Obama wants to tax the rich, no big deal, it isn’t going to raise the revenues we need and the amount won’t even cover the interest payment on the national debt. The big sticking point is that Obama wants the ability to raise the national debt limit without having to run it by Congress. I don’t think Congress will grant him that wish.
The economy seems to be picking up steam; most of it is tied to consumption. The main reason for this appears to be the low interest rates. Why save it? With the miracle of compound interest, it only takes about 144 years to double your dollar deposited today. The really laughable thing is the spread between high risk bonds and Treasuries is about 3 percent.
Interest rates in the bond market can’t go much lower but they have the built in ability to go higher. Examine the two graphs below. Graph one shows the value of a 1000 dollar 30 year bond issued at 3 percent interest. Notice what happens to it as interest rates jump up. Whoever holds these 30 year bonds will take a bath (you will get your principle back--if you can wait 30 years).Just a doubling of interest rates would be a 42 percent loss. Of course if rates went to 15%, you might want to buy these bonds, it would be a once in a lifetime opportunity.
With high unemployment and a lot of seniors opting for early retirement, look for decreased tax revenues next year. That may be why there is no compromise over the fiscal cliff debate in Congress. We need the tax revenue, don't pass the tax cut, and the Republicans will be blamed for it. Of course the voter has a poor memory, the Bush tax cuts were a Republican thing, and come next election, the Democrats will get burned for not passing it.
Congress IMHO is a shambles. Everyone wants to talk and no one is listening. The key to the whole debate revolves around the national debt. Will the debt ceiling be raised? The Democrats can spend all they want, but if the debt ceiling isn’t raised, they’ll run out of money some time before inauguration.
The election was pretty well split even, half Republican and half Democrats. I would imagine that rich people populate both parties evenly. So the real issue seems to be where our tax money will be spent and can we keep spending at the current rate?
Christmas is coming next week, and it doesn’t look like Obama will get what he wanted from Santa. Putting coal in his stocking wouldn’t be politically correct. Congress is a little like Santa. We get something real from these Congressional elves that nobody had to pay for. --Inflation.
Merry Christmas everyone.
Copyright 2012 by Jim Brubaker
5 comments:
Jim,
Go lightly on Joseph. He's just forgtten to ad a "/sarc" to the end of his comments. Funny, good read if taken in the right light.
Among the very rich, London is attracting EU citizens avoiding the possibility of collapse in Greece and so on, plus moneyed Chinese and Russians. The government presumably would like to find a way of taxing them that doesn't drive out of the country people who actually work or invest here. So far it hasn't done much except fiddle with the tax on buying very expensive housing.
Hi Dearieme
Welcome back.
Kind of unsettling to find that people aren't just visiting on vacation anymore. They want to stay.
The question I don't have an answer to yet, is where are the young going to find work? Butlers and maids?---that sounds too TV-ish too me. You need a job to tie down a good mate.
The question I don't have an answer to yet, is where are the young going to find work? Butlers and maids?<<<<
Times change....some can't handle that.....I won't go into all the new jobs, but the US, despite the crash, remains the innovator in financial services like recently the bank stress tests (and most financial stuff improved to a degree with Dodd/Frank)......we have done stress tests better than Europe...and they are new which require financial studies.....so, more need for educators, etc, etc.....even housing industry jobs....now banks, etc are better at lending.....etc, etc, etc....and America is still where the rich around the world want to be.....butlers, maids?......yes, but better paid and treated, but also with Obamacare, all kinds of healthcare jobs, doctors, nurses, caregivers for seniors.....plus, robotic stuff to assist/replace some butler/maid/doctor/healthcare stuff....so skilled people to come up with the robotics, etc.....so, more and better teaching jobs.....sure, Jim delete this.....I know you can't handle facts......it's called living in a bubble....thanks for letting me understand the bubble better.
Hi Joseph
Dearieme is from Great Britain. I was asking a question on how the youth was handling unemployment in that country. I know three young people personally that have left the country for better job opportunity's elsewhere.
Your answer to my question to Dearieme doesn't enlighten me on how things are going on in Europe.
Your last comment was deleted, only because it was a shotgun blast that left little room to comment to the original article that I wrote. The comments section is a place to compare notes, and find out what is happening elsewhere.
Then to add insult to injury, you make the flaming statement ".....sure, Jim delete this.....I know you can't handle facts......it's called living in a bubble . . ." --Thats not very nice. You are a guest here, and I demand better behavior. You can make comments, but if you think I am way out of line, you are reading the wrong blog.
Not to be mean, you might want to redo your picture icon. Take a picture from about 5 feet away. You might seem more human and less goldfish-ish
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