Tax Cuts and Simplified Tax Code, PLEASE!

From Seeking Alpha:

Manufacturers plea for tax cuts. With both presidential candidates proposing ideas to boost manufacturing, what companies want most are lower taxes and a simplified code. “It all sort of starts and stops right there,” said Harley Davidson (HOG) CEO Keith Wandell of tax rates, while MIT professor David Simchi-Levi said the “corporate tax structure is driving manufacturing outside the country.” Improved infrastructure and education would also help.

Big Goverment should listen (both sides of the aisle!).

Posted August 28th, 2012 Filed in Economics and the Economy, Taxes and the IRS

Japan’s Economic Outlook Worsening

Yes, the poor economy is coming. China manufacturing contracts, and now Japan’s economy is predicted to contract. From Seeking Alpha:

Japan becomes pessimistic about economy. The Japanese government has downgraded its assessment of the economy for the first time in 10 months in its latest monthly report, saying that risks include slowing overseas economies and sharp market fluctuations. The pessimism comes as JPMorgan and BNP Paribas forecast contraction of 0.3% and 0.9% respectively for Q3 GDP vs. consensus for 1% growth.

Posted August 28th, 2012 Filed in Economics and the Economy

EU’s Systemic Risk

Graham Summers analyzes why the EU’s systemic risk is different from the 2008 and comes to an alarming conclusion. He begins:

Europe will collapse before the end of the year, and very likely before the end of the summer. When this crisis hits it will be worse than 2008. And the world central banks will not be able to control the damage.

What makes this time different?

Several items:

  1. The crisis coming from Europe will be far, far larger in scope than anything the Fed has dealt with before.
  2. The Fed is now politically toxic and cannot engage in aggressive monetary policy without experiencing severe political backlash (this is an election year).
  3. The Fed’s resources are spent to the point that the only thing the Fed could do would be to announce an enormous monetary program that would cause a crisis in of itself.

Read the full post.

Posted June 5th, 2012 Filed in Economics and the Economy, Europe

President’s Day

Received via email:

I was eating lunch with a 6-year-old and I asked her, “What is the 20th of February?”

She said “President’s Day!”

She is a smart kid, so, I asked her, “What does President’s Day mean?”

I was waiting for something about Washington or Lincoln etc.

She replied, “President’s Day is when President Obama steps out of the White House, and if he sees his shadow we have one more year of unemployment.”

You know, it hurts when hot coffee spurts out your nose.

It would be funny if it weren’t based on millions of people struggling to survive.

More Signs Point to Recession in Europe

Companies in Europe are already scaling back spending, as evidenced by a dramatic drop in the Baltic Dry Index (the Baltic Exchange’s main sea freight index, which tracks rates to ship dry commodities). It has fallen almost 50% so far this month, nearing a three-year low as slow Chinese demand compounded fleet growth troubles.

“The freight market is completely oversupplied because shippers put in orders for new vessels two years ago in expectation of a firm recovery by now,” one freight paper trader said, and added: “They clearly did not expect the crisis to reignite as it has.”

Plunging graph

Analyst Lou Basenese declares:

The Baltic Dry Index tracks the cost of shipping major raw materials (iron ore, coal, grain, cement, copper, sand and gravel, fertilizer and even plastic granules). Or, more simply, it tracks the precursors of economic output. As such, the Index provides a measurement of the volume of global trade at the earliest possible stage.

When I last reported on the Baltic Dry Index in October 2011, it was coming off an impressive two-month, 50% rally. That rally’s come to an end. As you can see in the chart above, the Index is down 48.4% in the last month, and 54.4% in the last three months.

The culprit is Europe, of course. You’ll recall that European sovereign debt fears spiked (again) last October. And that’s precisely when the Baltic Dry Index also began its descent. Coincidence? I think not. And the World Bank and International Monetary Fund (IMF) have my back. On Wednesday, the World Bank cut its world economic growth forecast explicitly because of Europe’s never-ending debt crisis. Meanwhile, as Europe’s debt crisis persists, Bloomberg reports that the IMF plans to cut its global growth forecasts, too.

Another bit of bad news is that Spain has come out and admitted that it will not be able to meet the agreed-to target deficit of 4.4% go GDP, as projected GDP growth is now weaker than previously thought. James Kostohryz says that the unfolding of a global fiasco is upon us:

In various articles I have said that the endgame in Europe will probably take the form of PIIGS economies shrinking more than expected, their revenues shrinking more than expected and fiscal deficits ballooning more than expected. All of this will cause fiscal targets and commitments to be violated on the part of PIIGS. This in turn will lead to a showdown with Germany centered on how such shortfalls will be handled.

Spain has now begun the process of acknowledging publicly that it will violate its commitments under recent accords; it is preparing the way for confrontation. According to various reports, Budget Minister Cristobol Montoro has warned that Spain will not meet its target deficit of 4.4% of GDP in 2012. Montoro said that this target was based on an outdated forecast of 2.3% economic growth for Spain in 2012 made by the previous government.

In my view, the absolute best-case scenario for Spain’s GDP growth in 2012 will be a contraction of -2.0%. My own base case estimate is for a contraction of -3.5%. A contraction that exceeds -5.0% is entirely plausible.


And the Food Stamp President will continue to embrace the same failed policies that are destroying Europe.

Posted January 21st, 2012 Filed in Economics and the Economy, Europe

Recovery Weak, Re-recession in 2012

Bear Fight asks, “Where Is The Recovery?

Bear Fight is the latest in a series of authors that note that the historically reliable Economic Cycle Research Institute is calling for a U.S. recession in 2012 and presents a series of charts (including the one below) that highlight our economic plight:

While many are calling for another recession the charts below highlight that our recovery was short and shallow and unlikely to help the average citizen. Since the 2008 recession, real GDP has been stagnant, while unemployment has improved only modestly. Most troubling is the overall debt situation which has yet to be resolved. The stagnation in debt growth is exacerbating the problems of anemic GDP growth and stagnating unemployment.

Unemployment Failed to Recover

“… our recovery was short and shallow and unlikely to help the average citizen.”


Posted December 27th, 2011 Filed in Economics and the Economy

Forbes: Guns to Prepare for Global Economic Collapse

Daniel J. Mitchell, Senior Fellow at CATO, gives five reasons for opposing gun control. The first four have been widely debated for years. The fifth, and final one, is the result of fiat currencies, welfare states, short-sided politicians and the yammerheads that elect them. His preface holds the clue:

About a year ago, I spoke at a conference in Europe that attracted a lot of very rich people from all over the continent, as well as a lot of people who manage money for high-net-worth individuals.

What made this conference remarkable was not the presentations, though they were generally quite interesting. The stunning part of the conference was learning – as part of casual conversation during breaks, meals, and other socializing time – how many rich people are planning for the eventual collapse of European society.

Not stagnation. Not gradual decline. Collapse.

As in riots, social disarray, plundering, and chaos.

Prepare. If TEOTWAWKI doesn’t happen you will have lots of ammo to support your shooting addiction for years to come. But if it does you will at least have a fighting chance of surviving.

Posted December 24th, 2011 Filed in Economics and the Economy, Second Amendment

Why This Crash will be Worse than 2008

If you want to get a clear understanding of just how bad things are for the global economy, read Chris Martenson’s Why This Crisis Will Be Worse Than 2008. It begins:

There are clear signs of a liquidity crunch in the asset markets right now, and the question I keep hearing is, “is this 2008 all over again?”

No, it’s worse. Much worse.

In 2008 there was a lot more faith and optimism upon which to draw. But both have been squandered to significant degrees by feckless regulators and authorities who failed to properly address any of the root causes of the first crisis even as they slathered layer after layer of thin-air money over many of the symptoms.

Anyone who has paid attention knows that those “magic potions” proved to be anything but. Not only are the root causes still with us (too much debt, vast regional financial imbalances, and high energy prices), but they have actually grown worse the entire time.

If you don’t go read it all, at least go and skip down to the circular graphs at the very bottom. Trust me, these are not your normal economic graphs.

But they will scare the hell out of you.

Posted December 22nd, 2011 Filed in Economics and the Economy

Deflation Risk Rising

While I’ve seen the occasional story about deflation, it seems that there are more and more of them. Just today:

Deflation’s Back, And Stocks Just Don’t Get It

Signs Of Deflation Grow

Latest Price Data Show U.S. On Brink Of Deflation As World Economy Slows

For an elegantly simple explanation of what deflation is and why it is bad:

A Visual Guide to Deflation

And for a final scare:

50 Economic Numbers From 2011 That Are Almost Too Crazy To Believe

Posted December 19th, 2011 Filed in Economics and the Economy

Death to the Penny

Funny AND true:

Posted December 14th, 2011 Filed in Economics and the Economy