Tag: finance

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

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 more 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

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

Guest Post: Growth Is Obsolete

Submitted by James H. Kunstler via Peak Prosperity blog,

The word that sticks in the craw of many who cogitate over economics is growth. The condition that the word refers to has proven disturbingly problematic in recent years, especially as world’s population continues to expand exponentially and the global ecology suffers in response. In fact, Thomas Carlyle (1795 – 1881) called economics “the dismal science” in direct reference to the work of the Rev. Thomas Malthus, because the Malthusian conclusions were so unappetizing – that sooner or later rising human populations would outstrip the world’s capacity to provide for them.

Now it happened that the Reverend Malthus’s notorious Essay on the Principle of Population was first published in 1798, which was about exactly the take-off moment for the industrial revolution. That extravagant melodrama was about marshaling mechanical invention with fossil fuel. The first act ran on coal and allowed populations to expand because it extended the extractive reach for resources by colonialist nations. The second act featured exploitation of oil, which was more powerful and versatile than coal. It also lent itself much more directly than coal to being converted into food for people. The use of oil powered farming machines, oil and gas (an oil byproduct) based herbicides, insecticides, and fertilizers, and oil based long distance food transport, has allowed us to convert oil into food pretty directly. This has led to the “hockey-stick” swerve of population growth that took human numbers worldwide from under 2 billion in the year 1900 to more than 7 billion today.

We are in the third act of the industrial melodrama now where the dire sub-plot of peak oil has taken stage. Despite the wishful thinking and happy-talk propaganda lighting up the media-space, we have arrived at the problematic point of the story: the end of cheap oil. This is poorly understood by the public and, apparently, by leaders in business, politics, and the media, too. They misunderstand because they insist on thinking that peak oil was simply about running out of oil. It’s not. It’s about running out of the ability to extract it from the earth in a way that makes economic sense — that is, at a price we can afford in terms of available capital and energy invested (and also ecological destruction). That dynamic is now exerting a powerful influence on modern civilizations. We ignore it — even at the highest levels of intellectual endeavor — because we have made no alternate plans for running the complex operations of everyday life, and because the early manifestations of the dynamic present themselves in the realm of finance, which is dominated by academic viziers and money-grubbing opportunists who benefit from obfuscating reality.

The sad, stark fact is that oil is now too expensive to permit further expansion of economies and populations. Expensive oil upsets the cost structure of virtually every system we need to run modern life: transportation, commerce, food production, governance, to name a few. In particular expensive oil destroys the cost structures of banking and finance because not enough new wealth can be generated to repay previously accumulated debt, and new credit cannot be extended without a reasonable expectation that more new wealth will be generated to repay it. Through the industrial age, our money has become an increasingly abstract and complex product of debt creation. As Chris Martenson has put it so succinctly in The Crash Course, money is loaned into existence. Thus, the growth of debt (allowing the growth of money) has played a crucial role at the heart of our banking operations, and the very word “growth” has become shorthand for this process in the lingo of current economic discourse.

It is quite clear that the banking system has been thrown into great disarray as the price of oil levitated from $11-a-barrel in 1999 to the great spike of $140 in 2008, and then settled into a range between $75 and $110 since 2010. Most of this disarray is a result of attempts to offset the failure to create new real wealth with fake wealth generated by accounting fraud, "innovative" swindling, insider chicanery, high frequency front-running, naked shorting of securities, and the construction of a vast untested network of derivative counterparty wagers that give every sign of being booby-trapped. All this private monkey business has been abetted by public mischief in central bank interventions and market manipulations, fiscal irresponsibility, political payoffs for favorable legislation, statistical misreporting, and the failure to apply the rule of law in cases of blatant misconduct (e.g., the MF Global confiscation of segregated client accounts; the Goldman Sachs “Timberwolf” CDO scam… the list is very long).

In short, a society with deeply impaired capital formation has turned to crime, corruption, fakery, and subterfuge in order to pretend that “growth” — i.e. expansion of capital — is still happening. The consequences are many and profound. The chief one is that the manufacture of fake wealth is such an alluring activity that some of the smartest people in society have devoted their waking hours to making a profit off it. It absorbs all their energies and they are simply not available for other work, such as figuring out a sane and practical way to run civilization in the absence of cheap energy. Added to this is the administrative effort and the work-arounds needed to support all this corruption and dishonesty, which occupy the hours of another class of smart people who work in government, academia, public relations, and the media. The sustenance of these parasitical cohorts more and more continues at the expense of everybody else in society, who cannot find work, or cannot make enough money to pay their living expenses, and who have become deeply discouraged, disappointed, demoralized, and disengaged in their losing struggle to thrive. Hence there is little public vigor to even mount a discussion of these vexing problems and the final result is the greater wholesale failure to construct a coherent consensus about what is happening to us and what we might do about it.

Another consequence to these disorders of capital is the massive malinvestment directed into things with no future in themselves or, much worse, things that actively undermine the future of everything needed to support any civilized future. For instance, the "innovation" in securitizing and repackaging mortgages — which continues to be a boon for the giant banks in concert with the thoroughly dishonest and technically bankrupt "government sponsored enterprises" Fannie Mae and Freddie Mac — expresses itself in the activity we call "housing starts." Economists overwhelmingly agree that a higher number of housing starts is a good thing for the economy and hence for society. But what do housing starts actually represent? These days they mostly take the form of new suburban housing subdivisions, which are inevitably joined by the kit of the strip mall, the big box store, and all the other furnishings of the highway strip. In short, all that glorious "innovation" by the banks produces more suburban sprawl and destruction of rural land, which is about the last thing this society needs when faced with the realities of peak cheap oil, since it is absolutely certain to make these things obsolete, and very soon. It is not any better, either, if the nominal capital — nominal because it is sure to someday represent a loss for some bond-holder or stockholder — gets invested in
a 30-story high rise apartment because, contrary to a lot of current delusional thinking, skyscrapers also have no practical future for reasons I have explained in other essays here.

Similarly, the public investments going into "shovel-ready" highway projects, although the fiscal outlays are more transparently based on money that doesn't really exist. The public, as well as leaders all across society, serenely believe that the Happy Motoring matrix will find a way to go on forever, and that therefore we must make provision for it, not to mention the beneficial side of effect of "job creation" for all the additional workers. Yet the dynamic at work must be obvious: oil will never be cheap again; it will impair future capital formation; there will be far fewer car loans; there will dwindling public funds to maintain the roads; and there is no practical substitute for gasoline that scales to the existing system, nor any prospect of one within a time frame that makes sense — not to mention the gigantic background problem of pouring evermore carbon into the sky.

If these things I mention — highways, tract houses, condo towers, strip malls — represent our current idea of "growth," and if they are self-evidently bad investments, then we can infer that our current concept of "growth" no longer applies to a reality-based model of our economic prospects. We ought to junk the term and what it implies about the daily business of mankind, and come up with a new way of understanding the place we're at.

In Part II: Getting To a Future That Has a Future, we take a hard look at the critical task facing humanity if we want to enjoy a future of any worth — and that's managing contraction. We have to reorganize all the major systems of civilized daily life. We have to produce our food differently, we have to do commerce differently, and so on with any number of ongoing endeavors including transportation, manufacturing, governance, banking, education, health care, and more.

Click here to access Part II of this report (free executive summary; enrollment required for full access).

 


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/SvF5OdcTBU8/story01.htm Tyler Durden

What Each Country Leads The World In

Every country is Number One when it comes to something, and this map from webcomic Doghouse Diaries just what all those somethings are.

 

As , of course, it's not all maple syrup and raspberries; some countries have some rather tragic distinctions.

(click map for massive version)


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/sUn5z5_68Wc/story01.htm Tyler Durden

(In)Direct Slavery: We’re All Guilty

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As we sit in our comfortable living rooms, loafing back into our sofas, munching on a bar of chocolate and slurping down the coffee whilst checking the smartphone for message most of us have little idea that the chocolate, the coffee and the smartphone were made by resorting to indirect slavery quite probably. Whether we like it or not, we are contributing to the indirect slave trade of the companies that provide those things and many more to us. Whether we like it or not we are directly contributing to slavery because there are slaves employed in our own back yard still today.

Global Slavery Figures

  • There are 29.8 million slaves in the world.
  • They mostly work in developing and emerging countries producing goods that are destined for the Western world and our own markets.
  • Those 29.8 million people account for 1.82% of world population today.
  • India is the worst country in the world for the total number of slaves.
  • There are 14 million of them.
  • China comes in way behind and in second place with 2.9 million of them.
  • Pakistan has 2.1 million slaves.
  • Mauritania has the highest ratio of slaves to the population.
  • The total population stands at 3.4 million and 4.3% are enslaved people.

The top ten countries that make up 76% of all of the enslaved people in the world are:

  • India
  • China
  • Pakistan
  • Nigeria
  • Ethiopia
  • Russia
  • Thailand
  • Democratic Republic of Congo
  • Myanmar
  • Bangladesh

The USA is 139th on the list out of a total of 162. The UK is 160th.

India is the worst country in the world for slavery today. Perhaps if they were to ratify the Worst Forms of Child Labour Convention, then they might be able to deal with that problem. Bonded labor might have been outlawed as from 1976by the Bonded Labour System (Abolition) Act 1976, but it has rarely been enforced.

But there are slaves working in the Western world too such as the forced laborers that are made to work on the cannabis farms in the UK. For the first time, the Global Slavery Index has been published this year and it is a telling story of the misery not only of the developing world, but of our own countries. It’s a quantitative index of 162 countries which means that it accounts for almost the entire world population. . Until this report was published estimates stood only at roughly 10 million under the 29.8-million estimate of the Global Slavery Index. Previously, the method of calculation did not include forced labor and did not consider that human trafficking was part of slavery. The Index also uses forced servile marriage and debt bondage in the calculation.

The Global Slavery Index estimates that there is a margin of error of between 5% and 10% and they hope that it will be a “wake-up call” to governments around the world. It is however highly unlikely that this will become reality.Governments in the West remain complacently asleep when it comes to slavery in their own back yards and certainly even more so with other countries that are toiling away for us.

Endemic cultural problems have maintained people entrapped in slavery in countries like India due to caste issues (despite that officially having been abolished (at least Article 17 of the Indian Constitution made untouchability and discrimination on that basis illegal).

Maybe some leaves should be taken out of Brazil’s book and we should be doing more of what they do there. There is a list of ‘dirty’ companies that have used slaves in the production of products. Their national plan is to do away with slavery.

Slavery is not just a figment of our imagination, it means jobs that we can’t walk away from, it’s working for nothing and it’s control through violence and pressure as well as being nothing more than the boss’s property.

We’re All Slaves

To some extent we are all slaves in daily life in the societies that have been elaborated for the benefit of those either at the top or even for those at the bottom. There’s rarely something for those that are stuck in the middle. We go to work, we earn a living and we pay that money to someone else in taxation so that it can go to the common good of all in society under the supreme principle of providing for the needy, whoever they are and whatever being needy really does mean.

But, we work like drudges even though the 19th century sweatshops went long ago from our societies; at least, for most of us, although they still exist in some back room of a dingy apartment building somewhere in the rough part of towns of most cities we live in. We created democracy (or we thought we did) and the upper class was reduced (or the wealth just got spread around with fewer people allowed to rake it in). The poorer got richer and the majority got thrown into the middle band of the class that got little or nothing. Democracy created what we have right now. The few rich people get most of the earnings and the poorest get doled out and propped up. The guys in the middle pay for the rest and get their shoulders thrown into the grindstone, regardless of whether they want their money to be handed around to the needy or to fill the cash-fat obese accounts of the super wealthy in Geneva or somewhere else.

We have all a role to play in the slave trade. But, there are some that are worse off than others in countries around the world.

Which is better: being a slave in India or being a middle-class slave that finances the government through taxation? A no-brainer? Or, does it depend on where we’re sitting?

 

Originally posted: (In)Direct Slavery: We’re All Guilty

 

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Technical Analysis: Bear Expanding Triangle | Bull Expanding Triangle | Bull Falling Wedge | Bear Rising Wedge | High & Tight Flag

 


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/5pQ7QVl8ep4/story01.htm Pivotfarm

Mexico Overtakes US As World's Fattest Country; Begins Regulating Food Consumption

Mayor Bloomberg’s crusade to micromanage what New Yorkers put in their mouth has so far failed, but that just means the attempt to impose the first “New Normal” nanny state, in which individual calorie consumption is regulated for the greater good by the even greater government, has simply shifted its geographic location. In this case to Mexico, which according to the OECD has surpassed the US as the world’s fattest country and is “notorious for its love of sweets, fried foods and pastries” and where as the WSJ reports, the lower House of Congress passed on Thursday a special tax on junk food that is seen as potentially the broadest of its kind, part of an ambitious Mexican government effort to contain runaway rates of obesity and diabetes.

Mexico’s weight problem in context:

The WSJ reports on what can only be described as Mike Bloomberg’s wet dream:

The House passed the proposed measure to charge a 5% tax on packaged food that contains 275 calories or more per 100 grams, on grounds that such high-calorie items typically contain large amounts of salt and sugar and few essential nutrients.

 

The tax, which was proposed just this week, is sure to stir controversy among big Mexican and foreign food companies that operate here. It comes on top of another planned levy on sugary soft drinks of 1 peso (8 U.S. cents) per liter that was passed by the same committee, an effort that New York Mayor Michael Bloomberg supported.

…

 

The taxes—both aimed at curbing consumption—have broad political support and were expected to later be approved by the Senate as part of a sweeping tax overhaul. The snack food levy is part of a bigger tax proposal from President Enrique Peña Nieto which aims to raise the government’s non-oil tax collections.

 

“This appears to be the most aggressive strategy anywhere in the world in recent years to improve diets via tax disincentives,” said Michael Jacobson, executive director of the Center for Science in the Public Interest in Washington.

Some have already cast the blame: TV zombies and undereducated “fatsos.”

“We’re a country of malnourished fatsos,” José Antonio Álvarez Lima, a former state governor turned newspaper columnist told Mexican political news website Animal Politico. He pegged part of the blame for Mexico’s high consumption of soda and snacks on incessant TV advertisements and poor education.

Mexico’s attempt to centrally-plan what’s for dinner naturally was met with the adoration of not just Mayor Mike, but every government apparatchik desperate to justify their non-value adding exietsnce. Such as this one:

Harold Goldstein, executive director of the California Center for Public Health Advocacy, called Mexico a role model, saying that the measures could protect the health of consumers while also shielding the economy from productivity losses and runaway public health costs.

Of course, if the “measures” fail at doing all those magical things, the government can just swoop in and start regulating the economy and productivity next, just as the Fed has been doing in the US for the past 5 years, with absolutely disastrous results.

Which is not to say Mexicans aren’t fat. As noted above, according to the OECD, the average Mexican is now fatter than the average American. Which means very, very fat.

Seven of 10 adults in Mexico, and a third of children, are either overweight or obese. Mexicans have now surpassed Americans for the title of the fattest country in the OECD, according to the organization.

 

All that fat has contributed to an alarming rise in chronic illnesses like adult-onset Type 2 diabetes, which afflicts an estimated 15% of Mexicans over the age of 20, the highest rate for any country with more than 100 million inhabitants. Illnesses related to excess weight cost the Mexican public health system more than $3 billion a year, according to the legislation.

 

On virtually every street corner in Mexico, makeshift stands sell the types of packaged items that will be taxed for the first time: potato chips, cookies, ice cream, fried corn chips, chocolates, candy, puddings and local sweets.

However, while those who revel in the government’s intellectual superiority, despite the vivid example of every centrally-planned economy crashing and burning in due course, some are quick to point out that this latest plan to micromanage consumption is idiocy. First, the big food companies:

Mexican industrial chamber Concamin estimates that processed food companies targeted by the new tax employ thousands of Mexicans and account for 4.1% of GDP. “We can’t allow last-minute taxes,” said Concamin president Francisco Funtanet, suggesting that companies might cut back on personnel and investment to absorb the tax hit.

 

Raul Picard, a top official at Concamin and owner of a chocolate company, argued that vice taxes could lead to a proliferation in contraband goods of questionable origin, possibly posing a threat to public health.

 

“There’s no such thing as junk food, just junk diets,” said Felipe Gómez, head of a regional food makers’ group in Jalisco state. Even so-called junk food has carbohydrates and calories that the body needs, Mr. Gómez argued.

But it’s not just the big corporations that are skeptical. So are normal people with some common sense.

Some ordinary Mexicans said a tax was unlikely to change their eating habits much.

 

Héctor Ortega, a 45-year-old operator of a street stand in downtown Mexico City, predicted that consumers may pull back briefly when prices rise, but then return to their old habits.

 

“Just like the cigarettes, people will go back to their old habits,” said Mr. Ortega. He said junk food was obviously unhealthy, but it was often the only thing that poorly paid office workers and students can afford. “This is a restaurant zone and the food here is expensive. For some people, these products are the only food available.”

 

Fernando González, 24, an office worker who frequents Mr. Ortega’s stand, is a big fan of sodas and gum, in particular. When the new prices kick in, he said, he won’t give up on his favorites, but will probably buy less chips and candy.

 

“It’s a craving, it’s an addiction, it’s something people enjoy,” he said of Mexicans and their treats.

The biggest irony, of course, is that the government “of the people”, in its very finite wisdom, will hurt those it supposedly cares about the most: the poor. Because the rich can afford to eat healthy. It is the poor who will merely have to pay more to satisfy their “food addictions.”

Academics say the move could hurt the poor because they spend a greater percentage of their income on cheap, packaged foods, but added that doing nothing was worse.

Sure. Which is why America no longer has a drug (or gun) problem. Oh wait.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/wKEwrWwJ0a4/story01.htm Tyler Durden

Mexico Overtakes US As World’s Fattest Country; Begins Regulating Food Consumption

Mayor Bloomberg’s crusade to micromanage what New Yorkers put in their mouth has so far failed, but that just means the attempt to impose the first “New Normal” nanny state, in which individual calorie consumption is regulated for the greater good by the even greater government, has simply shifted its geographic location. In this case to Mexico, which according to the OECD has surpassed the US as the world’s fattest country and is “notorious for its love of sweets, fried foods and pastries” and where as the WSJ reports, the lower House of Congress passed on Thursday a special tax on junk food that is seen as potentially the broadest of its kind, part of an ambitious Mexican government effort to contain runaway rates of obesity and diabetes.

Mexico’s weight problem in context:

The WSJ reports on what can only be described as Mike Bloomberg’s wet dream:

The House passed the proposed measure to charge a 5% tax on packaged food that contains 275 calories or more per 100 grams, on grounds that such high-calorie items typically contain large amounts of salt and sugar and few essential nutrients.

 

The tax, which was proposed just this week, is sure to stir controversy among big Mexican and foreign food companies that operate here. It comes on top of another planned levy on sugary soft drinks of 1 peso (8 U.S. cents) per liter that was passed by the same committee, an effort that New York Mayor Michael Bloomberg supported.

…

 

The taxes—both aimed at curbing consumption—have broad political support and were expected to later be approved by the Senate as part of a sweeping tax overhaul. The snack food levy is part of a bigger tax proposal from President Enrique Peña Nieto which aims to raise the government’s non-oil tax collections.

 

“This appears to be the most aggressive strategy anywhere in the world in recent years to improve diets via tax disincentives,” said Michael Jacobson, executive director of the Center for Science in the Public Interest in Washington.

Some have already cast the blame: TV zombies and undereducated “fatsos.”

“We’re a country of malnourished fatsos,” José Antonio Álvarez Lima, a former state governor turned newspaper columnist told Mexican political news website Animal Politico. He pegged part of the blame for Mexico’s high consumption of soda and snacks on incessant TV advertisements and poor education.

Mexico’s attempt to centrally-plan what’s for dinner naturally was met with the adoration of not just Mayor Mike, but every government apparatchik desperate to justify their non-value adding exietsnce. Such as this one:

Harold Goldstein, executive director of the California Center for Public Health Advocacy, called Mexico a role model, saying that the measures could protect the health of consumers while also shielding the economy from productivity losses and runaway public health costs.

Of course, if the “measures” fail at doing all those magical things, the government can just swoop in and start regulating the economy and productivity next, just as the Fed has been doing in the US for the past 5 years, with absolutely disastrous results.

Which is not to say Mexicans aren’t fat. As noted above, according to the OECD, the average Mexican is now fatter than the average American. Which means very, very fat.

Seven of 10 adults in Mexico, and a third of children, are either overweight or obese. Mexicans have now surpassed Americans for the title of the fattest country in the OECD, according to the organization.

 

All that fat has contributed to an alarming rise in chronic illnesses like adult-onset Type 2 diabetes, which afflicts an estimated 15% of Mexicans over the age of 20, the highest rate for any country with more than 100 million inhabitants. Illnesses related to excess weight cost the Mexican public health system more than $3 billion a year, according to the legislation.

 

On virtually every street corner in Mexico, makeshift stands sell the types of packaged items that will be taxed for the first time: potato chips, cookies, ice cream, fried corn chips, chocolates, candy, puddings and local sweets.

However, while those who revel in the government’s intellectual superiority, despite the vivid example of every centrally-planned economy crashing and burning in due course, some are quick to point out that this latest plan to micromanage consumption is idiocy. First, the big food companies:

Mexican industrial chamber Concamin estimates that processed food companies targeted by the new tax employ thousands of Mexicans and account for 4.1% of GDP. “We can’t allow last-minute taxes,” said Concamin president Francisco Funtanet, suggesting that companies might cut back on personnel and investment to absorb the tax hit.

 

Raul Picard, a top official at Concamin and owner of a chocolate company, argued that vice taxes could lead to a proliferation in contraband goods of questionable origin, possibly posing a threat to public health.

 

“There’s no such thing as junk food, just junk diets,” said Felipe Gómez, head of a regional food makers’ group in Jalisco state. Even so-called junk food has carbohydrates and calories that the body needs, Mr. Gómez argued.

But it’s not just the big corporations that are skeptical. So are normal people with some common sense.

Some ordinary Mexicans said a tax was unlikely to change their eating habits much.

 

Héctor Ortega, a 45-year-old operator of a street stand in downtown Mexico City, predicted that consumers may pull back briefly when prices rise, but then return to their old habits.

 

“Just like the cigarettes, people will go back to their old habits,” said Mr. Ortega. He said junk food was obviously unhealthy, but it was often the only thing that poorly paid office workers and students can afford. “This is a restaurant zone and the food here is expensive. For some people, these products are the only food available.”

 

Fernando González, 24, an office worker who frequents Mr. Ortega’s stand, is a big fan of sodas and gum, in particular. When the new prices kick in, he said, he won’t give up on his favorites, but will probably buy less chips and candy.

 

“It’s a craving, it’s an addiction, it’s something people enjoy,” he said of Mexicans and their treats.

The biggest irony, of course, is that the government “of the people”, in its very finite wisdom, will hurt those it supposedly cares about the most: the poor. Because the rich can afford to eat healthy. It is the poor who will merely have to pay more to satisfy their “food addictions.”

Academics say the move could hurt the poor because they spend a greater percentage of their income on cheap, packaged foods, but added that doing nothing was worse.

Sure. Which is why America no longer has a drug (or gun) problem. Oh wait.


    



via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/wKEwrWwJ0a4/story01.htm Tyler Durden