Monthly Archives: December 2012

Understanding the Budget Cuts in the Current Fiscal Crisis Talks

"Even someone following the budget negotiations closely might be surprised to learn that there are no real cuts on the table in the way normal people think of them. That goes for Republican proposals, too. For example, households may decide to reduce their holiday spending this year from $750 to $500 and forgo the summer family vacation because times are tough. Those are spending cuts. Washington is the only place where a cut isn’t a cut. Instead, so-called spending cuts are reductions in the growth rate of outlays as prescribed under current law. Nothing is cut." Continue reading →

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A Swiss-Style Spending Cap Would Have Prevented the Current Fiscal Mess in America

"I greatly admire Switzerland’s 'debt brake' because it’s really a spending cap. Theoretically, taxes could be hiked to allow more spending, but that hasn’t happened. The Swiss are very good about voting against tax increases, so the politicians don’t have much ability to boost the revenue trendline. Since the debt brake first took effect in 2003, the burden of government spending has dropped from 36 percent of GDP to 34 percent of economic output – a rather remarkable achievement since most other European nations have moved in the wrong direction." Continue reading →

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Why Your Take Home Pay WILL DROP in 2013

"The headlines all talk about taxes being increased, as a result of Obama and Boehner scheming, for those earning over $400,000 per year, perhaps $1 million per year. Nothing for you to worry about, right? Not so fast. Little discussed is the fact that the payroll tax is very likely to go up. Letting the payroll tax rate revert to the old 6.2% from the current 4.2% would raise government revenue by about $125 billion next year, equivalent to 0.8% of total U.S. economic output, according to J.P. Morgan Chase. WSJ estimates that it will mean an average tax increase of about $1,000 a year for the typical American household making about $50,000 annually." Continue reading →

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U.S. Treasury to miss deadline on FATCA tax crackdown

"The Treasury Department will miss a year-end deadline to publish final rules for a new global tax enforcement regime targeting the offshore assets of U.S. taxpayers. FATCA was enacted in 2010 after an outcry over a Swiss banking scandal that revealed U.S. taxpayers had hidden millions of dollars in assets overseas from the Internal Revenue Service. The law requires foreign financial institutions to tell the tax-collecting IRS about Americans' offshore accounts worth more than $50,000. International businesses ranging from Western Union Co to BlackRock Inc are waiting anxiously to see the rules so they can figure out how to comply with the law." Continue reading →

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Putin offers French actor Gerard Depardieu Russian passport following tax controversy

"Russian President Vladimir Putin said on Thursday he was ready to offer French movie star Gerard Depardieu a Russian passport to resolve his tax row, calling him a friend. 'If Gerard really wants to have a residency permit in Russia or a Russian passport, we can consider this issue resolved positively,' Putin said at his first major news conference after his return to the Kremlin in a March election. Depardieu on Sunday threatened to give up his French passport and take up Belgian citizenship to protest at the Socialist government’s new tax hike on the rich." Continue reading →

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UBS Libor-fixing fine may reach $1.5 billion

"Swiss banking giant UBS may be slapped with a combined fine of $1.5 billion (1.1 billion euros) to settle allegations that it manipulated Libor interest rates, the Financial Times reported Tuesday. Around three dozen bankers and senior managers will be implicated, and according to the terms of the deal, the Swiss bank’s Japanese subsidiary will plead guilty to a US criminal offence, the paper said. If the Financial Times report is correct, the Swiss bank would be hit with one of the biggest fines ever imposed on a financial institution." Continue reading →

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Police Raid at Deutsche Bank World Headquarters

"Frankfurt raid at Deutsche Bank: Before the Twin Towers are ten VW team buses and two large Mercedes buses of the Federal Police, in the foyer, five riot police taken a position. Tax inspectors and officials in suits and ties and black arm bands with the word 'police' rush out of the elevator into a conference room. They wear heavy black briefcase, a staff member described the start of the raid as 'martial'. Against five unnamed employees of Deutsche Bank warrants were issued, total is now calculated against 25 bankers. It now not only going to tax evasion, but also to the charge of money laundering." Continue reading →

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U.S. Construction Hits 37-Month High

"Ben Bernanke's mad money printing is making its impact. Analysis of October's construction spending patterns by the Associated General Contractors of America found ongoing building expenditures running at a $872 billion annual rate. That's up 9.6 percent in a year – and the highest level of activity in 37 months. Residential efforts ran especially strong: New single-family construction hit its highest mark since November 2008; multifamily construction hit a three-year high; and home improvements ran at a five-year high. This is all a Bernanke manipulated boom---next stop price inflation 2013." Continue reading →

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Could 2 platinum coins solve debt crisis?

"If President Obama wants to avoid an economic calamity next year, he could always show up at a news conference bearing two shiny platinum coins, each worth ... $1 trillion. That sounds wacky, but some economists and legal scholars have suggested that the 'platinum coin option' is one way to defuse a debt ceiling crisis. Under this scenario, the U.S. Mint would make a pair of trillion-dollar platinum coins. The president orders the coins to be deposited at the Federal Reserve. The Fed moves this money into Treasury's accounts. And just like that, Treasury suddenly has an extra $2 trillion to pay off its obligations for the next two years." Continue reading →

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