Obama Takes Class Warfare To The Next Level With The "Buffet Rule" And A New "Millionaire Tax": Is A Market Selloff Imminent?

In his increasingly desperate attempts to pander to a population that has by now entirely given up on the hope, and barely has any change left, Obama is going for broke (or technically the reverse) by setting the class warfare bar just that little bit higher. This time around, his targets are millionaires, who according to the NYT are about to see their taxes soar. Or not: nobody really knows if the proposed "Buffett Rule", affectionately known for crony communist #1, will impact just millionaires income tax, which incidentally is the same as what everyone else is paying, or, far more importantly, their Investment Income, which is where the bulk of America's wealthy income comes from. Which incidentally makes all the sense in the world: two and a half years after Bernanke has been desperately doing everything in his power to raise the "wealth effect" if only for the richest 1% of the US population, it is, from the government's perspective, time for the taxman to come knocking and demand his share of the capital gains. Yet what is lost in this ridiculous proposal are the unintended consequences, which always follow idiotic decisions arising out of central planning, number one of which would be a market crash as those who have paper gains since the market lows of 2009, scramble to lock in the old capital gains tax rate of 15% instead of holding on to paper profits that could end up being as high as 35% (or more): an event that would cut actual income by over 25% should one wait to cash out! And since 25% is substantially more than anything that Twist and QE3 and 4 could hope to achieve, it is all too conceivable that those holding on to profitable positions will have had enough, and take their profits, likely converting them into physical and non-dilutable assets along the way. As to whether they would subsequently relocate to far more hospitable countries, such as those that don't foment class warfare, and implicitly invite a civil war, that remains yet to be seen.

Guest Post: Where We Are Is Where Japan Has Been

Once upon a time, there were a bunch of banks that said “Hey, forget balance sheets.  If they have collateral give them a loan.”  For a while it was good money.  As long as they got payments, it was OK.  So there were more loans, which in turn bid up the value of the collateral. Then the worm turned, because what goes up must come down.  When collateral values collapsed, so did lending.  It got real hard to keep up with the loan payments.  Banks started looking like they came straight out of Goodfellas. This isn’t an American story at all.  All of these types of issues are about debt resolution.  It has happened for centuries, probably further back in history.  You know the story, but perhaps there are some details here that may open eyes.  Like why you heard about Japanese CEOs committing suicide.  Often it was because to keep their businesses running, they had to pledge all their personal possessions for a loan.  The insurance benefit was all that was left for their families when their businesses went bankrupt. This collateral value collapse implies banking crisis implies real problems for a lot of voters.  Anywhere this happens, it is a political crisis, and governments have to step in.  This is where the story goes from bad to worse.





US taxpayers could be on hook for Europe bailout





Europe's Response To Geithner's Advice: "I'd Like To Hear How The United States Will Reduce Its Deficits ... And Its Debts".




Eurozone: A nightmare scenarios.






Dumpster Diving?




Geithner:  Economy in "An Early Stage" of Crisis




US Poverty Rate Spikes as Incomes Decline




Fuel Pump Woes Won't Go Away

KWN Weekly Metals Wrap

September 17, 2011, at 5:59 pm
by Eric King in the category King World News, Trader Dan Norcini |  Print This Post |  Email This Post

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