The following article by David Haggith was published on The Great Recession Blog:

The big announcement of the really, really big Trump Tax Plan with the “biggest tax cuts in history” came out bigly on Wednesday, as Trump promised. Treasury Secretary Steven Mnuchin and National Economic Council Director Gary Cohn, Trump’s latest tax team, beamed proudly as they presented their baby. The stock market took a deep breath, then  looked at their brainchild and completely petered out.

First, let me say, I clearly have nothing to recant from my earlier predictions about Trump’s tax plan. The plan that came out looks almost exactly as I thought it would — the only difference being that it is far more pathetic.

Some news organizations, getting a little ahead of themselves, talked about the US stock market taking off because of the Trump tax plan when the market first got wind that the plan had been released and heard some of the key points:

 

Once again, investors appear to be placing the bet that Good Donald Trump will be great for the market and that Bad Trump won’t be all that horrible. That was on display on Tuesday. The Dow Jones Industrial Average soared more than 230 points after it was reported that the White House’s tax plan, whose broad outlines will be announced on Wednesday, will propose cutting corporate tax rates to 15 percent, a Trump campaign pledge that many thought the president was backing away from. (Newsmax)

 

Ah, but that was this afternoon, and now it is the evening after the market plunged as steeply as it soared (and twice as far) to finish the day with the Dow slightly down from its pre-tax open — a sign of a mercurial market that was, for an instant pleased, until it started to feel a little indigestion from consuming its dinner too quickly. At that point, it barfed up all its gains for the day and went to bed sour.

What the White House billed in its release as “the biggest tax cut in history” rapidly turned into digestive gas. As I speculated earlier in the day, no real plan was released. Just gas. Once again the Trumpet blew his horn loudly (probably from his back side) as he released the big plan, and then his team turned out a summary statement, devoid of any details or calculations.

 

Here is my own summary of the Greatly Trumped-up Tax Plan:

 

• The plan will eliminate estate taxes, which only the wealthiest Americans now play, helping Trump and family considerably in the future, but most of you not one iota. (This is a cut 100% for the rich, but it makes things equitable.)
• The White House compensates for this by saying some other tax breaks that help the rich will be eliminated so that the plan would largely help the middle class; only, as usual, it doesn’t specify what those “other” current tax breaks are that will be eliminated. (So, read that as, “Just trust us on this one.”)
• The new, new New Trump Tax Plan contains no math to show how much of a deficit the new plan will create, but co-creator Cohn offers assurances that the tax cuts “will pay for themselves” through economic growth and that the president knows we have to “be good stewards.” (“Just trust us on that one.”)
• The plan comes with Cohn’s personal assurance that the president “will get this done for the American people.” (I feel better knowing that assurance is still being offered as it was in past months. I do note, though, that missing their stated and revised schedules during those months now leaves them simply assuring us it will still get down, but without anymore undoable deadlines.)
• Corporate taxes will fall from 36.9% to 15%. (That will include closely held businesses and limited partnerships, like legal firms, construction companies in the oil industry, and … real-estate companies, where business income largely passes through to the owners (sometimes the family) so the business does not pay the tax but the owner does when the money passes through. (In other words, the bulk of Trump’s income tax — and his children’s — will drop from 35% to 15%, except that the plan comes with a footnote that this will be done in such a way as to insure that wealthy Americans do not exploit the change. So, we’re good!)
• The plan reduces the number of tax brackets to three simple levels (10, 25, and 35 percent), and states the tax rate of each bracket. (Unfortunately, it omits stating what income levels will apply to each bracket.)
• The plan comes with a note that details will be hashed out with the House of Representatives and the Senate in coming weeks. (Maybe months? Like the Obamacare repeal details got hashed out … of existence?)
• “We know this is difficult,” Cohn said. “We know what we’re asking for is a big bite.” (That’s a plus because with Obamacare, “who could have thought it would be this difficult?” At least, now they’ve learned it is difficult. They have learned something on the job, so we can feel good about having a smarter team.)
• It does help some of the middle-class by doubling the standard deduction for married couples, and it maintains the allowance for charitable deductions, and it says it will allow tax relief for childcare expenses (though, again, without any details).
• The plan promises to alienate anyone who lives in a state with high state income taxby making state income tax no longer deductible. (No help if you’re not in such a state, and a bite in the butt if you are; but the plan softens this news by noting that this effects higher income people the most — well, yeah, the ones unlike Romney and Trump who have been known to pay no state income tax.)
• The plan simplifies tax code (albeit it doesn’t tell us how, just that it WILL). This will presumably happens when congress actually sits down to create the plan with laws under Trump’s instruction that the laws be more simple. (Trust us on that one, even though everything we’ve simplified so far has been ruled unconstitutional in a court of law or died in debate.)
• Repatriated corporate profits will get a one-time major tax reduction, but all profits made overseas after that will be completely tax free for years to come! (That’s a glory-hallelujah! Well, except for the detail that the tax rate for repatriation is omitted. But, hey, at least they’re thinking about it! And they’re gonna do something! Those cuts will be the “biggest in history!” We just don’t get to know how big until they figure that out. Details.)
• One thing that is NOT mentioned in the Trumped-up Tax Plan is capital gains tax. If the lack of mention means there will no longer be a special capital-gains tax rate, the elimination of that gift, which goes largely to rich stock and real-estate speculators who can pay to play in that realm, is something I will like. (But the plan doesn’t say one way or another, and you can be sure Republicans will insist on putting that objectionable trickle-down part in as details are “hashed out.”)

 

Fine print: “details to be determined.”

 

Wouldn’t you know it? The one part where the devil always rests is still cloaked under a sheet to be revealed at some vague later date.

Written on all of one side of one page, the newly Trumped-up Tax Plan looks like a scheme worked out by a couple of guys in a paneled club room, smoking cigars over whisky on the rocks and deciding what sounds “great.” That’s clearly why the US stock market plunged once the cigar smoke cleared so investors could actually see the Trumped-up Tax Plan … and the napkin it was written on. How pathetic is that plan when it gives the “biggest tax cuts in history” all aimed at pumping up the stock market, and all its coming-out accomplishes is to cause the stock market to slump in disappointment? Talk about an anti-climax.

I think Trump announced, “We’re going to present our tax plan on Wednesday,” and his two tax boys said, “Yikes, we better get the plan laid out. Let’s meet tonight after work for drinks and draw something up, and then we’ll give it one of our secretaries to make it look nice.”

Where we got Trumped on this plan was in thinking a plan might actually be coming out today!

Hah! Silly us! It’s more of a promissory note, really. I’ve seen footnotes larger than this plan. What we got today was, again, nothing more than just talk! Talk about what Team Trump WILL do … whenever it is that it finally does it. They’ve managed to finish a one-page outline. I think the market rose when it heard general statements about the plan, then plunged all the way to closing when it saw that it was written with lots of white space and NO detail on one page. What the market first thought were summary statements introducing the plan, actually are the plan. Great work for your first hundred days, Boys!

Read my last article, “You Got Trumped! Trump tax plan taxing for the maestro of negotiation?” and you’ll see I sure called this one. If there is anything that has gotten to be predictable about Trump, it’s that he’s all talk all the time. He’s appropriately named after his loud and brassy mouth. Now, if he can just get his band of merry boys to orchestrate a tune. Trump promised the plan would be beautiful, and it is that; it’s written on a lovely piece of paper — very high quality like the menu at Mar-A-Lago — in an attractive font. It’s a thing of beauty. You should see it. Really, you should see it. I think it even has a picture of chocolate cake on it!

 

Here is the actual plan if you want to read something truly pathetic after months of waiting:

 

It’s so full of vague platitudes or catch phrases that it’s practically a tax cliché.

 

Goals for Tax Reform

? Grow the economy and create millions of jobs

? Simplify our burdensome tax code

? Provide tax relief to American families—especially middle-income families

? Lower the business tax rate from one of the highest in the world to one of the lowest

Individual Reform

? Tax relief for American families, especially middle-income families:

• Reducing the 7 tax brackets to 3 tax brackets of 10%, 25% and 35%

• Doubling the standard deduction

• Providing tax relief for families with child and dependent care expenses

? Simplification:

• Eliminate targeted tax breaks that mainly benefit the wealthiest taxpayers

• Protect the home ownership and charitable gift tax deductions

• Repeal the Alternative Minimum Tax

• Repeal the death tax

? Repeal the 3.8% Obamacare tax that hits small businesses and investment income

Business Reform

? 15% business tax rate

? Territorial tax system to level the playing field for American companies

? One-time tax on trillions of dollars held overseas

? Eliminate tax breaks for special interests

Process

Throughout the month of May, the Trump Administration will hold listening sessions with stakeholders to receive their input and will continue working with the House and Senate to develop the details of a plan that provides massive tax relief, creates jobs, and makes America more competitive—and can pass both chambers.”

 

 

Trumped you!

 

In other words, it is a plan to start creating a plan!

And you thought I was just joking about how vague and utterly deplete of details this so-called plan is! After six months of poring over the details and laboring late into the nights, this fourth rendition of Trump’s plan is not that different from what he presented during the campaign, and it’s equal in depth of thought and detail to the kind of outline you come up with after a day of brainstorming and sorting out the the most-liked ideas.

Now that Team Trump has done all the heavy lifting, it falls to congress to turn this masterplan into months of argument and volumes of law.

I knew it was going to be pathetic; I didn’t know it was going to be deplorable.

via http://ift.tt/2pkqX3S Knave Dave

Authored by Paul Craig Roberts,

When the gullible and insouciant American public and the presstitutes who participate in the deceptions permitted the Deep State to get away with the fairy tale that a few Saudi Arabians under the direction of Osama bin Laden, but without the support of any government or intelligence agency, were able to outwit the entirety of the Western Alliance and Israel’s Mossad and deliver the greatest humiliation in history to “the world’s only superpower” by making the entirety of the US government dysfunctional on September 11, 2001, Washington learned that it could get away with anything, any illegal and treasonous act, any lie. The gullible Western populations would believe anything that they were told.

Not only insouciant Americans, but much of the world accepts any statement out of Washington as the truth despite the evidence. If Washington said it, Washington’s vassals in Germany, France, UK, Canada, Australia, New Zealand, Netherlands, Belgium, and Japan assent to the obvious lie as if it were the obvious truth. So do the CIA purchased media of these vassal states, a collection of whores who prefer CIA subsidies to truth.

When Obama inherited the Deep State’s agenda from George W. Bush, he set up Syria’s Assad for regime change by repeating for many months that if Assad used chemical weapons in the “civil war” that Washington had sent ISIS to conduct, Assad would have crossed the “Red Line” that Obama had drawn and would, as the consequence, face an invasion by the US military, just as Iraq had been invaded based on Washington’s lie about “weapons of mass destruction.”

Having burnt this idea into the feeble minds of the Western populations, Obama then arranged for a chemical weapon to be exploded in Syria and blamed it on Assad. Thus, the Red Line had been crossed, the insouciant West was told, and America would now invade.

The UK prime minister, the usual piece of Washington-owned garbage, rushed to the support of the American invasion, promising British support. But the British Parliament voted NO. The MPs said that the UK was not going to support another American war crime justified by obvious lies. Only in Britain does democracy still have any teeth, as we saw a second time with the Brexit vote. All the rest of the West lives in vassalage and slavery.

The Russian government also took a firm stand, admitting that Russia stupidly trusted America in Libya, but no more. We, said the Russians, will ourselves remove any and all chemical weapons from Syria and turn them over to Western “civilization” to be destroyed, which the Russians did.

What did Western “civilization” do with the weapons? They gave some of them to ISIS. This gave Washington a second chance to accuse Assad of using chemical weapons “against his own people.”

And so Washington has rolled out this hoax a second time. During a Syrian air force attack on an ISIS position, a chemical weapon exploded, or so it is alleged. Instantly Washington said that Assad had used “Sarin gas against his own people.” Trump was shown photos of dead babies and stupidly ordered a US military strike against Syria.

This was the first time that Washington had engaged in an unambigious war crime without any cover. Trump had no UN resolution, not even one that could be stood on its head as in Libya. Trump had no NATO participation, no George W. Bush “coalition of the willing” to give cover to the war crime with the support of other governments.

There are no skirts for Trump to hide behind. He stupidly let himself be pushed into commiting an unambigious war crime.

Now all his opponents—the Deep State, the military/security complex, the CIA, the Hillary Democrats, the warmonger Republicans—have the New White House Fool under their control. If Trump doesn’t do as they want, they will impeach him for his war crime.

Meanwhile the risk of war with the Russian/Chinese/Iranian/Syrian alliance grows closer. The US shows every intention of provoking this war. Washington has imposed sanctions on 271 employees of Syria’s Scientific Studies and Research Center for, in Washington’s lying words, responsibility “for developing and producing non-conventional weapons and the means to deliver them.”

In order to make this false charge stick, Washington prevented any investigation whatsoever into the facts of the alleged chemical weapon associated by Western propaganda, not by any known fact, with a Syrian air attack on ISIS. If Washington is so certain that Syria is responsible, why does Washington block an investigation? If Washington is right, an investigation would prove Washington’s case. But as Washington is again lying through its teeth, an investigation would prove the contrary. And that is what Washington fears and is the reason Washington blocked an investigation.

Why do Western peoples believe the US government, a well proven liar, who blocks an investigation and asserts that everyone must believe Washington or else be put on a list of Russian agents?

Here is the lie, the raw propaganda, that the US government has no qualms about issuing: http://ift.tt/2ooCj9P It comes from the US Department of the Treasury in which I once served honorably. But honor no longer exists in the US Treasury.

Are Western populations intelligent enough to understand that the only reason for Washington to block an investigation of the alleged use by Syria of a chemical weapon is that the facts clearly do not support Washington’s lie? No, they are not.

Theodore Postol, a scientist at MIT, has concluded from his investigation that the chemical weapon was not dropped from the air but was set off on the ground and that it was not Sarin gas as Sarin lingers and the alleged aid workers who were immediately on the scene were unprotected by gloves or masks or by anything. If the gas were Sarin, they would be dead also.

The Russian explanation is that the Syrian air force attack hit a storage facility, conveniently arranged by Washington, that contained chemical weapons. I have seen reports that Washington, or Washington’s vassals such as Saudi Arabia, have provided ISIS with chemical weapons. President Putin of Russia says the reason Washington has delivered chemical weapons to ISIS is that there can be more orchestrated instances of their use that can be blamed on Assad.

I think I can say in complete confidence that this is what is happening: Washington intends to wear Russia down with orchestrated chemical attack after chemical attack, portraying Russia as an inhuman defender of Assad’s alleged chemical attacks, in order to more thoroughly isolate Russia and in order to provoke opposition to Putin’s government, especially among the US and German financed NGOs that Russia stupidly permits to operate in Russia and in the Russian media. Washington’s goal is to force by the weight of world opinion Putin to abandon Assad to Washington.

US Secretary of State Tillerson, another gigantic disappointment to those who hoped for peaceful relations between the US and Russia/China/Iran/Syria, has said that the US still intends regime change in Syria. Tillerson has advised Russia to get out of Washington’s way and to “consider carefully their support for Bashar al-Assad.”

Russia cannot abandon Assad, because if Syria falls to Washington, Iran will be next, and then the Washington-financed jihadists will be set upon the Muslim populations of the Russian Federation and China.

This is Washington’s game plan. I am certain Putin is aware of it, and I think the Chinese are, despite their inordinate focus on making money.

The questions before us could not be any clearer: Will Russia and China break and give in to Washington? If not, will Washington become a good world citizen for the first time in America’s history, or will Washington issue more threats, thereby convincing Russia and China that their alternative is to wait for Washington’s preemptive nuclear strike or deliver one themselves?

This is the only question that the world faces that is worth our attention. I spent a quarter century in Washington. The evil that is in control there at the present time is unprecedented. I have never seen anything like it.

Can the world survive the evil that is concentrated in Washington, evil that has the support of the governments of the Western world?

via http://ift.tt/2pnHKVJ Tyler Durden

In what is believed, but has not been confirmed, to be an Israeli air strike, moments ago the area around the Damascus International Airport in Syria was rocked by at least one massive explosion.

Explosion around #Damascus airport now http://pic.twitter.com/ZNsZs0BY3L

— Armies And Weapons (@ArmiesWeapons) April 27, 2017

Video showing the explosion in #syria #Damscus international airport http://pic.twitter.com/Y4R22MyT3Q

— Armies And Weapons (@ArmiesWeapons) April 27, 2017

#BREAKING: Huge explosion reported near Damascus International Airport in Syria http://pic.twitter.com/FrND1p1WFd

— People’s Daily,China (@PDChina) April 27, 2017

#Syria #Damascus Bunch of #Syrian Activist Saying a Huge Explosion from the countryside Shaked #Damascus. & No Info on what it was yet

— Ivan Sidorenko (@IvanSidorenko1) April 27, 2017

#Syria #Damascus A #Syrian Reporter is now Saying the Sound of HUGE EXPLOSION came from Vicinity of Damascus International Airport. http://pic.twitter.com/K9iLZcmful

— Ivan Sidorenko (@IvanSidorenko1) April 27, 2017

If confirmed, it would be the second Israeli attack on Syria in the past week: on Sunday, Israeli forces bombed a camp for pro-government forces killed three fighters near the Golan Heights on Sunday according to AFP. Two fighters were also wounded in the attack on the Al-Fawwar camp near Quneitra in southwestern Syria, adding that it was unclear whether the damage was inflicted by an air strike or shelling.

Israel’s army declined to comment Sunday on the attack. On Friday the army said it targeted positions inside Syria in retaliation for mortar fire that hit the northern part of the Golan Heights.

Syria’s official news agency SANA said Israel had struck a Syrian army position in the province of Quneitra on the Golan plateau, “causing damage”. The Syrian government labels rebel groups and jihadists fighting the regime as “terrorists” and accuses Israel of backing them.

One thing is certain: the party behind today’s attack on Syria was not the US – otherwise CNN would be blasting it in real time – although with Russia having withdrawn half of its warplanes and with the Syrian army eager to avoid further airborne confronations, it is easy to imagine why the IDF can now enter the sovereign territory unopposed and without fear of reprisals.

via http://ift.tt/2oKTiys Tyler Durden

With the ECB set to announce its latest monetary policy decision in less than 12 hours, one can summarize in one word what the market expects: nothing. Sure, there are some nuances – the central bank may wax philosophical about Europe’s better growth prospects, and maybe even set the stage for a small signal as early as June about an eventual reduction of stimulus, but don’t count on it. After all, there is a reason – or rather two – why markets are where they are today, and it has to do with central banks creating a record $1 trillion in new money out of thin air. The ECB has been responsible for half and Mario Draghi knows it.

Which is why the former Goldmanite will to point to still-weak inflation, muted wage growth and an uncertain outlook to argue that easing off the accelerator now could unravel years of work that have consumed much of the ECB’s firepower, a Reuters poll showed. That won’t stop him however from acknowledging the euro zone’s “solid growth momentum”, surging consumer and business confidence, and receding political risk after the first round of France’s presidential vote put a pro-euro centrist in pole position. After all, Jean-Claude Trichet dud just that in 2011 when he, too, mistook a burst of exported Chinese inflation for “recovery.” We all know what happened after: first he hiked by 25 bps, and a few months later the Fed had to bail out Europe with unlimited swap lines.

In any case, for those who need a more erudite assessment of why Draghi will say nothing at all of consequences tomorrow, here is BofA’s Gilles Moec who says that “we do not expect hard decisions or communication changes from the ECB this week” howver “policy debate may get fierce from June.” What happens then: “we expect very slow QE tapering in 2018 and no policy rate hike before well into next
year, if at all.” As for the market, rates traders will focus on any mention of bond scarcity and exit sequencing.

From Moec’s full note “No Need to Rush”:

No need to rock the boat yet

Given the recent focus on political developments, we think it is easy to forget the ECB’s Governing Council is due to meet on Thursday. Our sentiment is that there is a consensus at the Governing Council to leave the current stance and communication largely unchanged for now, even if we think this consensus does not extend on which decisions to make, when the time comes. This means that while we do not expect any hard decision or any significant communication surprise this week, we also believe the policy conversation could be quite fierce from June.

We continue to think that in the face of a still subdued inflation outlook, prudence will prevail and the ECB will opt for small changes to forward guidance in June, slow tapering in 2018 and no policy rate hike before well into next year. Still, the hawks – and some centrists – at the ECB appear to be tired of extraordinary measures, meaning the market could price a more aggressive stance in the second half of this year.

Peace in our (short) time

In our opinion, most Governing Council members in March were not expecting their tiny move on forward guidance to trigger such an impressive market reaction. After engaging in concerted damage mitigation in the two weeks before the Easter break, we think they will be looking for some peace and quiet at the April meeting. We note in particular that even some hawkish hardliners, such as Governing Council Hansson, have recently stated that the ECB is “looking at the data,” which suggests that even this block of the Council is not after an immediate policy discussion. At the same time, Board member Coeure was keen to say the ECB was “very, very serious about forward guidance,” which did not sound like having another go at this essential part of their communication was on their wish list.

We think there are several reasons behind this truce.

• First, the data provides fodder for hawks, who will focus on strong surveys pointing to swift output gap reduction, and doves, who continue to worry about weak core inflation and hard data, which do not fully live up to the surveys’ promise.
• Second, the March episode, with the market hastily pricing depo rate hikes, will remind Council members that moving market expectations is more art than science, with significant risks of overreaction.
• Third, the political context–the ECB meets between the two rounds of the French presidential elections– goes against making big moves.

Fire beneath the ice

Still, the debate is going on underground. We think Benoit Coeure – who in his role of “market man” at the board is probably quite sensitive to the need to provide investors with sufficient visibility – is trying to gently move the communication toward a very slow “Exit strategy”. This week he stated that the balance of risks to growth is now neutral: the council statement kept it “tilted to the downside” last month. He has been very candid on the direction of travel for the ECB since December, e.g., in his speech at the end of last year about the need for governments to prepare for higher interest rates, so he is probably keen to prepare the market for a gradual removal of QE.

Peter Praet–the chief economist, i.e., more focused on macro developments–for his part continues to insist on the weakness in inflation and last week stuck to the negative balance of risks.

More profoundly–those are limited divergences we think–hawks are probably still ready to argue for a swift decommissioning of the ECB’s unconventional arsenal as soon as the political situation allows it.

Baseline and risks

In our baseline, the statement does not change this week. In June, the assessment of the balance of risks would move to neutral, while the most dovish part of the forward guidance–the notion that rates could fall further–would be removed (a cheap bone to throw to the hawks, in our opinion).

Then in September the Council would start preparing the market to slow tapering in 2018 (eg, going first at EUR40bn for six months before gradually moving to zero by the end of 2018) while the forward guidance on rates would be more thoroughly changed; dropping the notion that there would be a long delay before the end of QE and the first hikes, while opening the door to some “technical tweaks” to the depo rate, which would not materialize before well into next year. In our baseline, the ECB would still be a net purchaser of securities at the end of 2018 (to be clear, would stop by December 2018).

It seems to us the market tends to focus on a hawkish alternative to this, with fast tapering and quicker rates. We agree that is what the noises from the hawks and centrists suggest. But we also continue to believe core inflation will disappoint the ECB. That is what motivates our belief in a very, very slow and considered exit.

via http://ift.tt/2pjSBhp Tyler Durden

All the money and all the assets in the world, shown in physical cash form, in one graphic.

(click image for huge legible version)

Source: Demonocracy

The Liquidity Pyramid was created for visualizing the organization of asset classes in terms of risk and size. As Demonocracy explains, the Liquidity Pyramid was created during the time in United States, when each dollar was backed by Gold. Gold forms the small base of most reliable value, and asset classes on progressively higher levels are more risky. The larger size of asset classes at higher levels is representative of the higher total worldwide notional value of those assets. While Exter's original pyramid placed Third World debt at the top, today derivatives hold this dubious honor.

As financial risk increases, money tends to move from the more risky assets (Derivatives), to the least risky assets (to physical cash and then gold). Nothing is without risk, but risk is relative.  The issue is that there is very little physical cash and even less Gold compared to the more risky assets, this makes for a crowded trade in times of high risk when everyone wants to jump into cash and gold, pushing up the price.

The little yellow rectangle on the left front is all the gold in the world in physical form.

Source: Demonocracy

All the gold in the world is NOT all in "financial investment grade" form. World Trade Center, Empire State & bunch of too-big-to-fail Bank HQ buildings are in the background to help illustrate the size. You are eye-level to the WTC top floors. The $1 Quadrillion Derivatives cash wall fades into the distance, because $1 Quadrillion is an estimation by the best analysts and truth is no one really knows the true size of the Derivatives Market.

via http://ift.tt/2qgMjhR Tyler Durden

While today’s “tremendously” vague one-page summary of Trump’s tax plan had barely any detail – it did not even include the income ranges for the three personal income tax brackets – it did contain enough information for the CRFB to be able to score it, and calculate how much it would cost, or in other words assuming little or no offsetting revenues, this is how much additional debt it would add to the existing upward trajectory in US national debt.

While it is in a way amusing that after 8 years and $10 trilion in debt accumulated under the Obama administration, US sovereign debt suddenly matters, we admit that the CRFB’s findings are troubling. This is how the CRFB phrased it: “the White House released principles and a framework for tax reform today. We applaud the President’s focus on tax reform, but the plan includes far more detail on how the Administration would cut taxes than on how they would pay for those cuts. Based on what we know so far, the plan could cost $3 to $7 trillion over a decade– our base-case estimate is $5.5 trillion in revenue loss over a decade. Without adequate offsets, tax reform could drive up the federal debt, harming economic growth instead of boosting it.“

The framework proposes a number of specific changes including: consolidating and reducing individual income tax rates to 10, 25, and 35 percent; doubling the standard deduction; cutting the business tax rate to 15 percent on both corporations and pass-through businesses; repealing the Alternative Minimum Tax (AMT) and estate tax; repealing the 3.8 percent investment surtax from the Affordable Care Act (“Obamacare”); moving to a territorial tax system; and imposing a one-time tax on money held overseas.

 

The plan also includes some vaguer proposals, including “providing tax relief for families with child and dependent care expenses” and eliminating “targeted tax breaks that mainly benefit the wealthiest taxpayers.” Although the framework itself is vague on the latter, at their press conference Secretary of the Treasury Steven Mnuchin and National Economic Director Gary Cohn seemed to imply it meant repealing all individual deductions unrelated to savings, charitable giving, or mortgage interest (revenue would come mostly from repealing the state and local tax deduction).

While the CRFB admits that even with the detailed portions of the plan, there are not enough parameters specified to provide a certain revenue estimate of the tax plan, the agency said that “making some assumptions based on prior proposals, our best rough estimate suggests the specified parts of the plan would cost $5.5 trillion. Assuming tax break limits only apply only to higher earners, that cost could be as high as $7 trillion; assuming credits and exclusions are eliminated as well as deductions, it would cost $3 trillion.“

The conclusion: adding interest costs, a $5.5 trillion tax plan would be enough to increase debt to 111 percent of Gross Domestic Product (compared to 89 percent of GDP in CBO’s baseline) by 2027.

That would be higher than any time in U.S. history, and no achievable amount of economic growth could finance it.

Here we go back to our original cynical observation: suddenly, after years and years and trillions of new debt, the experts – especially those on the left – are suddenly so very concerned about it. That aside, at 77 percent of GDP, debt is currently higher than at any time in history outside of World War II and its aftermath. Even under current law, debt will rise to 89 percent of GDP by 2027. Based on the details of what has been put forward by the Trump Administration so far, debt could rise to 111 percent of GDP by 2027 – a new historical record. In dollar terms under this estimate, debt held by the public would total $31 trillion in 2027 and gross debt would total $36 trillion.

Of course, one look at the chart above – assuming Trump does not come up with offsetting revenue measures, which so far he has not proposed – means that it has a snowball’s chance in hell of passing Congress. As Reuters more politely puts it, “Trump’s proposal may be unpalatable to party fiscal hawks. It lacks plans for raising new revenue and could potentially add billions of dollars to the federal deficit.”

Finally, here are some analysts quoted by Reuters, on the opinion of the proposed plan.

GREG MCBRIDE, CFA, BANKRATE.COM CHIEF FINANCIAL ANALYST, WEST PALM BEACH, FLORIDA:

“In the eyes of financial markets, apparently all the concerns about North Korea, Syria, etc have been vanquished as the euphoria about tax reform has taken over. Wake me when something actually gets signed into law.”

DAVID LEFKOWITZ, SENIOR EQUITY STRATEGIST AT UBS WEALTH MANAGEMENT AMERICAS IN NEW YORK:

“A lot to digest on the tax side and to be honest we don’t have a lot of details at this point aside from just a few bullet points from the press conference. The key question really is what is doable from a budgetary and political perspective in Congress and this is going to be a bit of an uphill fight to get this plan enacted into law. But it is early innings, early days and the White House is going to have to try to convince a lot of people this is the right way to go.”

MICHAEL PURVES, CHIEF GLOBAL STRATEGIST AT WEEDEN & CO, IN NEW YORK:

“There’s no question that lower taxes means higher earnings and stronger balance sheets. From a market perspective its a positive. From an economic perspective for the country its much more complicated.
“There’s a long way to go between now and a done deal. The fact the market has gone nowhere today is telling you something.

JOE MANIMBO, SENIOR MARKET ANALYST AT WESTERN UNION BUSINESS SOLUTIONS IN WASHINGTON DC:

“The lack of specificity with regard to the tax announcement offered little for dollar bulls to get excited about. If anything, it dimmed the spotlight on Europe and it put the focus back on ‘Trumponomics’ that could ultimately benefit the dollar. I think the market still has a bad taste in its mouth for how the healthcare reform went, so there’s a degree of skepticism in how soon we could see tax relief.”

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Authored by Vinay Kaura via The Strategic Culture Foundation,

Jihadist terrorism in India is on the verge of acquiring a global footprint, as radicalization and recruitment have become more sophisticated thanks to social media and the Internet. This marks a clear departure from the past when jihadist terrorism was almost synonymous with the insurgency in Kashmir.

It was often held that ideologically motivated Islamist terror had bypassed mainland India and that even though there had been a separatist insurgency in Jammu and Kashmir state, Muslims in the rest of the country had spurned the radical revivalist movements plaguing other Islamic countries. This is no longer the case, as a growing number of Muslims from mainland India are becoming radicalized.

Last week, in a joint anti-terror operation by the police teams of five states, an allegedly ISIS-inspired terror module spanning Maharashtra, Punjab, Bihar, Andhra Pradesh and Uttar Pradesh was busted with the arrest of three suspected terrorists.

Saifullah, the alleged ISIS-inspired terrorist killed in a shootout with police in the first week of March in Lucknow, had also been tasked with securing arms and training facilities for a new ISIS-linked terror cell in Uttar Pradesh. The National Investigation Agency (NIA) first came to know of Saifullah from Mudabbir Mushtaq Sheikh, a resident of Maharashtra state. Mudabbir is now facing trial for his alleged role as chief of the Jund-ul-Khalifa-ul-Hind, an organization of Indian jihadists inspired by ISIS.

It is feared that India may become a soft target in the global jihadist plan of outfits such as al-Qaeda and ISIS, which are not only instigating violence through sleeper modules, but are also attracting educated Muslim youths through the Internet to spread their agenda. Though ISIS has declared its intention to expand its footprint in the subcontinent, it has not managed to make considerable headway in India. However, it is also an undeniable fact that a few of India’s misguided Muslim youth are being swayed by Wahhabist propaganda.

What has been most surprising is that many of the individuals arrested for involvement in some recent attacks are young men with good educations and prestigious occupations, such as doctors and engineers. These men are often motivated through the Internet or through Pakistan-based terrorist networks.

The majority of the home-grown terrorists are apparently self-radicalized, self-motivated and inspired by the extreme jihadist ideology of ISIS as well as by local grievances. The groups formed to carry out attacks are loose conglomerations, and it is still unclear whether there is an overarching commanding element directing the different cells.

To compound the challenge emanating from Pakistan-based jihadist outfits, there are believed to be many Indian Muslim youths fighting for ISIS in Iraq and Syria. The Indian Intelligence Bureau estimated in 2016 that ISIS’ Indian cell engaged more than 700 people in conversation – and raised more than 20 identified volunteers.

During the past two years, the NIA has arrested several persons accused of forming ISIS modules, whose members use social-media platforms for plotting terrorist attacks. The data suggest that people subscribing to ISIS ideology are present across India, making it increasingly difficult for the law-enforcement agencies to keep track of them.

The Ministry of Home Affairs informed the Rajya Sabha, upper house of the Parliament of India, in March that 75 people had been arrested for suspected links to the ISIS terror network. Of these 75 persons, 21 were from Kerala, 16 from Telangana, nine from Karnataka, eight from Maharashtra, six from Madhya Pradesh, four from Uttarakhand, three  from Uttar Pradesh, two from Rajasthan, four from Tamil Nadu and one each from Jammu and Kashmir and West Bengal.

The NIA has also revealed that it arrested 52 people for allegedly being ISIS terrorists last year, including a few converts from Hinduism and Christianity. While releasing data on the arrests, the NIA gave details of the religious affiliations of the accused: 50 per cent belonged to Ahle Hadith, 30 per cent to Tabligi Jammat, and 20 per cent followed Deobandi ideology.

Indian security agencies need to be worried on three accounts. First is the risk of a “lone actor” attack, similar to some recent terror attacks in European cities, including one in Paris just a few days before the first round of French presidential elections. Second is the presence of distinct terror modules that could be activated at short notice. And third, there is the concern of radicalized youth approaching other terror organizations for logistical support.

Because of these factors, ISIS is seen as posing a serious security threat, as its ideologues are not part of an organized syndicate such as the Indian Mujahedeen, which was relatively easy to crack. ISIS is a different phenomenon, as every module is different and is handled by different operators abroad. As ISIS has been under pressure in Iraq and Syria and many of its members are on the run, a major worry of security agencies is about their return to India.

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Having slapped Canadian softwood with tariffs, and begun investigating steel imports last week, it appears – as Commerce Secretary Wilbur Ross promised – the Trump adminstration has shifte its focus to aluminum imports. Specifically, as AP reports, Washington has begun an investigation into whether aluminum imports are jeaoparding national security.

Commerce Secretary Wilbur Ross says the president will sign a memo ordering him to determine the impact of rising aluminum imports. High-purity aluminum is used in a number of defense applications, including military planes and the armor-plating of military vehicles.

Ross says there is only one American smelter that produces high-purity, aerospace-quality aluminum.

He says, “It’s very, very dangerous, obviously from a national defense point of view, to only have one supplier of an absolutely critical material.”

This is the president’s second such move. He initiated an investigation into steel imports last week.

The investigation could lead to tariffs on aluminum imports.

Ironically, just as with lumber, and steel…

Prices for the commodity have been surging recently (despite a broad-based commodity selloff worldwide).

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As President Trump appears to fold on his funding request for a border wall, though tweet-xclaiming "it will get built and help stop drugs, human trafficking etc.," a top Mexican official on Tuesday said that Mexico may consider charging a fee for Americans entering the country in what could be seen as a retaliation to President Trump's posturing.

Trump has asked congress to include a down payment on the wall in the spending bill but because of scrutiny from both sides, the President announced Monday that he’d be willing to wait until September to revisit the issue of funding; however, his stance on Mexico’s role in paying for the wall hasn’t changed. And as Fox News reports, Foreign Secretary Luis Videgaray, in a meeting with Mexico's top legislators, called Trump's plan an "unfriendly, hostile" act, and called on his colleagues to consider the entry fee.

"We could explore – not necessarily a visa, that could impede a lot of people from coming to Mexico – but we could perhaps (have) a fee associated with entry,” Videgaray said. “This is something that I'm sure will be part of our discussion, and I believe we can find points of agreement."

Videgaray went on to say that Mexico would not pay a cent towards the wall. He said if talks between the U.S. and Mexico fail to satisfy both countries, the Mexican government would consider reducing security cooperation. 

"If the negotiation on other themes — immigration, the border, trade — isn't satisfactory to Mexico's interests, we will have to review our existing cooperation," Videgaray said. "This would be especially in the security areas … and that involves the national immigration agency, the federal police and of course, the armed forces."

So, trade deficits, tax plans, and budget decisions aside, who will really pay for the wall? American tourists via a transfer tax on entry to Mexico? Well Ted Cruz has an even more cunning plan. As RT reports, President Donald Trump’s much vaunted Mexican border wall could be built using the fortune of a notorious drug kingpin, according to Republican Senator Ted Cruz, who has proposed the ‘El Chapo Act’.

Cruz, a one time political rival to Trump, has backed the president’s desire to build a 1,000 mile-long (1600km) barrier between the US and Mexico.

Cruz has now gone a step further by proposing the so-called ‘El Chapo Act’, or the Collection of Hidden Assets to Provide Order, which would use any of the $14 billion being sought by the US government in a case against Mexican drug boss Joaquín Guzmán, to construct the barrier.

The US indictment alleges the 59-year-old, who was previously given a 20-year sentence in his homeland for murder and drug offences, led the violent Sinaloa Cartel and amassed “$14 billion from narcotics sales throughout the United States and Canada.”

“Fourteen billion dollars will go a long way toward building a wall that will keep Americans safe and hinder the illegal flow of drugs, weapons, and individuals across our southern border,” Cruz said in a statement.

 

“Ensuring the safety and security of Texans is one of my top priorities. We must also be mindful of the impact on the federal budget. By leveraging any criminally forfeited assets of El Chapo and his ilk, we can offset the wall’s cost and make meaningful progress toward achieving President Trump’s stated border security objectives.”

Now that is a border wall funding plan we suspect many could get behind.

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Authored by Raul Ilargi Meijer via The Automatic Earth blog,

Something hit me this week. The maps which came out on Monday and detailed the outcome of the French elections, were telling a story, and a familiar one by now. A story of deep division. There are a number of such maps now depicting the Brexit vote in the UK, the US presidential elections, and its French counterpart.

In all three cases they leave me wondering something along the lines of: ‘Are you guys sure you want to remain in the same country with each other?’ Because to me that is not all that obvious, and I think it’ll get less so as time passes. For instance in the case of France, the ‘ideological’ differences between Macron and Le Pen are substantial to say the least, they’re worlds apart.

And if you’re worlds apart, why live in the same country? Here’s that French map:

As you see, the country is sharply divided between west (Macron) and east (Le Pen). So much so that you wonder what these people still have in common, other than their language. There’s no doubt it’s also a dividing line between the richer part of the country, and the poorer.

Thing is, that same dividing line is visible in a similar map of the November 8, 2016 US election results, in a slightly different way.

In the US it’s not east versus west, it’s coast versus interior (flyover land). But the difference is equally clear and sharp. In fact, probably what we’re looking at is that France has only one coastline, while the US has two, and in both countries people living close to the ocean are on average richer than those who live more inland.

And in both cases there is no doubt that wealth is a deciding factor in dividing the nations to the extent that they are. We see that in an ‘urban versus rural area’ comparison as well. Cities like New York, LA and Paris are strongholds for the incumbent and establishment, the parties that represent the rich.

There can be no doubt that we’ll see more of that going forward. It won’t be there in smaller countries, Holland for instance is not nearly large enough for such dynamics. But Italy very well might. It’s always had a strong north-south-divide, and its present crisis has undoubtedly deepened that chasm.

Looking at things that way, it’s also glaringly obvious that Macron is Obama (and is Renzi is Cameron etc.). A well-trained good looking mediagenic puppet with a gift of teleprompter gab, fabricated and cultivated by the ruling financial and industrial world to do their bidding. Macron, to me, looks the most artificial of the crop so far, the Obama, Rutte, Cameron, Renzi crop. There will be more, and they will get more artificial. Edward Bernays is just getting started.

Of course there is also a strong move away from established parties. It is more pronounced in France -where they were eradicated at least in the presidential elections- than in the US or UK, but that may be more of a superficial thing. Trump and Bernie Sanders are simply America’s version of France’s ‘ultra’ right wing Le Pen and ‘ultra’ left wing Melenchon. And Trump is running into problems with the remnants of the established parties as much as Macron will if he’s elected president.

Anglo countries seem to take longer diversifying away from tradition than others, but they too will get there. The various deteriorating economies will make sure of that.

A third map is of the UK Brexit vote. Once again, a sharp division, and once again with a ‘character’ of its own. If you ignore Scotland for a moment, what you see is blue=poor and yellow=rich. Broad strokes, I know, but I’ve been doing that with the first two maps too. There are only a few pockets of yellow=rich=remain. But yeah, fewer people live there. Same thing as in the US and France.

That the whole Brexit thing should now be negotiated by the Tories is a cynical irony the country owes to its adherence to tradition. That is how that backfires, too little flexibility. How the UK will solve its many ignored issues is anyone’s guess. Will Scotland leave the no-longer-very United Kingdom? Will voters wake up in time to not present the Tories with a free hand to make the rich-poor divide even worse?

There’s one more, and more detailed, map of France, which shows even better to what extent ‘Le Pen country’ is eerily similar to America’s flyover land. It’s almost poetic, a poem about how countries fall apart, about centers that cannot hold. It also makes me think of a locust invasion, by the way.

Every French and European body and their pet hamster is presently telling voters in France to please please not vote for Le Pen, in a move that resembles similar calls against Trump and Brexit. And who knows, it might work this time around. The anti-Le Pen frenzy is even stronger than the others, and it has Marine’s crazy father to use as a warning sign.

But as these maps show, it’s not about Le Pen, or Trump, or Nigel Farage. It’s about people being left behind in ever larger numbers, susceptible to voices other than the ones they’ve known for a long time and who never listened to them. And nothing is being done to address these people’s claims; on the contrary, things are only getting worse for them.

I saw a headline today that said ECB president Mario Draghi’s “Stimulus Could Blunt Populism as Unemployment Declines”. There’s only one possible reaction to that: what happens when he stops his stimulus?

The growing divides that all these maps bear witness to will keep growing, unless someone decides that neo-liberalism has gone too far. But the only person who could make such a decision would have to be one who neo-liberalism itself has made rich and powerful. So don’t count on that happening.

Count instead on more Trumps and Le Pens and Sanders’s. And also on more Obama’s and Macrons for the rich to deploy to protect their power and hold on to their riches. Increasingly it would seem they have to limit democracy -even further- to remain in power. So count on that happening too.

But don’t count on all these countries surviving as sovereign nations. The chasms are widening too fast and too much.

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