unaffordable flood insurance premiums that could have caused them to lose their homes and see their home values plummet.”
…
The measure now goes to President Obama’s desk after a 72-22 vote in the upper chamber. The House passed it March 4.
Taxing the rich is good for the economy, IMF saysResearch paper debunks theory that taxing rich people slows overall growth
Feb 26, 2014 1:19 PM ET
The Canadian Press
A new paper by researchers at the International Monetary Fund appears to debunk a tenet of conservative economic ideology — that taxing the rich to give to the poor is bad for the economy.
The paper by IMF researchers Jonathan Ostry, Andrew Berg and Charalambos Tsangarides will be applauded by politicians and economists who regard high levels of income inequality as not only a moral stain on society but also economically unsound.
Special report: Tax season
Labelled as the first study to incorporate recently compiled figures comparing pre- and post-tax data from a large number of countries, the authors say there is convincing evidence that lower net inequality is good economics, boosting growth and leading to longer-lasting periods of expansion.
In the most controversial finding, the study concludes that redistributing wealth, largely through taxation, does not significantly impact growth unless the intervention is extreme.
Warren Buffett says rich people should pay more tax
In fact, because redistributing wealth through taxation has the positive impact of reducing inequality, the overall affect on the economy is to boost growth, the researchers conclude.
“We find that higher inequality seems to lower growth. Redistribution, in contrast, has a tiny and statistically insignificant (slightly negative) effect,” the paper states.
Tax tips: How to protect your capital gains from the taxman
“This implies that, rather than a trade-off, the average result across the sample is a win-win situation, in which redistribution has an overall pro-growth effect.”
While the paper is heavy on the economics, there is no mistaking the political implications in the findings.
In Canada, the Liberal party led by Justin Trudeau is set to make supporting the middle class a key plank in the upcoming election and the NDP has also stressed the importance of tackling income inequality.
Stephen Harper’s Conservatives have boasted that tax cuts, particularly deep reductions in corporate taxation, are at least partly responsible for why the Canadian economy outperformed other G7 countries both during and after the 2008-09 recession.
In the Commons on Tuesday, Employment Minister Jason Kenney said the many tax cuts his government has introduced since 2006, including a two-percentage-point trim of the GST, has helped most Canadians.
Speaking on a Statistics Canada report showing net median family wealth had increased by 44.5 per cent since 2005, he added:
“It is no coincidence because, with the more than 160 tax cuts by this government, Canadian families, on average, have seen their after-tax disposable income increase by 10 per cent across all income categories. We are continuing to lead the world on economic growth and opportunity for working families.”
Tax doesn’t kill jobs
The authors concede that their conclusions tend to contradict some well-accepted orthodoxy, which holds that taxation is a job killer.
But they say that many previous studies failed to make a distinction between pre-tax inequality and post-tax inequality, hence often compared apples to oranges, among other shortcomings.
The data they looked at showed almost no negative impact from redistribution policies and that economies where incomes are more equally distributed tend to grow faster and have growth cycles that last longer.
Meanwhile, they say the data is not crystal clear that even large redistributions have a direct negative impact, although “from history and first principles … after some point redistribution will be destructive of growth.”
Still, they also stop short of saying their conclusions definitively settle the issue, acknowledging that it is a complex area of economic theory with many variables at play and a scarcity of hard data.
Instead, they urge more rigorous study and say their findings “highlight the urgency of this agenda.”
The Washington-based institution released the study Wednesday morning but, perhaps due to the controversial nature of the conclusions, calls it a “staff discussion note” that does “not necessarily” represent the IMF views or policy. It was authorized for distribution by Olivier Blanchard, the IMF’s chief economist.
© The Canadian Press, 2014
Canada needs to cozy up to the IMF now, god knows they’ll need them when their bubble implodes.
“All those dollars low-wage workers spend create an economic ripple effect. Every extra dollar going into the pockets of low-wage workers, standard economic multiplier models tell us, adds about $1.21 to the national economy. Every extra dollar going into the pockets of a high-income American, by contrast, only adds about 39 cents to the GDP.”
http://www.ips-dc.org/reports/wall_street_bonuses_and_the_minimum_wage
Of course the slow growth in property taxes reported above doesn’t take into account all the properties that are no longer eligible for the homestead rebate, which was something like 10% of the average tax bill, because the homeowners make over $75k. And even for people who make less, I believe it’s been shrunk. More sleight of hand from the fat fvck.
6 – Blame Christie for property taxes? That’s a hoot.
Homestead rebate was a disgusting election tactic. You don’t think it was coincidence that the homestead rebate checks were sent out a week or two before elections, with the governors signature, do you?
Why else would you waste money to administer a program, process applications, cut checks, mail checks, etc etc. Just lower taxes and be done with it?
Oh, yeah, but then you can’t use it as a campaign tool.
Democrat or Republican – no difference – either way you get a politician.
The End Is Nigh (NYPD JJ Edition):
A sleazy Brooklyn cop was busted Thursday after asking female NYPD recruits for panties, money and sex in exchange for a fast track to a job, sources said.
Delfin Lantigua, 34, was arrested after demanding $1,000 from the women — along with all the sex he wanted — in return for quickly moving their hiring paperwork through the system, according to one law-enforcement source.
The cop was caught after one woman met the offer at a restaurant and Lantigua asked her to give him her panties, the source said.
The woman refused and reported him to police, who launched an investigation.
When Lantigua was arrested, officers searched his locker at the Brooklyn North Task Force and found three pairs of panties inside, a source said.
Lantigua formerly worked in applicant processing, where he obtained the women’s personnel information.
He was charged with receiving a bribe, official misconduct and coercion.
Joyce, I guess this is evidence to support the negatives of hoarding money, meaning too much money stuck at the top, not going into productive investments for the overall economy. Buying a 40 million dollar yaht or painting, doesn’t do much for the overall economy. One individual spending money, can’t replicate the spending effect of the majority, meaning the spending of majority is what drives overall economic growth. Their demand is what drives industries to grow and create jobs. How many jobs are created when a 40 million dollar painting is bought?
How many jobs are created when a billionaire increases his position in equities by purchasing more stocks in an economy with this much inequality? None. Their investments don’t create the drive that leads to more job creation. Demand drives job creation. Plain and simple. Instead of purchasing more equities, if that money was given to the consumer, it would create instant demand for production of common products that drive the economy. In a stagnant economy, where the consumer doesn’t have anymore money to spend, investments in stocks by the billionaires doesn’t really do much for the overall growth of the economy. Investing in stocks when there is actual demand, would make more sense.
“All those dollars low-wage workers spend create an economic ripple effect. Every extra dollar going into the pockets of low-wage workers, standard economic multiplier models tell us, adds about $1.21 to the national economy. Every extra dollar going into the pockets of a high-income American, by contrast, only adds about 39 cents to the GDP.”
Elasticity is real. Denial of this fact is actually desirable if you are in tax planning.
Pass “soak the rich” legislation. Chifi and I will profit.
3- I agree with this article’s message. I think permanent redistribution is bad. I think random redistribution is great for the economy. It’s like injecting the economy with steroids.
Let’s face it, a major negative of a capitalist system is that the money always gets to a point, where there is too much money accumulated at the top. When we reach that point, a tax should be in place to bring back balance to the economy. This is no different from a boom and bust cycle. Problem is, the bust cycle doesn’t effect the wealthy anymore, and that money is not redistributed back to the bottom. That is the purpose of bust cycles, take back some of the money from the top, and redistribute it back to the bottom, to fuel the ambition for the next game changers in our economy. Keeping the money at the top is not fueling the ambition for the people at the bottom to be game changers in our economy. Instead they feel helpless (they never see anyone in their neighborhood or lives moving up in the system). Without economic mobility, our economy will eat itself from the inside out.
I’m not saying we can’t have wealthy people. I’m just saying you can’t have so much of the economy’s money tied up in a few hands. It’s not good to have too many poor people and it’s not good too have a few people with all the money in their hands. You don’t have to be a rocket scientist to understand this.
[11] michael
” That is the purpose of bust cycles, take back some of the money from the top, and redistribute it back to the bottom, to fuel the ambition for the next game changers in our economy.”
Please explain how a tax that replicates a bust cycle is going to fuel ambition, investment and spending. Because I see a “heads I win, tails you lose” economic policy as a major disincentive. Don’t get me wrong, I want it because I am first and foremost interested only in my family’s survival and this will generate work. But I do see this glaring contradiction that just begs for further explanation.
When we reach that point, a tax should be in place to bring back balance to the economy.
But doesn’t that exactly describe the current situation?
Split all citizens into two categories, the top 50% and the bottom 50% – which group pays what percentage of taxes today? Heck, split it into quintiles – which group pays what percentage of taxes?
Are you saying that the richer should pay even more taxes than they do (because you can’t say the poor should pay less, they pay little as it is)? Hell, the rich are paying most of it today.
How have taxes gone from how we fund our country and government to a massive redistribution machine?
You think random redistribution is good? So do your local crime gangs. Maybe you should give them your address.
12- Bust creates opportunity. I think it’s as simple as that. If there is no bust, than the rich get richer and the poor stay the same. The bust eliminates some of the rich, hence, creating opportunities for those below to fill in the spot. There has to be economic mobility in order for our economic system to be working properly. I think when there is too much inequality, it destroys economic mobility, which is the heart of an economic system working at peak efficiency.
In 2008, there was a bust, but it was not normal. With quantative easing, there basically was no bust for the top. The top recovered almost immediately, the rest felt the brunt of it all. The bottom 50% still not have seen any type of recovery whatsoever.
I agree, but what is the other choice? Just let the wealthy accumulate capital to no avail? Just have permanent classes of wealthy and poor, with no chance to improve?
“How have taxes gone from how we fund our country and government to a massive redistribution machine?”
That’s totally different. You are talking about organized crime. That hurts the economy as opposed to helping. Random redistribution when too much money accumulates at the top is much different in purpose and scope. Having local crime gangs take advantage of the poor and middle class by robbing them, is terrible for the economy. Apples and Oranges you are comparing.
“You think random redistribution is good? So do your local crime gangs. Maybe you should give them your address.”
Organized crime =/ the government ? …. HAHAHAHAHA
Michael says:
March 14, 2014 at 10:20 am
That’s totally different. You are talking about organized crime. That hurts the economy as opposed to helping. Random redistribution when too much money accumulates at the top is much different in purpose and scope. Having local crime gangs take advantage of the poor and middle class by robbing them, is terrible for the economy. Apples and Oranges you are comparing.
“You think random redistribution is good? So do your local crime gangs. Maybe you should give them your address.”
What other choice? Are you serious? I swear to god you’re bipolar. You can’t remember from just a few hours ago (yesterday). You stop trying to raise taxes to (attempt to) bandaid a situation and you address the actual cause.
Michael says:
March 14, 2014 at 10:17 am
I agree, but what is the other choice? Just let the wealthy accumulate capital to no avail? Just have permanent classes of wealthy and poor, with no chance to improve?
“How have taxes gone from how we fund our country and government to a massive redistribution machine?”
Just have permanent classes of wealthy and poor, with no chance to improve?
You are misstating the facts.
In our area, the probability of the lowest income quintile moving to the highest income quintile is greater than 10%.
What does that mean? That means 1 in 10 has the ability to go from the absolute bottom to the absolute top .
No opportunity? God damn if there isn’t. Those are my kind of odds. And you know what, they are even better when you look at the probability of jumping from the bottom to the second highest quintile.
[15] michael
Once again, that’s a nonanswer. Please re-read the question.
Michael,
I was once in the bottom 50% and I decided that I didn’t want to be there anymore. I quit smoking, saved every penny I could, moved in with my mother-in-law, and went to the University to get a degree in electrical engineering.
I now am not in the bottom 50% because of hard work and dedication.
What you are proposing is probably the most backwards solution to the problem. The answer is not to redistribute wealth from the rich to the poor. I think that in several religious texts the right answer has been detailed already. “Give a man a fish and he eats for a day, teach a man to fish and he eats for a lifetime”, “If you are planning for a year, plant rice. If you are planning for a decade, plant trees. If you are planning for a lifetime, educate people”
The solution is to build opportunities for the bottom 50% to expand, learn, and develop new skills. I don’t think that the right thing to do is to take from those who have worked hard to obtain the skills required to do valuable things in society and give it to those who feel that hard work and discipline is for suckers.
Michael,
If the study was such a big deal, the IMF would own it front and center rather than just call it a staff discussion. What I can’t tell from the article is whether there’s a breaking point of redistributing too much. What is the starting point for their tax rates. If the starting point is a system where everyone rich and poor has the same tax rate, well that’s not our current system. The top 1% I read somewhere already pay about 40% of the taxes. Does the study say what would be ideal?
Michael [9];
How many jobs are created when a billionaire increases his position in equities by purchasing more stocks in an economy with this much inequality? None.
You demonstrate an absolutely cartoonish view of the world where ‘the rich’ (typically $250k annual income and up…) are all suddenly transformed into billionaires who swim daily in vaults of their money a la Scrooge McDuck on Saturday morning TV.
In the hopes that someone sentient is reading this, buying equities absolutely, positively does hire people. Companies that sell stock do so to raise capital. They use that capital to hire workers, buy material, build plants and staff factories. Your only beef is who gets the money — you think you know better than they who it should be, so you want to enforce your belief by enlisting the government.
New York City 5-star restauranteur coming to Morris County
http://morristowngreen.com/2013/10/02/its-finally-official-upscale-restaurant-coming-to-morristowns-vail-mansion/
oh what, there’s no liquor licenses left? no problem, nothing $500,000 can’t fix. and please note, that’s just the money that was paid ‘over the table’
I’d like to point out that statistically you can never eliminate the bottom 50%.
Regarding the post below and other alike.
What Michael is trying to explain is what the economist Hyman Minsky wrote about.
If you bailed out the “speculative” and “ponzi” borrowers and their big bank, big business support system. Is not that the borrowers do not learn their lesson. it’s that the bail out does not cancel debts, but lets this debts live on as zombies debt. Those debts hold back economic growth, because if those debt were discharged, it would be equivalent to cash in the pockets aka economic redistribution, etc.
From Wikipedia.
Minsky proposed theories linking financial market fragility, in the normal life cycle of an economy, with speculative investment bubbles endogenous to financial markets. Minsky claimed that in prosperous times, when corporate cash flow rises beyond what is needed to pay off debt, a speculative euphoria develops, and soon thereafter debts exceed what borrowers can pay off from their incoming revenues, which in turn produces a financial crisis. As a result of such speculative borrowing bubbles, banks and lenders tighten credit availability, even to companies that can afford loans, and the economy subsequently contracts.
This slow movement of the financial system from stability to fragility, followed by crisis, is something for which Minsky is best known, and the phrase “Minsky moment” refers to this aspect of Minsky’s academic work.
“He offered very good insights in the ’60s and ’70s when linkages between the financial markets and the economy were not as well understood as they are now,” said Henry Kaufman, a Wall Street money manager and economist. “He showed us that financial markets could move frequently to excess. And he underscored the importance of the Federal Reserve as a lender of last resort.”[4]
Minsky’s model of the credit system, which he dubbed the “financial instability hypothesis” (FIH),[5] incorporated many ideas already circulated by John Stuart Mill, Alfred Marshall, Knut Wicksell and Irving Fisher.[6] “A fundamental characteristic of our economy,” Minsky wrote in 1974, “is that the financial system swings between robustness and fragility and these swings are an integral part of the process that generates business cycles.”[7]
Disagreeing with many mainstream economists of the day, he argued that these swings, and the booms and busts that can accompany them, are inevitable in a so-called free market economy – unless government steps in to control them, through regulation, central bank action and other tools. Such mechanisms did in fact come into existence in response to crises such as the Panic of 1907 and the Great Depression. Minsky opposed the deregulation that characterized the 1980s.
Hyman Minsky’s theories about debt accumulation received revived attention in the media during the subprime mortgage crisis of the late 2000s.
Minsky argued that a key mechanism that pushes an economy towards a crisis is the accumulation of debt by the non-government sector. He identified three types of borrowers that contribute to the accumulation of insolvent debt: hedge borrowers, speculative borrowers, and Ponzi borrowers.
The “hedge borrower” can make debt payments (covering interest and principal) from current cash flows from investments. For the “speculative borrower”, the cash flow from investments can service the debt, i.e., cover the interest due, but the borrower must regularly roll over, or re-borrow, the principal. The “Ponzi borrower” (named for Charles Ponzi, see also Ponzi scheme) borrows based on the belief that the appreciation of the value of the asset will be sufficient to refinance the debt but could not make sufficient payments on interest or principal with the cash flow from investments; only the appreciating asset value can keep the Ponzi borrower afloat.
If the use of Ponzi finance is general enough in the financial system, then the inevitable disillusionment of the Ponzi borrower can cause the system to seize up: when the bubble pops, i.e., when the asset prices stop increasing, the speculative borrower can no longer refinance (roll over) the principal even if able to cover interest payments. As with a line of dominoes, collapse of the speculative borrowers can then bring down even hedge borrowers, who are unable to find loans despite the apparent soundness of the underlying investments.[5]
Economist Paul McCulley described how Minsky’s hypothesis translates to the subprime mortgage crisis.[11] McCulley illustrated the three types of borrowing categories using an analogy from the mortgage market: a hedge borrower would have a traditional mortgage loan and is paying back both the principal and interest; the speculative borrower would have an interest-only loan, meaning they are paying back only the interest and must refinance later to pay back the principal; and the ponzi borrower would have a negative amortization loan, meaning the payments do not cover the interest amount and the principal is actually increasing. Lenders only provided funds to ponzi borrowers due to a belief that housing values would continue to increase.
McCulley writes that the progression through Minsky’s three borrowing stages was evident as the credit and housing bubbles built through approximately August 2007. Demand for housing was both a cause and effect of the rapidly-expanding shadow banking system, which helped fund the shift to more lending of the speculative and ponzi types, through ever-riskier mortgage loans at higher levels of leverage. This helped drive the housing bubble, as the availability of credit encouraged higher home prices. Since the bubble burst, we are seeing the progression in reverse, as businesses de-leverage, lending standards are raised and the share of borrowers in the three stages shifts back towards the hedge borrower.
McCulley also points out that human nature is inherently pro-cyclical, meaning, in Minsky’s words, that “from time to time, capitalist economies exhibit inflations and debt deflations which seem to have the potential to spin out of control. In such processes, the economic system’s reactions to a movement of the economy amplify the movement – inflation feeds upon inflation and debt-deflation feeds upon debt deflation.” In other words, people are momentum investors by nature, not value investors. People naturally take actions that expand the high and low points of cycles. One implication for policymakers and regulators is the implementation of counter-cyclical policies, such as contingent capital requirements for banks that increase during boom periods and are reduced during busts.
Comrade Nom Deplume, Guardian of the Realm says:
March 14, 2014 at 9:40 am
[11] michael
” That is the purpose of bust cycles, take back some of the money from the top, and redistribute it back to the bottom, to fuel the ambition for the next game changers in our economy.”
Please explain how a tax that replicates a bust cycle is going to fuel ambition, investment and spending. Because I see a “heads I win, tails you lose” economic policy as a major disincentive. Don’t get me wrong, I want it because I am first and foremost interested only in my family’s survival and this will generate work. But I do see this glaring contradiction that just begs for further explanation.
Godzilla,
Michael is at least 4-5 years late for that discussion that we’ve had here ad nauseum. Most don’t support the bailouts which about a handful of exceptions.
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There is truth to the cliché that one generation makes the money, the next maintains it, and the third pisses it away……I see multiple examples in front of me……if for no other reason than by the time a fortune gets to the third generation, it is split up eight ways or more……
grim says:
March 14, 2014 at 10:25 am
Just have permanent classes of wealthy and poor, with no chance to improve?
27- Thank you godzilla! My writing ability is terrible at trying to get my points across, but thank you for being open minded and conveying the point I was trying to make. Guess, communication is not one of my strong points. My writing style conveys the message (at least based on your comments back) that I support just taking from the rich and giving to the poor, for no other reason than they have it. Far from the truth, like I stated, I’ve done extremely well with my investments, that I’m well on my way to not worrying about money from a job. Why would I support hurting myself in the future, if I didn’t really think some sort of redistribution was really needed. Hell, I would love to just accumulate and give nothing back, but that type of behavior destroys the economy in the long run.
Honestly, you guys can believe me or not, but most of my posts are based on my own individual deep thinking on the subject. I’m not reading some economists book and conveying their message. I’m spitting out economical proposals based on deep thinking and logic, nothing more. I’m only 33, so I dont’ claim to know it all. I have a lot to learn. I have a lot of time to adjust my philosophical standing on these economic issues that are sure to grow with experience. So continue to challenge me, I embrace it, it really helps me to open minded and at the same time grow as an individual. I’m sure to change my position on these issues, so don’t get upset if I switch positions on certain issues. It’s all about growth as an individual. Debates drive this growth. Thank you for the daily challenges you present to me on a daily basis. Thank you.
I wonder if Michael is Godzilla?
As for taxes, I’ve had years where I’ve paid over 100k in taxes and it sucked and other years where all I paid was FICA and that sucked just about the same. Now in a (happy?) median.
Oldest daughter got accepted into Boston Latin School today. One down, one to go.
24- I am not talking about someone worth 10 million or even 100 million……I have a problem with billionaires. That’s silly money. I’m telling you, based on logic, it does massive harm to the economy when an individual amasses that type of silly money. It’s too high of a concentration of capital to be the hands of one individual. Money that would take 100 lifetimes to count should not be in the hands of one individual. Right now, Bill Gates is worth 76 billion. That’s worth more than entire countries. If you see nothing wrong with that and think it doesn’t harm the economy, please explain to me why that kind of accumulation of capital in one individual is beneficial to the economy. If I’m wrong, I’m wrong. Im fine with that. I just want justification to change my way of thinking.
Anon E. Moose says:
March 14, 2014 at 11:54 am
Michael [9];
How many jobs are created when a billionaire increases his position in equities by purchasing more stocks in an economy with this much inequality? None.
You demonstrate an absolutely cartoonish view of the world where ‘the rich’ (typically $250k annual income and up…) are all suddenly transformed into billionaires who swim daily in vaults of their money a la Scrooge McDuck on Saturday morning TV.
32- You really think I would post under another name to try and win an argument? Why would I do that? If I’m wrong, I’m wrong. All I ask is that you enlighten me.
Does anyone else laugh when Michael includes “this is based on logic, and my deep thinking … my philosophical stance on ecomonics” in his posts?
Michael used to be a tennis ball boy for rich mommies who don’t have to work in Ridgewood. His toughest day being poor was probably when the fat ones would ask him to start rubbing their tired feet.
36- It honestly is, I don’t just regurgitate other people’s thoughts. I might not be right, but at least I’m capable of thinking on my own.
Michael [34];
I just want justification to change my way of thinking.
Ok, fine. I’ll play. So what exactly do you think happens to the money that a billionaire spends when he “increases his position in equities by purchasing more stocks”? Doesn’t that money go, as I already said, to hire people and buy stuff? Or do you think it goes into a vault, to be swam through, and where it increases by reproducing with its fellow $100’s to make little baby $1 bills?
man perfect example if you lay down with dogs you get fleas
https://www.facebook.com/zuck/posts/10101301165605491?notif_t=notify_me
I’m ignoring Michael by the way
It goes to the person who sold him the stock.
38
When I have a conversation with a person, I do not have to remind them that I thought before I spoke. I guess you do.
39
Moose – give up, I’ve said the exact same words. Spending money (one some things) is considered hoarding to him. Spending money (on other things) is considered patriotic economy-driving activity. Nevermind that what was purchased had to have been produced first; nevermind that what was spend had to be accumulated/saved first (unless it was just “transfered to them”).
Theo,
IPO
The existence of exchanges like a stock market is crucial to the existence of capitalism and private property. Otherwise the government just owns everything and picks the winners and losers. Well the commies had a real nice way of picking the winners and the losers and well the losers usually got a bullet.
39- I’m not sure, but are not corporations sitting on record #s of cash? They don’t know what to do with the money, so some are buying back company stock with it. They are definitely not investing it back into growth of the company, since there is no demand. So no, they are not hiring, or buying stuff. I stated this before, that demand drives the economy, spending 40 million on a painting does nothing to create demand for a product, which will then drive growth in the form of job creation to meet demand.
Michael [34];
I just want justification to change my way of thinking.
Ok, fine. I’ll play. So what exactly do you think happens to the money that a billionaire spends when he “increases his position in equities by purchasing more stocks”? Doesn’t that money go, as I already said, to hire people and buy stuff? Or do you think it goes into a vault, to be swam through, and where it increases by reproducing with its fellow $100′s to make little baby $1 bills?
Juice,
Couldn’t we just say the existence of various voluntary marketplaces in whatever form? If that’s what you’re hinting at, I agree 100%.
Juice Box says:
March 14, 2014 at 2:45 pm
The existence of exchanges like a stock market is crucial to the existence of capitalism and private property. Otherwise the government just owns everything and picks the winners and losers. Well the commies had a real nice way of picking the winners and the losers and well the losers usually got a bullet.
We’ve highlighted the financial punditry’s obsession with “cash on the sidelines” over the course of the last year in attempts to show that there is really no such thing. The argument from an investment perspective is utterly absurd. In general, investors like to think that their cash is some sort of fuel for the market that will drive prices higher. This is easily debunked simply by looking at the transactions at work. When you buy stocks you are effectively swapping cash with the seller. It’s that simple. There is no change in net financial assets. You merely swapped cash for stock and the seller swapped stock for cash. The price you arrive at is merely a function of psychology. Who is the more eager buyer or seller? While there is technically “cash on the sidelines” this amount of cash on the sidelines is relatively stable in any given period. It’s not changing with every transaction as many would have you believe. Therefore, there is no fuel or pile of cash that is just waiting to be injected into the market and drive prices higher.
In terms of corporate balance sheets the argument is equally misleading. You’ll often hear the financial punditry discuss the asset side of the balance sheet while ignoring the liability side. There’s all this “cash on the sidelines” just waiting to hire people, merge with other companies, etc. The only problem is, debt has been surging at the same time that cash levels rise.
http://pragcap.com/cash-sidelines-myth
The Original NJ ExPat says:
March 14, 2014 at 1:59 pm
Oldest daughter got accepted into Boston Latin School today. One down, one to go.
http://www.youtube.com/watch?v=_gtoDxXV4Zs
How about when they left him the keys to the cabanas in the towels? :(
Juice Box says:
March 14, 2014 at 2:32 pm
Michael used to be a tennis ball boy for rich mommies who don’t have to work in Ridgewood. His toughest day being poor was probably when the fat ones would ask him to start rubbing their tired feet.
[27] Godzilla,
I didn’t get the sense that you were replying to me directly, but I’ll ask: are you suggesting that tax policy should be used as a mechanism to regulate markets and smooth out boom and bust cycles?
I am not aware of any scholarly work on that subject, but I wouldn’t be surprised if I found some.
[33] expat
Congratulations. Boston Latin is the oldest and one of the most prestigious public high schools in the entire nation. But you already knew that.
Oh, and that should finally beat any remaining vestiges of New Jersey out of her. Good to see you she is on her way to being an intelligent, productive and valuable citizen.
[51] Thanks, Nom. I guess she knows how to play the game. Much to our chagrin, she has always been a Pats and Red Sox fan. We even allow her to wear the vile gear of those teams, only because we know there is some benefit to conforming during the younger years. Our younger daughter has more sass and is confident proclaiming her loyalty to her parent’s chosen NY teams. If they blackball her somewhere down the road I may need the services of you or one of your esteemed colleagues.
47- This analysis is misleading because the huge, levered balance sheets of the financial entities swamp the industrials. Most of the non financial companies I follow do in fact have unusually large amounts of cash. This has been generated in part due to the normal release of cash from working capital due to reduced business activity, and in part because companies have been cautious about commiting to new capex.
If investors in the aggregate shift their asset allocation from cash to equities, the price of equities will rise, at least in the short run, because the supply in the short run is finite.
TPC says:
10/23/2010 at 12:43 PM
Remove the debt from the financials. According to this screener its not much better ex-financials.
jpm1jr says:
10/25/2010 at 7:19 AM
Still don’t buy the argument, even eliminating financials. Comparing cash with total debt doesn’t really help understand underlying relative liquidity of corporate sector. It is normal for companies to finance their fixed assets with a blend of debt and equity. If you eliminate the financials, the cash for the remaining companies would be greater than or equal to the total amount of debt, which means that companies in the aggregate could pay down 100% of their debt using cash on hand, if they wanted to. That is a highly liquid situation.
I love your stuff, TPC, but just don’t agree with this item.
quark says:
10/24/2010 at 11:53 PM
This analysis is nonesense. If companies are refinancing their debt at these low interest rates then they can service their debt easily.
qwsp says:
10/25/2010 at 6:55 PM
Scratching my head.
My understanding of “cash on the sidelines” is that it’s not related to corporate holdings. It’s the current allocation to the “risk free” portion of the Global Market Portfolio (including govt bonds) by investors institutional and retail.
The link to “Mish” is just a graphical soundbite. There is no debunking of any myth here. If anything this article is an example of the nonsense that can arise out of anonymous blogs that start linking all over the place especially to something called “Mish”.
47- I don’t know if I’m right, but buying stocks is not simply swapping cash with the seller. If it was merely an even swap, how can a company be overvalued or undervalued?
I think stock prices have a lot to do with human emotion as opposed to fundamentals.
Musk throws gasoline on Christie.
http://www.teslamotors.com/blog/people-new-jersey
re # 54- Emotion? Next thing you are going to say is manipulation.
Don’t hate the Playa hate the game..
Juice, I’m not hating on anything. I’m just stating my true belief. I think emotion has more to do with a stock price than its fundamentals. Warren buffet could make any stock a winner by purchasing a large amount of it. Why? Emotion will trigger others to jump in on the premise that buffet bought it, therefore I should buy it. That’s just one example of emotion playing a role in a stock price, IMO.
Btw, Tesla piece was interesting. Makes me want to buy a tesla.
[55] juice.
Musk should fvck with Christie and Sweeney by opening stores in Palisades, Newtown, and Wilmington. Just over the border, middle finger held high.
[58] Maybe inject some non-outlet life into Stroudsburg. I guess that would result in Teslas getting pulled over all the time on Route 80 for going 56mph.
What I’m suggesting is leave it alone, let it fail, or as an 80’s rap song said – “The roof, the roof, the roof is on fire, burn mfer, bur”.
However, noting how we have a severe fear of “1% failure” disease and feel there is a need to bail out the levered corrupt financialized FIRE economy (I’m of the Paul Volcker school of “the only important new product created by banks in the last 40 yrs was the ATM machine”). Then it is only fair that what is good for the goose is good for the gander.
So yes, if we live in a world of safe and guaranteed bail-out, only a progressive tax on earned and unearned (capital gains here) income and estate taxes makes logical and fair sense to even out the effects of both the peaks and valleys of wealth and power concentration. Without it you’ll experience what we are experiencing now.
Are people going to rig results and adjust their behavior? Absolutely. But with an eye toward technology in mind, I’ll answer the following – FATCA NSA FINCEN (In short we got you by the balls)
Is there economic research out there about this subject, don’t know without some alcohol fueled research. However, economics is not a true science, like E=MC2 science; so I’m not putting too much confidence on any studies done. In this area cynical common sense and mercenary style manipulation of power rules the day.
March 14, 2014 at 3:52 pm
[27] Godzilla,
I didn’t get the sense that you were replying to me directly, but I’ll ask: are you suggesting that tax policy should be used as a mechanism to regulate markets and smooth out boom and bust cycles?
I am not aware of any scholarly work on that subject, but I wouldn’t be surprised if I found some.
Michael, you are a crashing bore and a troll.
I don’t. but I do laugh if it is based on Ron Hubbard or Ayn rand type science fiction
joyce says:
March 14, 2014 at 2:25 pm
Does anyone else laugh when Michael includes “this is based on logic, and my deep thinking … my philosophical stance on ecomonics” in his posts?
indeed
“economics is not a true science”
that’s right! time for S&P to upgrade us
@CNBCnow: Moody’s affirms EU’s AAA rating; changes outlook to stable from negative.
Michael – when a corporation buys back stock that is viewed as a good thing. They are saying, hey we don’t have any great ideas at the moment (or better said, nothing compelling enough to act on with respect to the sum of money we are offering to buy back — that or they think their stock is cheap)…here is your money back, you figure out how you want to spend it. And the stock price usually goes up after buy-backs. That’s basic stuff.
I think you are over simplifying things a bit…but don’t let people in here (like Joyce who is very snarky and generally annoying) dissuade you from having your own thoughts and opinions, you are entitled to them. If we all thought the same way the world would be a very boring place.
@allinwithchris: Total Wall Street bonuses =$11B more than total made by all full time min wage workers in 2013 http://t.co/FndSXC2qRk http://t.co/cTVEpvH4Iz
If this goes through, I can see the Trumps, The Hiltons, The Waltons, and the entire east side declaring their progenies “special”.
NY TIMES
The Opinion Pages|Editorial
Saving a Future for Those With Disabilities
By THE EDITORIAL BOARD MARCH 13, 2014
Back in the old days, when Congress did crazy things like pass legislation, a sensible bill like the ABLE Act might have sailed to the president’s desk. But today, even with a long list of positives — it’s a good idea, solves a pressing problem and has lots of bipartisan support — it’s not a slam dunk, because there’s always a way in Washington to squelch good ideas, especially those that involve tweaking the tax code and spending a little money.
The Achieving a Better Life Experience Act would be a boon for people with disabilities, and for their parents and other caregivers. It would allow them to put money into tax-deferred savings plans, like the 529 plans that parents use to save for college, to cover expenses like education, housing, transportation, therapy, rehabilitation and assistive technology. Advocates say the accounts, called 529-ABLE plans, would be easier and less expensive to set up and maintain than the trust funds often used for beneficiaries with disabilities.
Such accounts would go far to ease the worries of parents who have children with disabilities that require intensive, expensive forms of care. They would also be particularly useful in fostering a saver’s independence. One advocate who has lobbied strenuously for the bill, Sara Wolff of Moscow, Pa., makes that case. She works in a law office and volunteers with the local office of the Arc, the national organization for people with intellectual disabilities. Ms. Wolff has Down syndrome and receives Supplemental Security Income benefits, but cannot accumulate more than $2,000 in assets without becoming ineligible for that aid. A 529-ABLE plan would allow her to work and save and keep those benefits.
Questions about the future of a child with a disability can be a deep source of anxiety, if not anguish, for parents who wonder what will happen after they die. As people with disabilities live longer, it’s only sensible to help them secure their futures. At last count the bill had 342 co-sponsors in the House and 66 in the Senate. That is well beyond a critical mass of support; it just needs a vote. Supporters have been trying for seven years to get the ABLE Act passed. Here’s hoping this is its year.
Anon, the problem with your line of thinking, and most liberals including the president is that by saying so or dictating by law you can make one’s labor worth more than what they actually can produce. The honest truth is the value of what most minimum wage workers produce is not much more than they are paid. The problem is not the minimum wage it is the fact that we do not have jobs for these people where they can make enough tangible value that they can be paid more. The other real problem is that those who are not in minimum wage jobs generally have had stagnant wages for the last 20 years and are slipping out of the middle class, these are the people who need to be paid more who generally produce greater value than they are paid, unfortunately the labor market is such that if someone wants to quit they are easily replaced at a similar wage, the market is flooded with people of similar skills and qualifications. This discussion of minimum wage is a distraction, over the real failing which is growing our domestic job market, training workers for the 21st century, etc. I was always a democrat but I find myself disgusted over what both parties have done and how the game is played. You want to help the poor don’t give them sh*t, teach them, give them the opportunity to learn and earn it. Instead of increasing H1B’s why not train american workers to these jobs. I am very familiar with technology work and the H1B people and for the most part they are code monkeys doing the work that senior engineers don’t want to or have the time to do. It needs to be reformed and the H1B body shops should be banned from the US. When the politicians stop pontificating and presenting all this rhetoric I could get behind it. What I see from where I stand when I look at Democrats they want get there hands on as much money as possible and it isn’t to help people it is to enrich them and their friends. Blame corporations, blame the rich, the problem is neither. They make decide what to do based on their particular situation, to push an agenda good for the common man it needs to be appealing. Everything our government does is benefit to corporations and the mega wealthy, why when we talk about taxes it always hits the middle or the aspirationally wealthy never the mega filthy rich. Why do we still have the carried interest loophole? In what universe is that fair or make any sense? Why when Obama cuts the military’s budget do the people get the shaft but corporations get to keep projects and contracts? We are blowing it, with our energy and land advantage we could begin to manufacture again. We could train workers to do more technical things, we could increase the size of our workforce and the amount of money they are being paid. The opportunities are here but due to political fumbling this will not be the reality. I have a thought to maybe if the government didn’t have ZIRP insurance would work, there wouldn’t be crazy volatility in commodity and housing prices, etc. The issue is that we are seeing localized inflation and volatility which has acted as a wealth transfer from the very poorest to the wealthiest. People are paying ever increasing portions of their wages for housing, insurance, energy, and food. Our government lacks discipline, foresight, honesty, it is among the most contemptible group of people ever assembled in the United States. Our political class is looking worse than Italy’s or Greece’s, we are truly becoming a laughingstock. SO please for the love of all things good stop spewing propaganda!
Godzilla that’s a nobrainer, we just add a clause that any schmuck who tries to use it to cheat gets the gitmo torture treatment. The bloodsuckers in washington have no compassion for anyone.
Grim – how do you like the new gig, I see it’s been a year or so? Is all that travel worth it?
jcer, I think you just got yourself put onto some watchlists. Too much truth and common sense in your post.
Can’t wait for the rat bastard black helicopter set to come for me.
60/68- Posts of the day! You guys have a serious understanding of the current state of our govt/economy.
There is a bill in Congress to increase H-1B to 300k a year and other goodies that won’t be good for your career if passed. The best thing you can do is lobby your congress critter like crazy to not let this bill pass.
Orin Hatch should be driving a scooter in Florida not setting policy. He has been at it for a long long time now trying to get the cap raised.
http://beta.congress.gov/bill/113th-congress/senate-bill/169?q={%22search%22%3A[%22h-1b%22]}
More info.
http://thehill.com/homenews/senate/300989-schumer-and-hatch-strike-breakthrough-deal-on-h-1b-visas
Michael – share some tennis stories, we know you have one in you, such as one time at tennis camp……..
Epic!!!! Sly as a fox!!! I love when people refer to economics as a science, like there is some definitive right way to run the economy that holds up to the test 100% of the time. It’s god damn common sense that there is too much money at the top when the richest guy in our country is worth 76 billion dollars. I mean if that’s not a warning sign, I don’t know what is. But the naysayers are right, nothing wrong with an individual worth 76 billion, he earned it, it’s his. If that’s ok, then I have a question, how many billionaires can our economy support before the poor flip the hell out? You have a lot of hungry, greedy, and driven billionaires that want nothing more than to be richest individual in the world. Let’s see how this plays out if we let this continue on its current course. Probably make for a nice horror movie when you reach the breaking point.
“Is there economic research out there about this subject, don’t know without some alcohol fueled research. However, economics is not a true science, like E=MC2 science; so I’m not putting too much confidence on any studies done. In this area cynical common sense and mercenary style manipulation of power rules the day.”
Sorry, I could have offered a multitude of brilliant insights to today’s economic and market musings. But I am already donating 48% of my time to society via the taxman, and as they say, those who can, do, those who can’t, teach. Suffice it to say, the answers are opposite to Michael and Anon’s statements.
@SenSanders: We have a moral obligation to improve the lives of the more than 16 million American children living in poverty today.
Put this in perspective.
76 billion
You could spend 999 million plus another million for 76 years straight. That’s 2.7 million a day. 114,000 dollars an hour. 1,900 dollars a minute. For 76 years straight. Good luck trying to spend that. Chi fi, you think by the 3rd generation that fortune will be pissed away?
economics is not a true science
Economics doesn’t even belong in the same realm as science. I’ve never seen a group of academia that was more intellectually dishonest than the people that are involved in economics. Its filled with lies, half truths, distortions, misconceptions. The worst part about it is, they present themselves as all knowing and the general public and the rest of academia eats it up.
79 – Perspective? Oh, you mean like if we storm the castle and rob the richest man in the world of every dollar he ever worked for or invested, every American could get a whopping 200 dollar payday? My bad, 150 after taxes.
Or we could pay off part of the national debt… wait.. that wouldnt even change the first three digits of our national debt would it?
Of course, I’m assuming everyone is equal in receiving that money…
81- never meant it that way. I meant it more like a game of monopoly. A race amongst the billionaires to secure the most dollars for the sake of being top dog. This race destroys everything in its economic path in the end game. The more billionaires, the closer we are to the end game. When one individual can accrue this much wealth, how much is left for everyone else? That’s when the monopoly game is over, when one guy owns all the wealth and the rest owe this individual.
Bill Gates can keep his money. I just hope he is smart enough to see the danger of accruing that kind of wealth in a capitalist based economic system.
Remember the power of compounding and now add 76 billion to that. In 50 years, god knows what that 76 billion will be.
You know that these billionaires don’t have billions in cash, right? They typically have big percentage ownership of companies they founded and run, or are at least on the board of directors. And the values of their billions go up or down following the fates of these companies. Those billions are not spendable cash, it’s the value other investors assign to the earnings stream of the productive assets they are involved with. Those organizations either keep on growing and making money, or they shut down and fire people. Would that make you happy, Mike? So that billionaires can stop being so rich?
Great blog! Is your theme custom made or did you download it from
somewhere? A theme like yours with a few simple adjustements would really make my blog jump
out. Please let me know where you got your design. Thank you
Has it ever occurred to you that maybe we shouldn’t be trying to “run” the economy?
Michael says:
March 14, 2014 at 8:02 pm
like there is some definitive right way to run the economy
oh, fukc, really? so are you saying that they don’t literally carry billions in their wallet? that would had to be a fukcing mega super huge wallet, eh. really, no singles under the mattress? well, West, that changes the equation altogether. you rightwingers can’t afford a house but certainly know lots about billionaires
Ragnar says:
March 14, 2014 at 10:41 pm
“You know that these billionaires don’t have billions in cash, right? They typically have big percentage ownership of companies they founded and run, or are at least on the board of directors.”
anon – wealth of nations..
US total private worth is approx 70 trillion. Gov worth is allot more.
How about passing a law gifting 1 acre of gov land to the indigent? Sound familiar?
84- Can they not sell their positions for cash? If they decide to cash out, that money has to come from somewhere. Do you now see why it’s so dangerous to have this many billionaires in the double digits. It starts to kill the economy by having too much cash on the investment side and too little on the demand side. Only so much money in the economy can be put on the investment side (the wealthy). You have to have a certain percentage of the money on the demand side (poor, middle). Evidence is there, for example, how many cash purchases of real estate by investors and how many purchases by first time buyers. Both are at levels they should not be at, but this is what happens with inequality, too much money on the investor side, not enough on the demand side.
Heck how about all us rich fold chip in and give anon 100 acres of prime land to farm?
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