DoomwatchTM vs. Timesizing®

depression trends - 2009-2012
[Commentary] ©2012 Philip Hyde, The Timesizing Wire, Box 117, Harvard Sq PO, Cambridge MA 02238 USA 617-623-8080 - HOMEPAGE

12/23/2012  depression trends (or at least internal quotes) from WSJ, NYT, regional or online - missing earlier and later dates are handled entirely on recent archive page(s) -

6/19/2012  headlines from hell (or at least internal quotes) from Wall St. Journal, NY Times or online - missing earlier and later dates are handled entirely on recent archive page(s) -

6/03-04/2012  headlines from hell (or at least internal quotes) from Wall St. Journal, NY Times or online - missing earlier and later dates are handled entirely on recent archive page(s) -

6/02/2012  headlines from hell (or at least internal quotes) from Wall St. Journal, NY Times or online - missing earlier and later dates are handled entirely on recent archive page(s) -

5/03/2012  headlines from hell (or at least internal quotes) from Wall St. Journal, NY Times or online - missing earlier and later dates are handled entirely on recent archive page(s) -

4/27/2012  headlines from hell (or at least internal quotes) from Wall St. Journal, NY Times or online - missing earlier and later dates are handled entirely on recent archive page(s) -

4/24/2012  headlines from hell (or at least internal quotes) from Wall St. Journal, NY Times or online - missing earlier and later dates are handled entirely on recent archive page(s) -

3/25/2012  headlines from hell (or at least internal quotes) from Wall St. Journal, NY Times or online - missing earlier and later dates are handled entirely on recent archive page(s) -

3/17/2012  headlines from hell (or at least internal quotes) from Wall St. Journal, NY Times or online - missing earlier and later dates are handled entirely on recent archive page(s) -

12/27/2011  headlines from hell (or at least internal quotes) from Wall St. Journal, NY Times or online - missing earlier and later dates are handled entirely on recent archive page(s) -

11/25/2011  headlines from hell (or at least internal quotes) from Wall St. Journal, NY Times or online - missing earlier and later dates are handled entirely on recent archive page(s) -

  1. Don't tax the rich. Tax inequality itself - What the wealthy pay should depend on what the median income is, op ed by Ian Ayres & Aaron Edlin, New York Times, A24.
    The progressive reformer and eminent jurist Louis D. Brandeis once said, “We may have democracy, or we may have wealth concentrated in the hands of a few, but we cannot have both.” Brandeis lived at a time when enormous disparities between the rich and the poor led to violent labor unrest and ultimately to a reform movement.
    Over the last three decades, income inequality has again soared to the sort of levels that alarmed Brandeis. In 1980, the wealthiest 1 percent of Americans made 9.1 percent of our nation’s pre-tax income; by 2006 that share had risen to 18.8 percent — slightly higher than when Brandeis joined the Supreme Court in 1916.
    Congress might have countered this increased concentration but, instead, tax changes have exacerbated the trend: in after-tax dollars, our wealthiest 1 percent over this same period went from receiving 7.7 percent to 16.3 percent of our nation’s income.
    What we call the Brandeis Ratio — the ratio of the average income of the nation’s richest 1 percent to the median household income — has skyrocketed since Ronald Reagan took office. In 1980 the average 1-percenter made 12.5 times the median income, but in 2006 (the latest year for which data is available) the average income of our richest 1 percent was a whopping 36 times greater than that of the median household.
    Brandeis understood that at some point the concentration of economic power could undermine the democratic requisite of dispersed political power. This concern looms large in today’s America, where billionaires are allowed to spend unlimited amounts of money on their own campaigns or expressly advocating the election of others.
    We believe that we have reached the Brandeis tipping point. It would be bad for our democracy if 1-percenters started making 40 or 50 times as much as the median American.
    Enough is enough. Congress should reform our tax law to put the brakes on further inequality. Specifically, we propose an automatic extra tax on the income of the top 1 percent of earners — a tax that would limit the after-tax incomes of this club to 36 times the median household income.
    Importantly, our Brandeis tax does not target excessive income per se; it only caps inequality. Billionaires could double their current income without the tax kicking in — as long as the median income also doubles. The sky is the limit for the rich as long as the “rising tide lifts all boats.” Indeed, the tax gives job creators an extra reason to make sure that corporate wealth does in fact trickle down.
    Here’s how the tax would work. Once a year, the Internal Revenue Service would calculate the Brandeis ratio of the previous year. If the average 1-percenter made more than 36 times the income of the median American household, then the I.R.S. would create a new tax bracket for the highest 1 percent of income and calculate a marginal income tax rate for that bracket sufficient to reduce the after-tax Brandeis ratio to 36.
    This new tax, if triggered, would apply only to income in excess of the poorest 1-percenter — currently about $330,000 per year. Our Brandeis tax is conservative in that it doesn’t attempt to reverse the gains of the wealthy in the last 30 years. It is not a “claw back” tax. It merely assures that things don’t get worse.
    A key aspect of our proposal is the tax’s automatic nature. Congress need only act once to protect our future. Just as our tax brackets automatically adjust with the inflation rate, Congress could specify nondiscretionary conditions under which the Brandeis tax would automatically go into effect.
    Part of our goal is to change the way politicians speak about income equality. Framing the income of the wealthy in relation to the median income will help us all keep in mind the relative success of the middle class. Our grandparents would be shocked to learn that the average income of the 1-percent club has skyrocketed to more than 30 times the median income — just as we will be shocked if 20 years from now 1-percenters make 80 times the median, which is where we will be if inequality continues to grow at the current rate unabated.
    The Occupy Wall Street movement is right to decry the increasing power of the 1 percent as a threat to democracy. President Obama is right to characterize the present as a “make-or-break moment” for the middle class. As 1-percenters ourselves, we call on Congress, for the sake of democracy, to end the continued erosion of economic equality in our nation.
    Ian Ayres, a professor of law at Yale, is the author of “Carrots and Sticks: Unlock the Power of Incentives to Get Things Done.” Aaron S. Edlin, a professor of law and of economics at the University of California, Berkeley, is co-editor of “The Economists’ Voice: Top Economists Take On Today’s Problems.”
    [And here's a critique from Forbes Magazine -]
    A response to "Don't Tax the Rich. Tax the Inequality Itself," by Bernie Kent,
    In one of the most viewed and e-mailed articles of the day in The New York Times on 12/19/11, there is an op-ed opinion by law professors Ian Ayres and Aaron Edlin entitled, “Don’t Tax the Rich. Tax Inequality Itself.” Their thesis is that Congress should enact an automatic tax increase on the highest one percent of incomes for any years in which the average aftertax income of the top one percent of income taxpayers exceeds 36 times the income of the median American household.
    Ayres and Edlin call this the “Brandeis” ratio in honor of Supreme Court Justice Louis Brandeis, who they point out once said, “We may have democracy, or we may have wealth concentrated in the hands of a few, but we cannot have both.” Justice Brandeis succinctly stated an important point of view and the professors are to be thanked for creating a framework that attempts to achieve this goal. No matter what my personal opinion about the impact of concentrated wealth on democracy, I believe that the concept proposed in the article has several fatal flaws.
    1. Income and wealth are not synonyms. Although there is some correlation between income and wealth, they are often quite different. The problem that was stated in the op-ed piece is “concentrated wealth”. The solution should not be to tax income; it should be to tax wealth. This could be accomplished through an estate tax or an inheritance tax (or even a wealth tax, but let’s not get started down that path).
    [We Timesizers® agree that income (flowing money) and wealth (standing money) are not synonyms. That's why we broke them apart and designed a separate program for each, as outlined on our page of upgrades alias "transitions beyond Timesizing." But we also came to the reluctant conclusion that all these value dimensions (per-person worktime, income, wealth, credit...) had to be centrifuged and balanced in essentially the same way (ie: each separate balancing program for the whole series of them has essentially the same 5-phase structure) and none of these value dimensions could be adequately balanced by just a percentage tax. Bernie Kent has not yet "reluctantly" come to these conclusions. He doesn't want to get started down the path of a wealth tax and so for sure he wouldn't want to get started down the path of a ceiling on wealth, even a reinvestment ceiling (but who knows?...).
    Warren Buffet is a perfect example of the inability of an income tax to affect concentration of wealth. As I pointed out in my blog post entitled, “Musings on Warren Buffett’s Tax Disclosure” posted 10/17/11, Mr. Buffett’s taxable income for 2010 was just under $40 million. His net worth, as calculated in the most recent list of The Forbes 400, was 39 billion. Thus even if Buffett paid an income tax equal to 100% of his taxable income, it would represent only 1/10 of 1% of his wealth and would do nothing at all to reduce the concentration of wealth that Justice Brandeis and the op-ed authors abhor.
    2. The “Top One Percent” is dynamic over time. Many taxpayers appear in the top one percent one time in their lives–when they are selling a business that has been their life’s work. Other people might be part of this group only in a year in which they exercise stock options or receive a lump sum payment that represents many years’ work. These taxpayers should not be subject to this “Brandeis Tax”. They are not part of the concentration of wealth problem that the authors cite.
    Here is how the professors describe the mechanics of their tax proposal:
    “Once a year, the Internal Revenue Service would calculate the Brandeis ratio of the previous year. If the average 1-percenter made more than 36 times the income of the median American household, then the I.R.S. would create a new tax bracket for the highest 1 percent of income and calculate a marginal income tax rate for that bracket sufficient to reduce the after-tax Brandeis ratio to 36.”
    For which year would this tax apply–the year that the excess occurred, the year of the IRS calculation or the subsequent year? There are obvious problems in trying to assess and collect a tax for a year after all tax returns have been filed for that year. Prudent taxpayers would have to hold large amounts in reserve in case the tax were to be applied retroactively. Less prudent taxpayers may have spent or invested the funds needed to pay the retroactive “Brandeis Tax”, which would create difficult enforcement issues.
    If the authors would apply their “Brandeis Tax” to the year of IRS calculation or the following year, the people who suffer the tax are not the same people who exceeded the “Brandeis Ratio”. Incomes change from year to year. We have an enormous economy and people who rise to the top one percent of income do so for different reasons that do not always repeat.
    [Bernie's objections are trivial compared to the objection that the 36-to-1 ratio is inflexible and arbitrary and there is a way to get the ceiling flexible and much closer to market determination - as outlined in the income-balancing program on our Transitions page.]
    3. The percentage of income tax paid by the top one percent may represent something quite different than income inequality. Our income tax system is dynamic in many ways. Take, for example, the impact of capital gains. Capital gains income goes up when markets go up. One could argue both ways about whether “Brandeis Tax” should be imposed merely because the markets were up and the 36 to 1 ratio was exceeded. However capital gains income grows any time Congress increase the future tax rate on capital gains. This does not represent greater inequality of wealth, but merely a change in the timing of income recognition by taxpayers.
    The number of taxpayers reporting business income on their 1040s rather than as corporate taxpayers changes in response to tax rates on each type of business entity. This change in reporting income represents a significant reason why the income reported by the top one percent of taxpayers has gone up so much since 1980. At that time, the highest corporate rate was lower than the highest individual tax rate. Now that the rates are the same, many taxpayers have opted to be taxed personally on the income from their business, which results in more income being reported by the top one percent, but no greater concentration of wealth.
    Bottom Line. My view is that the proposed “Brandeis Tax” would not solve the problem of concentrated wealth, but would instead create a set of artificial rules which would add even more unfairness, complexity and uncertainty to our income tax laws.

    11/25/2011  headlines from hell from Wall St. Journal, NY Times or online - missing earlier and later dates are handled entirely on recent archive page(s) -

    1. We are the 99.9% - Why we shouldn't coddle the rich, by Paul Krugman, NYT, A29.
      “We are the 99 percent” is a great slogan. It correctly defines the issue as being the middle class versus the elite (as opposed to the middle class versus the poor). And it also gets past the common but wrong establishment notion that rising inequality is mainly about the well educated doing better than the less educated; the big winners in this new Gilded Age have been a handful of very wealthy people, not college graduates in general.
      If anything, however, the 99 percent slogan aims too low. A large fraction of the top 1 percent’s gains have actually gone to an even smaller group, the top 0.1 percent — the richest one-thousandth of the population.
      And while Democrats, by and large, want that super-elite to make at least some contribution to long-term deficit reduction, Republicans want to cut the super-elite’s taxes even as they slash Social Security, Medicare and Medicaid in the name of fiscal discipline.
      Before I get to those policy disputes, here are a few numbers.
      The recent Congressional Budget Office report on inequality didn’t look inside the top 1 percent, but an earlier report, which only went up to 2005, did. According to that report, between 1979 and 2005 the inflation-adjusted, after-tax income of Americans in the middle of the income distribution rose 21 percent. The equivalent number for the richest 0.1 percent rose 400 percent.
      For the most part, these huge gains reflected a dramatic rise in the super-elite’s share of pretax income. But there were also large tax cuts favoring the wealthy. In particular, taxes on capital gains are much lower than they were in 1979 — and the richest one-thousandth of Americans account for half of all income from capital gains.
      Given this history, why do Republicans advocate further tax cuts for the very rich even as they warn about deficits and demand drastic cuts in social insurance programs?
      Well, aside from shouts of “class warfare!” whenever such questions are raised, the usual answer is that the super-elite are “job creators” — that is, that they make a special contribution to the economy. So what you need to know is that this is bad economics. In fact, it would be bad economics even if America had the idealized, perfect market economy of conservative fantasies.
      After all, in an idealized market economy each worker would be paid exactly what he or she contributes to the economy by choosing to work, no more and no less. And this would be equally true for workers making $30,000 a year and executives making $30 million a year. There would be no reason to consider the contributions of the $30 million folks as deserving of special treatment.
      But, you say, the rich pay taxes! Indeed, they do. And they could — and should, from the point of view of the 99.9 percent — be paying substantially more in taxes, not offered even more tax breaks, despite the alleged budget crisis, because of the wonderful things they supposedly do.
      Still, don’t some of the very rich get that way by producing innovations that are worth far more to the world than the income they receive? Sure, but if you look at who really makes up the 0.1 percent, it’s hard to avoid the conclusion that, by and large, the members of the super-elite are overpaid, not underpaid, for what they do.
      For who are the 0.1 percent? Very few of them are Steve Jobs-type innovators; most of them are corporate bigwigs and financial wheeler-dealers. One recent analysis found that 43 percent of the super-elite are executives at nonfinancial companies, 18 percent are in finance and another 12 percent are lawyers or in real estate. And these are not, to put it mildly, professions in which there is a clear relationship between someone’s income and his economic contribution.
      Executive pay, which has skyrocketed over the past generation, is famously set by boards of directors appointed by the very people whose pay they determine; poorly performing C.E.O.’s still get lavish paychecks, and even failed and fired executives often receive millions as they go out the door.
      Meanwhile, the economic crisis showed that much of the apparent value created by modern finance was a mirage. As the Bank of England’s director for financial stability recently put it, seemingly high returns before the crisis simply reflected increased risk-taking — risk that was mostly borne not by the wheeler-dealers themselves but either by naïve investors or by taxpayers, who ended up holding the bag when it all went wrong. And as he waspishly noted, “If risk-making were a value-adding activity, Russian roulette players would contribute disproportionately to global welfare.”
      So should the 99.9 percent hate the 0.1 percent? No, not at all. But they should ignore all the propaganda about “job creators” and demand that the super-elite pay substantially more in taxes.

    10/28/2011  headlines from hell from Wall St. Journal, NY Times or online - missing earlier and later dates are handled entirely on recent archive page(s) - Three great articles today -

    1. Worker costs rise - Don't expect salaries to, by Kelly Evans, WSJ, C1.
      Employees may not realize it, but they are getting more expensive.
      It isn't that their paychecks have suddenly started bulging. It's that other employment costs—like health and retirement benefits—continue to rise. Benefit costs in the private sector were up 4% year-on-year in the second quarter, more than double the 1.7% increase in wages and salaries. On Friday, the Labor Department's employment-cost index for the third quarter is likely to show this trend continuing.
      The trouble is, this means employers are paying more for workers without actually paying their workers more. Higher benefit costs eat into profits without directly raising a company's output in the way hiring more workers would. In fact, this can actually discourage hiring. And the more that companies have to spend on benefits, the less take-home pay goes to workers. This undermines the virtuous cycle of consumer spending and job growth needed to help lower the 9.1% unemployment rate.
      This is already a management concern: The third-quarter Duke/CFO Magazine outlook survey shows companies expect health-care costs to jump 7.8% over the next year, while wage and salary costs are seen up just 2.3%. Just last week came word Wal-Mart Stores is raising health premiums for workers and cutting coverage for new part-time employees working fewer than 24 hours a week altogether because of rising costs.
      Pension-related costs may also jump as companies grapple with higher deficits due to earlier falls in equity markets and the still super-low interest-rate environment. With any luck, stock-market rallies like the sharp one seen this month will help relieve some of that pressure.
      Keeping health costs down, however, will prove more formidable. This, at a time of high unemployment, is likely to keep the squeeze on wages and salaries.
      Americans, in fact, sense this already. "People are worried about income security to an unprecedented degree," says Moody's Analytics economist John Lonski. Indeed, the share of those expecting their income to fall remains higher than the share expecting income to rise over the next six months, as per the Conference Board's October confidence survey. This situation never occurred in the survey's 30-year history prior to 2008. Now, it has become the norm. Low wages at least could spur hiring. But if employees are getting more expensive for other reasons, the risk is nobody benefits. —Email:

    2. Are companies responsible for creating jobs? by John Bussey, WSJ, B1.
      For anyone stepping gingerly through the encampment of Occupy Wall Street in Manhattan, it might be easy to dismiss the protest as just a living diorama of a 1960s Happening. That is, were it not for its intriguing challenge to American business, and Milton Friedman. Let's stipulate that the demonstrators have a fuzzy agenda. It's a smorgasbord of gripes ranging from income inequality to poor housing to executive pay—viewed as out of touch with executive value, which maybe we should stipulate too. The protest is diffuse, and young, and cohabitating under tarps. A passerby guiding his three children through the thicket of tents is overheard saying to his wife: "Let's get outta here before the kids see something they shouldn't." But what about one of the group's chief beefs: that business is falling short of its social responsibility, including creating jobs at home? Some politicians have given a nod of legitimacy to the protests. A CNN poll found that 32% of Americans favor the demonstrations while many others are still making up their minds.
      Milton Friedman, the Nobel laureate economist, blasted the very idea of corporate social responsibility four decades ago, calling it a "fundamentally subversive doctrine." Speaking for many capitalists then and now, he said, "there is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game."
      ["Within the rules of the game"? But what defines and enforces "the rules of the game"? Timesizing boils it down to the minimum: the workweek varies inversely with the unemployment rates to prevent the gradual diminishment and impoverishment of the foundation markets, the consumer markets, and we do this first in two steps - (1) we convert overtime into jobs to enforce the current 40-hour workweek max to stop the downward spiral, and then (2) we trim the workweek to get as much overtime to convert as it might take to restore wartime levels of full employment and markets and prosperity - without the war.]
      Companies shouldn't spend profits on unrelated job creation or social causes, he said. That money should go to shareholders—the owners of the companies. Pronouncements about corporate social responsibility, he added, are the indulgence of "pontificating executives" who are "incredibly shortsighted and muddleheaded in matters that are outside their businesses." And that indulgence can lead to inefficient markets.
      [But markets without Timesizing that are continuously laying off and deactivating customers can hardly be called efficient, unless we're talking about efficient self-destruction. And so much of what is currently being excused as Schumpeterian "creative destruction" is nothing but covert and indirect self-destruction, nothin' whatsoever "creative" about it.]
      What then to make of Howard Schultz, the chief executive of Starbucks, who in a letter earlier this month to fellow business leaders asked them to help "get Americans back to work and our economy growing again."
      He described Starbucks's own growth and hiring plans—a net of several thousand new jobs—and announced a $5 million donation by the Starbucks Foundation to a group that helps finance local businesses. Starbucks will also encourage customers and employees to donate. He's calling the program "Create Jobs for USA." Occupy Wall Street would like this.
      In a blog post last week, Mr. Schultz elbowed aside Mr. Friedman's triumph of profit: "Companies that hold on to the old-school, singular view of limiting their responsibilities to making a profit will not only discover it is a shallow goal but an unsustainable one," the post on the Harvard Business Review website read. "Values increasingly drive consumer and employee loyalties. Money and talent will follow those companies whose values are compatible."
      Occupy Wall Street has challenged American companies to create jobs, not just profits, and that appeals to some CEOs. John Bussey explains on The News Hub.
      Is this just window dressing, a new spin on PR and marketing? A group of CEOs and executives from large companies, including Exxon, Cisco and McDonald's, echo Mr. Schultz's view, though perhaps with a tighter link between largess and corporate self interest.
      The group, through their New York-based Committee Encouraging Corporate Philanthropy, highlights projects such as Wal-Mart's effort to reduce packaging in its supply chain (good for the environment, good for Wal-Mart's costs); IBM's "Service Corps," which sends young executives to help developing countries (good for the countries, good for scouting for future IBM business) and PepsiCo's program to train corn farmers in Mexico (good for the farmers, good for PepsiCo, which needed an improved supply of corn).
      To do it right, the group says, companies should pick issues that "are integral to the achievement of larger business goals...issues that drive growth or reduce costs" and also help society. That's a higher bar than pure charity.
      John Mackey, co-chief executive of Whole Foods, goes a bit farther. In a duel with Mr. Friedman in an issue of Reason magazine in 2005, he wrote: "From an investor's perspective, the purpose of the business is to maximize profits. But that's not the purpose for other stakeholders—for customers, employees, suppliers and the community. Each of those groups will define the purpose of the business in terms of its own needs and desires, and each perspective is valid and legitimate."
      In that exchange, Mr. Friedman acknowledged the value of corporate goodwill in a community—and tending to it—and counseled business to stick to a tight definition of shareholder interest.
      Mr. Friedman died the following year, but clearly his ideas on the subject didn't. Economic growth creates jobs, not the other way around, his adherents say. And it helps if government regulates less.
      "Jobs are an input, not an output; they're a cost of doing business, not a goal of doing business," says William Frezza, a Boston-based venture capitalist and fellow at the Competitive Enterprise Institute.
      [No, they're a required condition for there being any business there to do.]
      "From the perspective of defending capitalism, if you accept the premise of your opponent that business has to give back to society, you've already lost," he says. "To put sack cloth and ashes on—you've delegitimized capitalism, which is the goal of the protesters. Businesses give back to society every day by pleasing their customers and employing their employees. There's nothing business owes other than selling the best product at the best price."
      [Only within the context of Timesizing to frame the selfishness in a way that prevents it from destroying itself by laying off all its customers' customers. Why is this so hard for these geniuses to "get"?]
      Down at the demonstration, they've broken out the incense and are starting the drum-athon again.
      Over at Starbucks, Mr. Schultz is counseling his fellow CEOs that "business leaders have to step up and do our part."
      And across America, the 14 million unemployed are waiting for someone to be right.
      Write to John Bussey at

    3. Flat tax fantasies - and the realities, op ed by Scott Lehigh, Boston Globe, A15.
      In the spring, wrote Tennyson, a young man’s fancy lightly turns to thoughts of love. And in the autumn? Well, this fall, the Grand Old Party’s fancy has delightedly turned to fantasies about a flat tax.
      Among the Republican presidential candidates, Herman Cain was first to plight his troth to the notion, with his 9-9-9 proposal. Next came Newt Gingrich, who made a flat-tax option one of his promises in his “contract with’’ courtship of 21st-century America.
      This week, as he attempts to rekindle his romance with the Republican right, Texas Governor Rick Perry unveiled a 20 percent flat tax that, he rhapsodized, would free “our employers and our people to invest, grow, and prosper.’’
      [Isn't that what lower taxes all through the Bush years were supposed to do? So where's the prosperity, Perry? It did nothing but create a black hole of vast inert wealth in a tiny population of Americans, who have far far more than they can spend and by now, far more than they can even invest sustainably since they've co-opted such a huge percentage of the entire money supply of the nation.]
      Even Mitt Romney, once a flat-tax skeptic, is now flirting with the idea of flatter. And as for The Wall Street Journal editorial page? Well, it has already succumbed to commentary’s equivalent of a Stendhal Syndrome swoon.
      If flat-tax rhetoric sounds too good to be true, it is. We’ve already discovered that Cain’s 9-9-9 plan, presented as a marvelous gift to America, is actually a Trojan Tax Horse: A big break for upper earners, a bigger tax take from the other 84 percent.
      So here are some important tax truths to consider as the campaign proceeds.
      First, beware of “flat and fair.’’ Although you’ll often hear both adjectives applied to single-rate plans, the concepts are actually at war here. A flat tax would certainly be simpler than the current graduated system. But it definitely wouldn’t be fairer. Not if what one means by fair is progressive taxation: That is, a system that takes a larger share of upper earnings than it does of middle and moderate incomes.
      Further, “under any flat tax that raises an equivalent amount of money, it is unavoidable that middle and lower income people will pay more than they do under the existing tax code,’’ notes Robert Reischauer, former director of the Congressional Budget Office. 
      That’s a simple analytical reality. Consider: The one rate set by a flat tax will inevitably be well below the top rate of a graduated system. That spells a large tax cut for upper earners. But if such a plan is to be revenue neutral, those lost tax dollars have to be made up somewhere. And that means taking more from middle or moderate earners.
      Now, proposing a tax hike on middle America is hardly politically palatable. Thus advocates usually try to wriggle free of a flat tax’s regressive reality by choosing a rate that won’t replace the revenues raised under the current system.
      That’s what Steve Forbes, Perry’s flat-tax mentor, did with his plan in the 1996 campaign. His 17 percent flat tax would provide a break for all taxpayers, he promised. But that was only true because his scheme would have collected several hundred billion less than the existing system.
      Perry is taking a page from Forbes’s playbook, while adding a clever twist of his own. He’d let individual taxpayers choose whether to pay under the current system or to apply his 20 percent flat rate.
      That option means no taxpayers would see their taxes go up. But here’s what would happen, explains Len Burman, professor of public administration and economics at Syracuse University. Top earners would obviously take advantage of Perry’s 20 percent rate, which would provide them an enormous tax cut. And because no one would pay more, the inevitable result would be either a much bigger deficit or much deeper budget cuts to offset the hundreds of billions the flat tax would lose.
      Perry, of course, doesn’t have anything resembling a realistic plan for dealing with the existing budget deficit, let alone one rendered much larger by a flawed flat tax.
      So keep your wits clear and your wallet close in this time of flat-tax infatuation. Tax-code flat-tery may sound beguiling, but as policy, the idea is a decided dud.

    10/26/2011  headlines from hell from Wall St. Journal, NY Times or online - missing earlier and later dates are handled entirely on recent archive page(s) -

    8/16/2011  headlines from hell from Wall St. Journal, NY Times or online - missing earlier and later dates are handled entirely on recent archive page(s) -

    7/30/2011  headlines from hell from Wall St. Journal, NY Times or online - missing earlier and later dates are handled entirely on recent archive page(s) -

    7/15/2011  headlines from hell from Wall St. Journal, NY Times or online - missing earlier and later dates are handled entirely on recent archive page(s) -

    7/02/2011  headlines from hell from Wall St. Journal, NY Times or online - missing earlier and later dates are handled entirely on recent archive page(s) - 5/31/2011  headlines from hell from Wall St. Journal, NY Times or Boston Globe - missing earlier and later dates are handled entirely on recent archive page(s) -

    2/06-08/2011  headlines from hell from Wall St. Journal, NY Times or Boston Globe - missing earlier and later dates are handled entirely on recent archive page(s) -

    3/07-08-09/2010  headlines from hell from Wall St. Journal, NY Times or Boston Globe - missing earlier and later dates are handled entirely on recent archive page(s) -

    2/21-22/2010  headlines from hell from Wall St. Journal, NY Times or Boston Globe - missing earlier and later dates are handled entirely on recent archive page(s) -

    1. The bankruptcy boys - What's the plan? Fiscal catastrophe, op ed by Paul Krugman, 2/22 NYT, A17.
      OK, the beast is starving. Now what?
      That's the question confronting Republicans.
      [They don't think so. It's only confronting Democrats and independents. Nothing "confronts" them. They have most of the money and they want it all regardless of the effects on everyone else and the economy that (decreasingl) supports their wealth and power. They'd rather be huge fish in a small pond than big fish in a huge pond. They're even more like China's leaders than China's leaders, who don't give a damn about their people cuz there are sooo many of'em = common as dirt and cheap as dirt. They love the class system as long as they're on top.]
      ..They’re refusing to answer, or even to engage in any serious discussion about what to do.
      [Or rather, uninterested in either the question or the questioners.]
      ..Ever since Reagan, the G.O.P. has been run by people who want a much smaller government. In the famous words of the activist Grover Norquist, conservatives want to get the government “down to the size where we can drown it in the bathtub.”
      [Not a bad idea, considering that 70-80% of all 'modern' governments is devoted to two invalid governmental functions = serving as the employer and charity of last resort. Valid would be: seeing to it that the private sector cleans up its own messes and recycles its own disposable employees (so it doesn't downsize its own consumer base) by guaranteeing full employment and markets via refereeing economywide worksharing (temporary first-aid) and timesizing (permanent & sustainable). True, this would involve stepping in whenever the private sector refused to reinvest in its own markets by reinvesting overtime profits in training and hiring, But as for the vast socialist entitlement programs that exist only because we failed to "get" the central importance and necessity of worksharing in the age of technology, no. Social security, workman's compensation, minimum wage and unemployment insurance (plus the still-proliferating alphabet soup of makework programs) will all be scaled down once, with timesizing replacing downsizing, we hold the private sector's feet to the fire of whatever it takes to guarantee full employment and maximum markets.]
      But there has always been a political problem with this agenda. Voters may say they oppose big government, but the programs that actually dominate federal spending - Medicare, Medicaid and Social Security - are very popular. So how can the public be persuaded to accept large spending cuts?
      [The sustainable answer is: powerful, simple, even-handed, automatically operating, centrally positioned regulation of the private sector to regain, maintain, and enhance full employment and markets - so it doesn't get itself into the kind of death spiral it's in today. This starts with one of the GOP's main program planks during their first 75 years = cutting working hours to create jobs on a market-oriented basis. But most Republicans - and Democrats - have forgotten all about this Single All-Sufficient Control, a virtual Holy Grail of economic design. Government is not the answer to everything, at least in the shape of supposedly honest government replication of the private sector in all its complex detail. But this burgeoining maximum of stifling details has an alternative = a stable minimum of liberating general groundrules, theoretically just one. And the closest we have to that goal in our lifetimes is ... Timesizing. Republican strategy ASSUMES that something like Timesizing is already in place and fully operational, or that it will happen by itself. Unh-unh, it ain't there yet and it don't get there by magic.]
      ..Rather than proposing unpopular spending cuts, Republicans would push through popular tax cuts, with the deliberate intention of worsening the government's fiscal [budgetary] position. Spending cuts could then be sold as..the only way to eliminate an unsustainable budget deficit.\.a necessity rather than a choice... \It was\ a game of bait and switch...
      And the deficit came... So the beast is starving, as planned. [And] Republicans have backed away from spending cuts they..proposed in the cuts in Medicare \they\ tried to force through.\.in the 1990s [and] means-testing retirement benefits \that\ Bush..proposed.\.five years ago...
      [So they're not so bad, right? They REALLY WANT TO PROTECT Medicare and Social Security. But -]
      In effect, the party is doubling down on starve-the-beast.
      [That is, they're making the beast fatter while they drive it deeper into a narrowing cave of megadebt.]
      Depriving the government of revenue, it turns out, wasn’t enough to push politicians into dismantling the welfare state.
      So now the de facto strategy is to oppose any responsible action until we are in the midst of a fiscal catastrophe. You read it here first.
      [Actually I think we read it first two years ago in Dmitry Orlov's web article "The Five Stages of Collapse."]

    2. Q&A it's money that matters - A new book says economic inequality is the social division we should be worrying about, review by Jenna Russell ( of book The Spirit Level by Kate Pickett & Richard Wilkinson. 2/21 Boston Globe, C3.
      [And the actionable way to phrase "economic inequality" is "overconcentration of money."]
      If you like to think of America as The Greatest Country on Earth, and you’d rather not examine its claim to that title too closely, “The Spirit Level” will not be your favorite new book.
      [Yep, the USA is finished, killed by its phony conservatives, really dogmatic utopian radicals in conservative clothing.]
      On nearly every one of its 250-plus pages, a stark, unflattering graph shows the USA topping the charts among developed countries for some social ailment: drug use, obesity, violence, mental illness, teenage pregnancy, illiteracy. But authors Kate Pickett and Richard Wilkinson, a pair of British social scientists, have another, more enlightening point to make. With striking consistency, they say, the severity of social decay in different countries reflects a key difference among them: not the number of poor people or the depth of their poverty, but the size of the gap between the poorest and the richest.
      [That is, how far the unlimited concentration and coagulation of the nation's money supply has gone. In other words, it doesn't matter how much money a country has, if 1% of the population has 99% of it, it's a pathetic poor country with less and less claim to membership among the "developed countries."]
      It is economic inequality, not overall wealth or cultural differences, that fosters societal breakdown, they argue, by boosting insecurity and anxiety, which leads to divisive prejudice...and all manner of mental and physical suffering. Though Sweden and Japan have low levels of economic inequality for different reasons - the former redistributes wealth, while in the latter case, the playing field is more level from the start, with a smaller range of incomes - both have relatively low crime rates and happier, healthier citizens...
      What is groundbreaking is Pickett and Wilkinson’s compilation of data, much of it only recently available, allowing sweeping comparisons across dozens of nations and areas of well-being, and showing, for the first time, the breadth and strength of the statistical link...
      Wilkinson: "..The media is full of stuff about what’s going wrong in society, and what we’ve done is finally put the bits together, collate the evidence and put it out there."...
      Q: "..The people at the top would benefit from change as well?"
      Wilkinson: "..The quality of social relations seems to deteriorate in more unequal societies. People trust each other much less....In Sweden, people don’t bother to check your tickets on the train or bus. And it just feels so much nicer.... We came across a website in England called “Ferraris for all,” making the point that if everybody had a Ferrari, there would be no status in owning one.
      Q: Do they have a plan for achieving that goal?
      PICKETT: I don’t think a practical one, no...
      Q: What can realistically be done to redistribute wealth?
      PICKETT: "Different societies achieve their levels of equality or inequality through different mechanisms [examples next para.], and it doesn’t seem to matter how you get there - the improved conditions seem to flow from more equality itself, not from particular policies.".\..
      Though Sweden and Japan have low levels of economic inequality for different reasons - the former redistributes wealth, while in the latter case, the playing field is more level from the start, with a smaller range of incomes - both have relatively low crime rates and happier, healthier citizens...
      "We’re not advocating any particular way....It’s important to realize how rapidly our inequality has grown, and how different our societies used to be. Inequality isn’t some entrenched characteristic. [It's been created by design and] it’s become much worse since the 1970s. And we can [redesign things and] shift things back.
      [In short, they don't have a solution - but we do have a solution, a design for deconcentrating a nation's wealth and reversing inequality = our Timesizing Program is based on replacing downsizing jobs and markets with downsizing the workweek. Timesizing shifts capitalism from a chronic shortage of jobs and business opportunities to a chronic "shortage" (actually a balance at last) of labor hours that are available in the job market. Scarce commodities command a higher price by market forces, and the same goes for labor. Timesizing uses that fact to increase respect for the millions of ordinary Americans.]

    1/08/2010  headlines from hell from Wall St. Journal (j), NY Times (t) or Boston Globe (g) - missing earlier and later dates are handled entirely on recent archive page(s) -

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11/09/2009  headlines from hell from Wall St. Journal (j), NY Times (t) or Boston Globe (g) - missing earlier and later dates are handled entirely on recent archive page(s) -

  1. Economists Seek to Fix a Defect in Data That Overstates the Nation’s Vigor, By LOUIS UCHITELLE, NYT, B3.
    WASHINGTON — A widening gap between data and reality is distorting the government’s picture of the country’s economic health, overstating growth and productivity in ways that could affect the political debate on issues like trade, wages and job creation.
    The shortcomings of the data-gathering system came through loud and clear here Friday and Saturday at a first-of-its-kind gathering of economists from academia and government determined to come up with a more accurate statistical picture.
    The fundamental shortcoming is in the way imports are accounted for. A carburetor bought for $50 in China as a component of an American-made car, for example, more often than not shows up in the statistics as if it were the American-made version valued at, say, $100. The failure to distinguish adequately between what is made in America and what is made abroad falsely inflates the gross domestic product, which sums up all value added within the country.
    American workers lose their jobs when carburetors they once made are imported instead. The federal data notices the decline in employment but fails to revalue the carburetors or even pinpoint that they are foreign-made. Because it seems as if $100 carburetors are being produced but fewer workers are needed to do so, productivity falsely rises — in the national statistics.
    “We don’t have the data collection structure to capture what is happening in a real time way, or what is being traded and how it is affecting workers,” said Susan Houseman, a senior economist at the W.E. Upjohn Institute for Employment Research in Kalamazoo, Mich., who has done pioneering research in the field. “We have no idea how to measure the occupations being offshored or what is being inshored.”
    The statistical distortions can be significant. At worst, the gross domestic product would have risen at only a 3.3 percent annual rate in the third quarter instead of the 3.5 percent actually reported, according to some experts at the conference. The same gap applies to productivity. And the spread is growing as imports do.
    That may help to explain why the recovery from the 2001 recession was a jobless one for many months and why the recovery from this recession is likely to generate few jobs for many months.
    In addition, more detailed import data would help to explain wage inequality, by linking some low wages more accurately to particular industries exposed to import competition.
    On another front, many argue that labor productivity is rising faster than the pay of workers who made the greater productivity possible. That argument would be watered down if more accurate data showed that productivity had been overstated.
    “What we are measuring as productivity gains may in fact be changes in trade,” said William Alterman, assistant commissioner for international prices at the Bureau of Labor Statistics.
    The federal agencies that compile the nation’s statistics increasingly acknowledge that they lack the detailed data needed to calculate the impact of imported goods and services as imports rise from an insignificant 5 percent of all economic activity 35 years ago to more than 12 percent today, not counting petroleum. As a result, many imports are valued as if they were made in the United States and therefore higher in price than their imported counterparts.
    The problem is particularly acute in manufacturing. Imported components constitute an ever greater share of the computers, autos, appliances and other finished merchandise that roll off assembly lines in the United States — and an ever greater share of all of the nation’s imports.
    But the statistical system is not yet up to the task of sorting out which components are made here, which are made overseas and the resulting impact on employment. As Lori G. Kletzer, an economist at the University of California, Santa Cruz, put it, “We don’t know what jobs have been offshored.”
    The same holds for services. An accounting firm in New York with 50 employees outsources some of its functions to less expensive accountants in India: the paperwork on an income tax return, for example. That work comes back to New York by computer transmission and is billed at New York rates, as if it were value added in this country.
    Grappling with these blind spots, nearly all of the 80 experts at the conference, which was sponsored by the Upjohn Institute and the National Academy of Public Administration, agreed that the statistics now published tend to overstate the strength of the economy. That view was shared by those who attended from the Bureau of Economic Analysis, the Bureau of Labor Statistics and the Federal Reserve, all big players in measuring economic performance.
    The stated goal, among those at the conference, is to repair the statistics, but that requires several years, lots of money (from Congress) to gather more information about what companies are doing, and whole new procedures for measuring imports. Much of the conference was devoted to an analysis of the gap between existing data and reality, and ways to close that gap.
    Imports and exports are recorded, of course, as they enter and leave the country. The American trade deficit speaks volumes. But when it comes to who gets what import — particularly which manufacturer gets what component or what metal or what machine — these details are not gathered.
    Instead, the federal agencies use an import price index, much of it imputed from small samples, that fails to capture just when an auto company switches from a domestically made carburetor to a less expensive Chinese model, and whether that shift is in all of the company’s plants or just those in Michigan.
    “We can’t pick up the price shift,” Mr. Alterman said. “We are not designed to do that.”

    10/31/2009  headlines from hell from Wall St. Journal (j), NY Times (t) or Boston Globe (g) - missing earlier and later dates are handled entirely on recent archive page(s) -

    1. We're Governed by Callous Children - Americans are beginning to doubt their problems can be solved (hardcopy subhead) - Americans feel increasingly disheartened, and our leaders don't even notice (webcopy subhead) - Declarations, by Peggy Noonan, WSJ, A19.
      [Americans' problems CAN be solved, but only by sharing the vanishing work, which our 'leaders' are ignoring or spinning as a failure (never mind the first 170 years of American history when we cut the workweek in half).]
      The new economic statistics put growth at a healthy 3.5% for the third quarter. We should be dancing in the streets. No one is, because no one has any faith in these numbers. Waves of money are sloshing through the system, creating a false rising tide that lifts all boats for the moment. The tide will recede. The boats aren't rising, they're bobbing, and will settle. No one believes the bad time is over. No one thinks we're entering a new age of abundance. No one thinks it will ever be the same as before 2008. Economists, statisticians, forecasters and market specialists will argue about what the new numbers mean, but no one believes them, either. Among the things swept away in 2008 was public confidence in the experts. The experts missed the crash. They'll miss the meaning of this moment, too.
      The biggest threat to America right now is not government spending, huge deficits, foreign ownership of our debt, world terrorism, two wars, potential epidemics or nuts with nukes. The biggest long-term threat is that people are becoming and have become disheartened, that this condition is reaching critical mass, and that it afflicts most broadly and deeply those members of the American leadership class who are not in Washington, most especially those in business.
      It is a story in two parts. The first: "They do not think they can make it better."
      I talked this week with a guy from Big Pharma, which we used to call "the drug companies" until we decided that didn't sound menacing enough. He is middle-aged, works in a significant position, and our conversation turned to the last great recession, in the late mid- to late 1970s and early '80s. We talked about how, in terms of numbers, that recession was in some ways worse than the one we're experiencing now. Interest rates were over 20%, and inflation and unemployment hit double digits. America was in what might be called a functional depression, yet there was still a prevalent feeling of hope. Here's why. Everyone thought they could figure a way through. We knew we could find a path through the mess. In 1982 there were people saying, "If only we get rid of this guy Reagan, we can make it better!" Others said, "If we follow Reagan, he'll squeeze out inflation and lower taxes and we'll be America again, we'll be acting like Americans again." Everyone had a path through.
      Now they don't. The most sophisticated Americans, experienced in how the country works on the ground, can't figure a way out. Have you heard, "If only we follow Obama and the Democrats, it will all get better"? Or, "If only we follow the Republicans, they'll make it all work again"? I bet you haven't, or not much.
      This is historic. This is something new in modern political history, and I'm not sure we're fully noticing it. Americans are starting to think the problems we are facing cannot be solved.
      Part of the reason is that the problems—debt, spending, war—seem too big. But a larger part is that our government, from the White House through Congress and so many state and local governments, seems to be demonstrating every day that they cannot make things better. They are not offering a new path, they are only offering old paths—spend more, regulate more, tax more in an attempt to make us more healthy locally and nationally. And in the long term everyone—well, not those in government, but most everyone else—seems to know that won't work. It's not a way out. It's not a path through.
      And so the disheartenedness of the leadership class, of those in business, of those who have something. This week the New York Post carried a report that 1.5 million people had left high-tax New York state between 2000 and 2008, more than a million of them from even higher-tax New York City. They took their tax dollars with them—in 2006 alone more than $4 billion.
      You know what New York, both state and city, will do to make up for the lost money. They'll raise taxes.
      I talked with an executive this week with what we still call "the insurance companies" and will no doubt soon be calling Big Insura. (Take it away, Democratic National Committee.) He was thoughtful, reflective about the big picture. He talked about all the new proposed regulations on the industry. Rep. Barney Frank had just said on some cable show that the Democrats of the White House and Congress "are trying on every front to increase the role of government in the regulatory area." The executive said of Washington: "They don't understand that people can just stop, get out. I have friends and colleagues who've said to me 'I'm done.' " He spoke of his own increasing tax burden and said, "They don't understand that if they start to tax me so that I'm paying 60%, 55%, I'll stop."
      He felt government doesn't understand that business in America is run by people, by human beings. Mr. Frank must believe America is populated by high-achieving robots who will obey whatever command he and his friends issue. But of course they're human, and they can become disheartened. They can pack it in, go elsewhere, quit what used to be called the rat race and might as well be called that again since the government seems to think they're all rats. (That would be you, Chamber of Commerce.)
      And here is the second part of the story. While Americans feel increasingly disheartened, their leaders evince a mindless . . . one almost calls it optimism, but it is not that.
      It is a curious thing that those who feel most mistily affectionate toward America, and most protective toward it, are the most aware of its vulnerabilities, the most aware that it can be harmed. They don't see it as all-powerful, impregnable, unharmable. The loving have a sense of its limits.
      When I see those in government, both locally and in Washington, spend and tax and come up each day with new ways to spend and tax—health care, cap and trade, etc.—I think: Why aren't they worried about the impact of what they're doing? Why do they think America is so strong it can take endless abuse?
      I think I know part of the answer. It is that they've never seen things go dark. They came of age during the great abundance, circa 1980-2008 (or 1950-2008, take your pick), and they don't have the habit of worry. They talk about their "concerns"—they're big on that word. But they're not really concerned. They think America is the goose that lays the golden egg. Why not? She laid it in their laps. She laid it in grandpa's lap.
      They don't feel anxious, because they never had anything to be anxious about. They grew up in an America surrounded by phrases—"strongest nation in the world," "indispensable nation," "unipolar power," "highest standard of living"—and are not bright enough, or serious enough, to imagine that they can damage that, hurt it, even fatally.
      We are governed at all levels by America's luckiest children, sons and daughters of the abundance, and they call themselves optimists but they're not optimists—they're unimaginative. They don't have faith, they've just never been foreclosed on. They are stupid and they are callous, and they don't mind it when people become disheartened. They don't even notice.
      [You allow a huge labor surplus to develop by downsizing in response to worksavings instead of timesizing (adjusting your definition of "full time" work), and you screw up EVERYthing - the national income funnels up to the top brackets and they gradually grab all the decision-making power and drift off on their own planet of insulation and isolation - and resistance to any and all adaptation to changing circumstances because, hey, the system seems to be working for them and "if it works, don't fix it" - regardless of the "noise" from all the riffraff outside "our people." Capitalism only works well with a perceived labor shortage to raise wages and centrifuge the money supply out to the hundreds of millions who actually want and need to SPEND it. It does not work well when falling wages due to a labor surplus allow The Great Leak Upward = money beyond limit coagulating in a Black Hole among the top 300,000 or even 30,000 Americans, who were already spending all they cared to before they got the last $20 million (usually didn't even realize they got it!) and can't even find sustainable investment targets on that scale to maintain its value now they've effectively cannibalized their own consumer base (via their employment basement).]

    2. State death taxes are the latest worry, by Laura Saunders, WSJ, B1.
      [These people don't know what worry is.]
      With the federal estate tax disappearing for most people, state death taxes have emerged as a surprise new worry.
      This year, the federal exemption rose to $3.5 million per individual, or as much as $7 million per married couple. At the current level, only 5,500 estates a year are federally taxable.
      That is down from the 17,500 estates that would have faced death taxes under the previous $2 million limit, the Urban-Brookings Tax Policy Center estimates.
      The problem is that most states with estate or inheritance taxes haven't raised exemptions to match the federal limits. That means thousands of taxpayers who now escape the federal levy could still get hit with a state death tax.
      As a result, tax advisers are tweaking bypass trusts that allow married couples to maximize exemptions from state taxes. They are advising taxpayers where to retire in order to pare or eliminate estate taxes. And they are counseling out-of-state taxpayers so that they don't get dinged for property they own in a state with a tough death tax.
      "In the past, many people hardly gave state death taxes a thought," says veteran estate attorney Sidney Kess in New York. "Now they are shocked at how expensive mistakes can be."
      Adding insult to injury, Congress is talking about eliminating the federal deduction for state estate taxes. That would affect only wealthy taxpayers whose estates still exceed $3.5 million per individual.
      Keeping track of the constantly changing landscape in state death taxes can be tricky. Delaware just added an estate tax this year, while the estate taxes in Kansas and Illinois are scheduled to disappear at the end of 2009.
      Connecticut, meanwhile, will raise its exemption to $3.5 million from $2 million in January. There are only three states that have same exemption as the federal estate tax.
      "States are in such dire straits that most without these taxes would like to have one, and nobody who has one will let it go," says David Brunori, a state tax expert with Tax Analysts in Falls Church, Va.
      He believes that both Illinois and Kansas will end up retaining their taxes, even though they are supposed to go away at the end of the year. "They need the money."
      Seventeen states and the District of Columbia currently impose estate taxes, according to CCH Wolters Kluwer. Eight states have inheritance taxes, which are levied on heirs, not estates. Maryland and New Jersey have both.
      Compared to the uniform federal tax, state taxes are a crazy quilt. In many states with inheritance taxes, rates are tied to how closely the heir is related to the late donor. Iowa and Kentucky exempt both spouses and children who inherit property, while Nebraska treats only transfers to spouses as tax-free.
      Rates and exemptions vary widely. Washington state's top tax rate is 19%, but it applies only to estates over $2 million. Pennsylvania, by contrast, taxes children and grandchildren of an heir at an almost-flat rate of 4.5%. More-distant heirs pay up to 15%.
      Advisers say taxpayers are most likely to be tripped up by states that used to conform to the federal exemption but haven't raised it at the same rate.
      As a result, married couples in states with lower exemptions -- such as New York, Oregon, Minnesota and Massachusetts (all $1 million) or Illinois ($2 million) -- are setting up "bypass" trusts in wills even if they no longer need them for federal taxes.
      Here's how bypass trusts work: At the death of the first spouse, assets go into a trust that the survivor can draw on if necessary. When the second spouse dies, the remaining assets in the bypass trust pass tax-free to heirs, preserving the value of both individual exemptions.
      Put another way, if a married couple lives in a state with a $1 million individual exemption, a bypass trust would let them to pass as much as $2 million tax-free to heirs.
      "Without the proper trusts," says Eric Hager, an attorney at Davidson, Dawson & Clark in New York, "a couple in New York with $2 million in assets might pay an unnecessary $100,000."
      Others warn that even taxpayers who live in states without estate taxes, such as Florida or California, risk unpleasant surprises if they also own property in a state that does have one.
      The issue is figuring out the "domicile" of a taxpayer. Domicile is a much broader idea than the mere residency test that often determines where someone pays income tax.
      Although one determinant of domicile is the amount of time spent in a state, it also may look at where a taxpayer votes, has church and club memberships, registers a car or even has a burial plot.
      This means that a taxpayer could live in estate-tax-free Florida, California or Texas and even spend most of his time there. But if he keeps an apartment in New York or a summer home on Cape Cod and has other ties to the area, he might be considered to be domiciled there.
      "The issue of domicile used to come up only once in a blue moon," says Daniel Daniels, an attorney at Wiggin & Dana in Stamford, Conn. "Now we have to think about it all the time."
      In the worst case, a taxpayer could be domiciled in more than one state and owe taxes to each. There is a famous precedent: After the 1930 death of Campbell Soup magnate John Dorrance, both New Jersey and Pennsylvania claimed he was domiciled there. Each billed his estate about $15 million.
      Twice, the U.S. Supreme Court refused to break the deadlock. After a six-year battle, the Dorrance estate paid tax to both states.
      Write to Laura Saunders at

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    1. Stocks in the black on gusher of cash, by E.S. Browning, Wall St Journal, A1.
      [Stocks in the black - but what their value is based on, the employment and consumer bases, are in the mega-red thanks to the theft of megataxpayer money in favor of the super-super-rich - this is human stupidity, cluelessness and irresponsibility on a colossal scale.]
      With a 34% rebound in 3 months, the Dow..has pushed into positive territory for 2009, and one of the main reasons is disarmingly simple: Financial markets once again[?] are awash in government cash.
      ...Governments around the world are pumping money into "the economy" [our quotes] at a frenetic pace.
      [Actually by redistributing their money supply into the topmost income brackets, they are pumping money OUT of their economies since these millions cannot possibly be spent by their overloaded recipients and the baseless stock runup shows it cannot possibly be invested sustainably either.]
      Because businesses can't put trillions of new dollars to work in such a short time, the money is finding its way [ha, POURING would be more accurate] into financial markets. Some investors have begun speaking of a "bailout bubble" being created in certain markets [make that generally in financial markets], and about a "melt-up" in demand fueled by the growing supply of "money." [our quotes on money cuz it's just really just air]
      [A melt-down is deflation. A melt-up is hyper-inflation. This is going to be hyper-hyper-hyper-inflation. Soup kitchens all over America - reserve your place in line - if these total morons at the top can even get that right, instead of grab-grab-grabbing. It seems they're sooo detached from reality, they couldn't organize a two-car funeral.]
      "All that money that was printed had to go somewhere," says Joachim Fels, co-head of global economics at Morgan Stanley.
      [If it had gone to the bottom instead of the top, it would have created the circulation, trust and faith that would have solidified and substantiated it, but as it is, it has worsened the underlying problem that it was supposed to correct (except the underlying problem was never admitted or described in solvable terms) = insufficient circulating money to support the gigantic concentration of the money supply in the top brackets.]
      "It has been pushing up commodity prices and stock prices, starting in emerging markets [not really, unless he means China] and then pushing over into developed markets.
      The U.S. government alone has allocated $11.4 trillion to direct and indirect stimulus in the past two years, of which about $2.4 trillion has been spent, according to an estimate by Daniel Clifton, head of policy research at NY's Strategas Research Partners.
      Most of the money has been pushed out in the past year. [Meaning unclear. Bad writing. Does this mean that most of the money has been printed in the last year (and distributed to the topmost brackets)?]
      The money is gushing from direct grants, central-bank lending, tax breaks, guarantees and other items. China has announced plans for $600 billion in direct stimulus spending [direct to the top or the bottom? - cuz the top's gonna worsen things, the bottom's gonna improve things); Russia, $290 billion; Britain, $147 billion; and Japan, $155 billion, according to Strategas. Those countries and others are spending trillions more indirectly. [meaning??]
      "It is quite easily the biggest combined fiscal stimulus the world has ever seen in modern [or any] times," says Jim O'Neill, chief economist at Goldman Sachs. "That liquidity will impact anything that is sensitive to it, ranging from short-term fixed-income securities through stock prices through property prices and into people's personal wealth."
      Some of the market gains, of course, reflect a bet by investors that the worst of the global recession is over, and that investments tied to global growth will be big beneficiaries. The heavy influx of money into the financial system has fueled those bets.
      (surging liquidity chart)
      If the recession proves more lasting than the optimists believe, liquidity alone may not be enough to keep financial markets rising. American consumers, whose outlays account for more than two-thirds of U.S. economic output, have only begun to rein in spending and reduce debt, a process many economists expect to continue for years.
      The growing liquidity also is creating serious policy challenges. Senior economists, including Federal Reserve Chairman Ben Bernanke in congressional testimony on June 3, have begun warning that the government can't keep piling up debt at current rates without creating severe financial problems.
      In coming years, officials will need to raise taxes, cut spending, or both to mop up the ocean of liquidity they have created. That process could weigh on growth and stifle the market boom.
      Meanwhile, yields of government bonds are rising in anticipation of heavy federal borrowing, and higher yields also hamper growth. On Friday, the yield on 10-year Treasury notes eased a bit to 3.783%, still well up from 2.203% in mid-January.
      If the government fails to mop up the money, the consequence could be even worse: inflation and a collapsing dollar.
      Past liquidity-driven booms haven't ended well. In 1998, the Federal Reserve injected cash into the economy to rescue teetering bond markets. The unintended outcome: Technology stocks soared and then cratered. After the government turned on the spigot in 2001 to stave off deflation, residential real estate surged and then collapsed.
      Now, although almost all markets still are far from past highs, bubbles may be starting to inflate again in speculative foreign markets and other investments linked to global economic growth.
      For the seventh time this month, the Dow traded above its closing level from last year and finally closed in a new high for 2009. Not all news was good, however, with commodities closing lower. Dave Kansas reports after the bell.
      Silver is up 59% from December lows on futures markets; copper is up 90%; corn, 45%; and crude oil, 113%. Ukraine's stock market is up 125%, Vietnam's 116%, Indonesia's 76% and India's 87% from winter lows.
      In Shanghai, crowds are back on weekends on Guangdong Road, where locals gather to chat stocks. Tan Viet Securities Co. in Hanoi says it is opening or reactivating 50 accounts a day, up from five to seven in March. Optima Securities, a brokerage firm in Indonesia, says the number of new accounts has doubled in the last three months.
      The oil-price rebound is boosting costly projects such as western Canada's oil-sands fields. Imperial Oil Ltd., majority-owned by Exxon Mobil Corp., said May 25 that it is moving ahead with a delayed $8 billion project near Kearl Lake. Canada's stock index is up 41% since March 9.
      U.S. markets have been among the tamer ones, although some stocks demolished in the downturn have surged, such as banks and home builders. So have companies linked to foreign growth, including Freeport-McMoRan Copper & Gold Inc. and Caterpillar Inc.
      U.S. companies have reacted to the easier money by issuing new stocks and bonds. In May, Dealogic reported, more new stock was issued by existing companies in U.S. markets than at any time since 1995, when it began keeping records. May issuance of new dollar-denominated junk bonds was the heaviest since June 2007, and the fifth-highest monthly level on record.
      Worries are spreading that, like previous liquidity-driven market surges, this one could end badly, though many investors believe that won't happen soon.
      Money supply in major countries, as measured by cash and checking accounts, has been rising sharply relative to gross domestic product, or total value of goods and services, Morgan Stanley reports. Money supply relative to GDP is at the highest level of any period covered by Morgan Stanley's data, which go back to the 1970s.
      That measure of money supply has tended to move in line with bull and bear markets. It was declining in the late 1980s, ahead of the 1987 crash and the 1990 bear market. It started expanding in 1995, as a major bull market began. It started pulling back in March 2000, as the stock market fell. It then began expanding at the start of 2001, ahead of the next bull, only to top out again at the end of 2006, ahead of the next bear. Now it is surging again.
      A growing number of money managers are jumping back into stocks, some fearing they will fall behind the surging indexes or believing the world economy finally is poised to recover, led by developing countries.
      "We're past the crisis," says Jeff Schappe, chief investment officer at BB&T Asset Management in Raleigh, N.C. "The most attractive opportunities are probably going to be in emerging markets and commodities over time."
      Brett Gallagher, deputy chief investment officer at Artio Global Investors, a money-management arm of Zurich financial group Julius Baer Holdings, says that at some point, the stock market "probably has to correct. But right now, a lot of it is a reflection of the policies that global central banks and politicians have pursued, which are: Reflate at any cost. My guess is that it probably will run longer than fundamentals will dictate it should," just as the tech-stock and the real-estate bubbles did before they finally popped.
      —Mark Gongloff and James T. Areddy contributed to this article.

    2. San Francisco at a crossroads over its immigration policies, By JESSE McKINLEY, NY Times, front page.
      SAN FRANCISCO — In the debate over illegal immigration, San Francisco has proudly played the role of liberal enclave, a so-called sanctuary city where local officials have refused to cooperate with enforcement of federal immigration law and undocumented residents have mostly lived without fear of consequence.
      But over the last year, buffeted by several high-profile crimes by illegal immigrants and revelations of mismanagement of the city’s sanctuary policy, San Francisco has become less like its self-image and more like many other cities in the United States: deeply conflicted over how to cope with the fallout of illegal immigration.
      At the center of the turnaround is a new law enforcement policy focused on under-age offenders who are in this country illegally. Under the policy, minors brought to juvenile hall on felony charges are questioned about their immigration status. And if they are suspected of being here illegally, they are reported to the Immigration and Customs Enforcement agency for deportation, regardless of whether they are eventually convicted of a crime.
      “We went from being one of the more progressive counties in the country to probably one of the least, and the most draconian,” said Abigail Trillin, the managing attorney with Legal Services for Children, a nonprofit legal group. “It’s been a total turnaround.”
      Mayor Gavin Newsom, who ordered the new policy, disputes that characterization and ticks off a list of policies that remain immigrant friendly: the issuing of identification cards to residents regardless of legal status, the promotion of low-cost banking and the city’s longstanding opposition to immigration raids.
      “I’m balancing safety and rights,” Mr. Newsom said. “And I’m taking the arrows.”
      The policy was put in place last summer amid a series of embarrassing revelations about the city’s handling of illegal minors and even as reports arose of several serious crimes committed by illegal residents. The policy has led not only to dozens of juveniles in deportation proceedings, but also to criticism from the city’s public defender and members of its Board of Supervisors, which is threatening to relax it next month.
      “I think the point of sanctuary is that you protect people and treat people the same unless they engage in some felony crime,” said David Campos, a county supervisor who came illegally to the United States from his native Guatemala when he was 14.
      The new approach has pitted a growing coalition of immigrants rights groups against Mr. Newsom, who is running for governor in a state where immigrants, particularly Latinos, can be vital to being elected.
      Mr. Newsom defends the policy as an effort to bring the city’s juvenile protocol in line with that for adult illegal immigrants, who have always been reported to federal authorities if they are accused of a felony.
      But immigration advocates say the policy has too often swept up juveniles who are in this country illegally but who are innocent or held on minor charges, a list that includes young men like Roberto, 14, who has lived in the United States since he was 2.
      Roberto, whose last name is being withheld at the request of his parents who are also in the country illegally, was handed over to immigration authorities last fall after he took a BB gun to school to show off to friends. He spent Christmas at a juvenile facility in Washington State and is now facing deportation to Mexico, where he was born.
      The experience left Roberto shaken. “I was feeling really scared,” he said in an interview here.
      Supporters of the new crackdown say that Roberto’s case is unrepresentative and that the majority of youths turned over to the immigration authorities have engaged in serious crimes, including those associated with the practice by Honduran drug gangs in San Francisco of using minors as dealers.
      “A lot of them have histories; a lot of them are second, third chances,” Mr. Newsom said. “This is not as touchy feely as some people may want to make it.”
      Mr. Newsom says he still supports the sanctuary ordinance, which grew out of worries in the 1980s about the deportation of Central Americans to war-torn regions. Made city law in 1989, the policy forbids city agencies to use resources to assist in the enforcement of federal immigration law or information gathering.
      While proponents say such policies help the police by making immigrant communities — often suspicious of the authorities — more comfortable with reporting crimes, critics say San Francisco’s policy had been stretched to extremes, including the practice of occasionally flying some offenders back to their home countries rather than cooperating with immigration authorities.
      Mr. Newsom says he discovered and stopped that practice in May 2008, and quickly ordered a review. Juvenile referrals began shortly thereafter and were formalized as policy in August.
      In the interim, however, The San Francisco Chronicle reported that a group of teenage Honduran crack dealers who had been sent to a group home simply walked away from confinement.
      A second event was more serious, when a father and two sons driving home from a picnic were killed in a case of mistaken identity in June 2008. The police later charged Edwin Ramos, an illegal immigrant from El Salvador and suspected gang member who had had run-ins with the San Francisco police as a juvenile but had not been turned over to the immigration authorities.
      At the same time, San Francisco found itself under criminal investigation by the United States attorney for the Northern District of California, and city officials were eager to show that their city was not a lawless haven for illegal-immigrant criminals.
      “If we start harboring criminals as a sanctuary city, this entire system is in peril,” Mr. Newsom said.
      For their part, immigration advocates say they are not asking the city to shelter felonious youths from deportation. The problem, they say, is the point of contact: at arrest, rather than after any sort of legal adjudication.
      “Even if you’re undocumented, you have the right to due process,” said Jeff Adachi, the city’s public defender.
      The federal authorities, meanwhile, have been pleasantly surprised that the new policy has resulted in more than 100 referrals.
      “We are now getting routine referrals,” said Virginia Kice, a spokeswoman for the immigration agency.
      The most serious challenge to the policy is likely to come in July, when the Board of Supervisors is expected to take up a proposal that would apply the policy only to illegal juveniles found in court to have committed a felony. The measure’s sponsor, Mr. Campos, said he expected it to pass.
      Such an ordinance would not help Roberto, who is still waiting to plead his case to an immigration judge. He said he had already learned a valuable lesson.
      “I will never bring anything to school again,” he said.

    5/27/2009  headlines from hell from Wall St. Journal (j), NY Times (t) or Boston Globe (g) - missing earlier and later dates are handled entirely on recent archive page(s) -

    2/19/2009  headlines from hell from Wall St. Journal (j), NY Times (t) or other newsfeeds - missing earlier and later dates are handled entirely on recent archive page(s) -

    For earlier collapse stories, click on the desired date -
  2. 2005-2008.
  3. Feb-Dec/2004.
  4. Jan.10-31/2004.
  5. Jan.1-9/2004.
  6. Dec/2003.
  7. Nov/2003.
  8. Oct/2003.
  9. Sept.16-30/2003.
  10. Sept.1-15/2003.
  11. August/2003.
  12. July 16-31/2003.
  13. July 1-15/2003.
  14. June/2003.
  15. May 16-30/2003.
  16. May 1-15/2003.
  17. April/2003.
  18. Mar.21-31/2003.
  19. Mar. 1-20/2003.
  20. Feb.15-28/2003.
  21. Feb. 1-14/2003.
  22. Jan.16-31/2003.
  23. Jan. 1-15/2003.
  24. Dec/2002.
  25. Nov/2002.
  26. Oct.16-31/2002.
  27. Oct. 1-15/2002.
  28. Sept.10-30/2002.
  29. Sept. 1-9/2002.
  30. August/2002.
  31. July 16-31/2002.
  32. July 1-15/2002 + Jun 30.
  33. June 16-29/2002.
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  35. May/2002.
  36. April/2002.
  37. Mar.12-31/2002.
  38. Mar.1-11/2002.
  39. Feb.16-28/2002.
  40. Feb.1-15/2002.
  41. Jan/2002.
  42. Dec/2001.     Earlier 2001 months accessible via links at bottom of Dec/2001 page.
  43. Dec.21-31/2000.
  44. Dec.11-20/2000.
  45. Dec.1-10/2000.
        Earlier Y2000 months accessible via links at bottom of Dec.1-10/2000 page.
  46. Dec.16-31/99.
  47. Dec.1-15/99.
        Earlier 1999 months accessible via links at bottom of Dec.1-15/99 page.
  48. Dec/98.
        Earlier months accessible via links at bottom of Dec/98 page.

    Check also doomtrackers *Roubini and *Dismal Scientist from The Economist (3/13/99 p.7), and how
    the way we're using technology makes life harder instead of easier at *NetSlaves.  
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