Middle Class Dismissed

Harvard Economist: ‘No Doubt, Pensions Are Screwed’

"Der Spiegel interviews Harvard economist Carmen Reinhart who has the novel idea that central banks are acting like the 'adults' in the room by cleaning up after spendthrift governments. 'Governments are incapable of reducing their debts and now central banks are stepping in.' Perhaps this argument sounds reasonable to a Martian that has not been following exactly what central banks have been doing and continue to do, but last time we looked we weren't Martian. The idea that monopoly central bankers are 'responsible' and politicians are not seems a spurious question, in our humble view. A pox on both their houses." Continue reading →

Continue ReadingHarvard Economist: ‘No Doubt, Pensions Are Screwed’

When The Window Closes For Americans

"Something I think you can plan your life around is the eventuality of the US government imposing capital controls and other restrictive measures on the movement of people and capital. Any country that is sufficiently desperate can and will implement such measures. The big question remains: When will this happen in the US? I believe that moment will arrive sometime before it is apparent that the US dollar has lost its place as the world's premier currency. The ramifications of the US dollar losing this status are difficult to overstate. It will be the tipping point at which the US government becomes sufficiently desperate." Continue reading →

Continue ReadingWhen The Window Closes For Americans

Bill Bonner: Gold versus paper cash

"Maybe there really is a recovery...however weak. Maybe the feds really do have the situation under control. Maybe the central banks are right to print money. Maybe it will be clear sailing from now until Kingdom Come. And we'll be fools not to be on the boat along with all the other stockbuyers and gold-dumpers. One day, however...and we won't say 'when'...people will stop worrying about the quantity of the paper and begin worrying about the quality of it. They will find that they have plenty of paper...and that more is coming all the time. They will look in their vaults and wonder what they will do with all this paper money." Continue reading →

Continue ReadingBill Bonner: Gold versus paper cash

Portugal’s elder statesman calls for ‘Argentine-style’ default

"Portugal's leading elder statesman has called on the country to copy Argentina and default on its debt to avert economic collapse, a move that would lead to near certain ejection from the euro. Mario Soares, who steered the country to democracy after the Salazar dictatorship, said all political forces should unite to 'bring down the government' and repudiate the austerity policies of the EU-IMF Troika. 'Portugal will never be able to pay its debts, however much it impoverishes itself. If you can’t pay, the only solution is not to pay. When Argentina was in crisis it didn’t pay. Did anything happen? No, nothing happened,' he told Antena 1." Continue reading →

Continue ReadingPortugal’s elder statesman calls for ‘Argentine-style’ default

France’s President Hollande: Eradicate tax havens

"We think we can recognize a dominant social theme when we see one. This sudden emphasis on eradicating tax havens is a manufactured media firestorm, intended to go on and on until there are few places to hide money from increasingly demanding governments. Believe, if you wish, that taxes are a legitimate duty of citizens in the 21st century. This argument still begs the question of why, in an era of central banking, governments need to collect taxes. Banks can print as much as is necessary. And according to such wise men as Ben Bernanke, banks can also drain money if the economy is getting overheated. So why taxes?" Continue reading →

Continue ReadingFrance’s President Hollande: Eradicate tax havens

Rules Aimed at Tax Evasion Abroad Trip Up Average Americans

"Many middle- and upper-middle-class Americans have found it more and more difficult to comply with requirements on reporting the existence and value of bank accounts overseas and to reconcile the taxes of different countries. At the same time, Americans from immigrant families who have bank accounts in their home countries that they may have overlooked are being swept up by the same laws used to ferret out millionaires and billionaires stashing money in secret Swiss accounts. The Internal Revenue Service has increased its examination of such accounts, lawyers said, with serious penalties for those who have not reported them." Continue reading →

Continue ReadingRules Aimed at Tax Evasion Abroad Trip Up Average Americans

In Venezuela, Almost-Free Gas Comes at a High Cost

"Premium gasoline in Venezuela costs 5.8 U.S. cents a gallon, using the official exchange rate. Every day thousands of taxis, buses and motorcycles freshly loaded with gasoline head into Colombia from Venezuela. Once in Colombia, the fuel is siphoned off by freelancers known as pimpineros who pay them about $2 a gallon and resell the gasoline or diesel to Colombians for a few cents more. Under 14 years of rule by the late President Hugo Chávez, Venezuela kept gasoline prices frozen even as rising government spending spurred robust overall inflation. He made himself enormously popular but damaged long-term prospects for Venezuela's economy." Continue reading →

Continue ReadingIn Venezuela, Almost-Free Gas Comes at a High Cost

Happy Tax Freedom Day?

"Tax Freedom Day is the day that 'the nation as a whole has earned enough money to pay its total tax bill for the year.' National Tax Freedom Day comes just a few days behind our deadline to pay up, with the exception of Texas, where residents have a lower average state and local tax burden. Tax Freedom Day for Texans began on April 10. On average, Americans nationwide will work 40 days just to pay their income tax, another 25 days for payroll taxes, 15 days for excise taxes, and 12 days for property taxes. Overall, Americans will spend more on taxes than on food, housing, and clothing combined this year." Continue reading →

Continue ReadingHappy Tax Freedom Day?

Bill Bonner: Tough luck for investors!

"For five years now, the US private sector has been trying to deleverage - while the public sector insists that it borrow more. Result: economic stagnation. Also, US consumers have watched their wages and family incomes fall for more than ten years. And adjusted for inflation (however you calculate it) investors are still below where they were in 2000. And now, the world has changed...almost the opposite of 1980, when the big boom began. Today, stocks are expensive, not cheap like they were in 1980. Interest rates are low, not high like they were in 1980. Total debt is now around 350% of GDP, not 150% like it was in 1980." Continue reading →

Continue ReadingBill Bonner: Tough luck for investors!

Fed Could End Up Paying Banks $77 Billion Annually on Excess Reserves

"The Federal Reserve could pay more than $77 billion a year in interest on the excess cash reserves it holds for commercial banks if rates follow the highest path forecast by Fed policy makers. The central bank already has paid more than $13 billion since 2008 when Congress authorized interest on reserve balances as part of financial-rescue legislation. The Fed earns interest income on its bond holdings and, after covering its operating expenses, returns the profit to the U.S. Treasury. Last year, the Fed remitted $88.4 billion. As the interest payments on reserves rise, this profit could shrink or disappear." Continue reading →

Continue ReadingFed Could End Up Paying Banks $77 Billion Annually on Excess Reserves