Druckenmiller Blasts Obama: "Show Me When You Initiated Budget Discussions Without A Gun At Your Head"

One of the great ironies of the Obama presidency is that it has been a disaster for the young people who form the core of his political coalition. High unemployment is paired with exploding debt that they will have to finance whenever they eventually find jobs, and as Stan Druckenmiller explains in his WSJ interview, the “rat through the python theory,” (that fiscal disaster will only be temporary while the baby-boom generation moves through the benefit pipeline and then entitlement costs will become bearable) is simply wrong; since, by then Druck exclaims, “you have so much debt on the books that it’s too late.” Unfortunately for taxpayers, “the debt accumulates while the rat’s going through the python.” The hedge fund billionaire adds that he “did not think it would be nutty to tie entitlements to the debt ceiling because there’s a massive long-term problem. And this president, despite what he says, has shown time and time again that he needs a gun at his head to negotiate in good faith.” The interview goes much, much further…

On The Thieving Generation…

While many seniors believe they are simply drawing out the “savings” they were forced to deposit into Social Security and Medicare, they are actually drawing out much more, especially relative to later generations. That’s because politicians have voted to award the seniors ever more generous benefits. As a result, while today’s 65-year-olds will receive on average net lifetime benefits of $327,400, children born now will suffer net lifetime losses of $420,600 as they struggle to pay the bills of aging Americans.

 

“Oh, so you’ve paid 18.5% for your 40 years and now you want the next generation of workers to pay 30% to finance your largess?” He added that if 18.5% was “so immoral, why don’t you give back some of your ill-gotten gains of the last 40 years?

But the “kids” still don’t get it…

One of the great ironies of the Obama presidency is that it has been a disaster for the young people who form the core of his political coalition. High unemployment is paired with exploding debt that they will have to finance whenever they eventually find jobs.

 

Are the kids finally figuring out that the Obama economy is a lousy deal for them? “No, I don’t sense that,”

On Entitlements…

…for those on the left who say entitlements can be fixed with an eventual increase in payroll taxes. “Oh, I see,” he says. “So I get to pay a 12% payroll tax now until I’m 65 and then I don’t pay. But the next generation—instead of me paying 15% or having my benefits slightly reduced—they’re going to pay 17% in 2033. That’s why we’re waiting—so we can shift even more to the future than to now?”

 

and it’s not going to get any better… despite the left’s claims…

He also rejects the “rat through the python theory,” which holds that the fiscal disaster will only be temporary while the baby-boom generation moves through the benefit pipeline and then entitlement costs will become bearable. By then, he says, “you have so much debt on the books that it’s too late.”

 

Unfortunately for taxpayers, “the debt accumulates while the rat’s going through the python,” so by the 2040s the debt itself and its gargantuan interest payments become bigger problems than entitlements.

On a disingenuous President Obama…

I did not think it would be nutty to tie entitlements to the debt ceiling because there’s a massive long-term problem. And this president, despite what he says, has shown time and time again that he needs a gun at his head to negotiate in good faith. All this talk about, ‘I won’t negotiate with a gun at my head.’ OK, you’ve been president for five years.”

 

His voice rising now, Mr. Druckenmiller pounds his fist on the conference table. “Show me, President Obama, when the period was when you initiated budget discussions without a gun at your head.”

On changing the tax code…

Druckenmiller wants to raise taxes now on capital gains and dividends, bringing both up to ordinary income rates. He says the current tax code represents “another intergenerational transfer, because 60-year-olds are worth five times what 30-year-olds are.”

 

And 65-year-olds are “much wealthier than the working-age population. So the guy who’s out there working—the plumber, the stockbroker, whatever he is—he’s paying the 40% rate and the coupon clippers who are not working anymore are paying a 20% rate.”

 

Ah, but what about the destructive double taxation on corporate income? The Druckenmiller plan is to raise tax rates on investors while at the same time cutting the corporate tax rate to zero.

 

“Who owns corporations? Shareholders. But who makes the decisions at corporations? The guys running the companies. So if you tax the shareholder at ordinary income [rates] but you tax the economic actors at zero,” he explains, “you get the actual economic actors incented to hire people, to do capital spending. It’s not the coupon clippers that are making those decisions. It’s the people at the operating level.”

 

As an added bonus, wiping out the corporate tax eliminates myriad opportunities for crony capitalism and corporate welfare. “How do the lobbying groups and the special interests work in Washington? Through the tax code. There’s no more building plants in Puerto Rico or Ireland and double-leasebacks and all this stuff. If you take corporate tax rates to zero, that’s gone. But in terms of the fairness argument, you are taxing the shareholder. So you eliminate double taxation. To me it could be very, very good for growth, which is a huge part of the solution to the debt problem long-term. You can’t do it without growth.”

What the Republicans should do…

Republicans should demand entitlement reform in exchange for the next debt-limit vote this winter or spring. “Maybe they need a break,” he says. “I think a much more effective strategy would be for them to publicly shine a light on something so obvious as means-testing and take their case to the American people rather than go through the actual debt limit.”

 

If Mr. Obama rejects the idea, “then we will really know where he is on entitlement reform.” For this reason, Mr. Druckenmiller views means-testing as “really the perfect start—and it should only be a start—to find out who’s telling the truth here and who’s not.”

Read mor
e at WSJ…


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/BdmVMQujivo/story01.htm Tyler Durden

Caxton: Goodbye To The Self-Sustaining Recovery

It’s clear to us now that the US economy just isn’t going to reach escape velocity,” said Andrew Law, head of Caxton Associates (one of the hedge fund industry’s most successful money managers) in a wide-ranging and rare interview with the Financial Times. “Tapering is off the table for the foreseeable future.” As we have explained numerous times, Caxton notes the Fed has little option but to continue its policy of extraordinary monetary easing indefinitely, adding “what happened [last week] was just another can kicking exercise. The problem has not been solved and the hopes for a grand bargain are in tatters.” Simply put, he concludes rather dismally, “there are no incentives for the corporate world to go out and spend right now…

Via The FT,

One of the hedge fund industry’s most successful money managers has warned that dysfunction in Washington has damaged the US economy, leaving the Federal Reserve with little option but to continue its policy of extraordinary monetary easing indefinitely.

 

“It’s clear to us now that the US economy just isn’t going to reach escape velocity,” said Andrew Law, head of Caxton Associates, in a wide-ranging and rare interview with the Financial Times. “Tapering is off the table for the foreseeable future.”

 

 

Mr Law’s stark outlook for the US contrasts with widely-held expectations that the US economy will bounce back quickly in the coming months. Most investors and Wall Street analysts expect the Fed to begin “tapering” its programme of quantitative easing in December.

 

 

The 47-year old Mr Law said the shutdown and debt-ceiling debate in Washington had “undoubtedly” caused damage to the country’s economy.

 

“What happened [last week] was just another can kicking exercise,” he said of the political deal reached between Democrats and Republicans in Washington to raise the cap on the government’s ability to borrow. “The problem has not been solved and the hopes for a grand bargain are in tatters . . . the lack of visibility is very damaging.”

 

 

“We just don’t see how the economy is going to accelerate in the foreseeable future,” he said.

 

“Sequester spending cuts, the debt ceiling and shutdown have all taken their toll . . .  there are no incentives for the corporate world to go out and spend right now . . . that, and the housing market are critical. You’ve already seen earnings release statements for companies mentioning shutdown as a reason for a drop-off in orders.”

 

The grim outlook, while contrarian, is shared by a number of hedge funds.

 

 

Caxton also believes the dollar will continue to weaken against the euro – potentially precipitating a currency fight with the eurozone.

 

“It will be fascinating to see how the ECB [European Central Bank] responds,” said Mr Law, adding that one likely option for Frankfurt would be for it to lower rates. “They are not going to be too pleased [with a weakening dollar],”


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/IMf2DI9PhjU/story01.htm Tyler Durden

Pumpkin Festival & Trick-or-Treating in downtown Fayetteville Saturday

Fayetteville Main Street is hosting a variety of Halloween season events on Saturday, Oct. 26 in downtown Fayetteville.

Starting at the Gazebo at 10 a.m., residents can shop at an extended Market Day that runs until 5 pm. With nearly 100 vendors, it will be easy to find something to purchase and get a head start on holiday shopping.

read more

via The Citizen http://www.thecitizen.com/articles/10-20-2013/pumpkin-festival-trick-or-treating-downtown-fayetteville-saturday

Pumpkin Festival & Trick-or-Treating in downtown Fayetteville Saturday

Fayetteville Main Street is hosting a variety of Halloween season events on Saturday, Oct. 26 in downtown Fayetteville.

Starting at the Gazebo at 10 a.m., residents can shop at an extended Market Day that runs until 5 pm. With nearly 100 vendors, it will be easy to find something to purchase and get a head start on holiday shopping.

read more

via The Citizen http://www.thecitizen.com/articles/10-20-2013/pumpkin-festival-trick-or-treating-downtown-fayetteville-saturday

Larry Summers Explains How He Would Fix The Economy (In 80 Seconds)

A physically deflated Larry Summers spoke with Charlie Rose about the US economy (“all we need is a few tenths of a percentage more growth…“), the political process (“nobody should be proud of the governance process…”), and the state of American education (“reward merit, remove tenure…”). The following 86 seconds summarizes the twice-denied would-be-central banker’s thoughts…

 

 


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/NoasbwWPXCs/story01.htm Tyler Durden

Film & Digital Media Industry Open House moves to Sandy Creek H.S. this Sat.

A parking shortage at Fayetteville’s Lafayette Education Center has forced the Clayton State University Division of Continuing Education to move its upcoming Film and Digital Media Industry Open House to Sandy Creek High School, 360 Jenkins Rd., Tyrone.

The Open House will still be held at 10 a.m. on Saturday, Oct. 26. The exact location at Sandy Creek High School will be in the school auditorium, which is located inside the main front entrance.

read more

via The Citizen http://www.thecitizen.com/articles/10-20-2013/film-digital-media-industry-open-house-moves-sandy-creek-hs-sat

Film & Digital Media Industry Open House moves to Sandy Creek H.S. this Sat.

A parking shortage at Fayetteville’s Lafayette Education Center has forced the Clayton State University Division of Continuing Education to move its upcoming Film and Digital Media Industry Open House to Sandy Creek High School, 360 Jenkins Rd., Tyrone.

The Open House will still be held at 10 a.m. on Saturday, Oct. 26. The exact location at Sandy Creek High School will be in the school auditorium, which is located inside the main front entrance.

read more

via The Citizen http://www.thecitizen.com/articles/10-20-2013/film-digital-media-industry-open-house-moves-sandy-creek-hs-sat

Early voting starts in PTC, Tyrone

Early and absentee voting for the elections in Peachtree City and Tyrone starts Monday at each municipality’s respective library.

Registered voters will be able to cast ballots Monday through Friday from 8 a.m. to 5 p.m. at both library facilities through Friday, Nov. 1. Those seeking a larger window of time can wait until election day itself on Nov. 5 when their individual precinct will be open from 7 a.m. to 7 p.m.

read more

via The Citizen http://www.thecitizen.com/articles/10-20-2013/early-voting-starts-ptc-tyrone