Wednesday, December 30, 2015

State of the Economy and other Tid Bits (Dec. 2015)

New York Times (December 29, 2015) For the Wealthiest, a Private Tax System that Saves them Billions:

With inequality at its highest levels in nearly a century and public debate rising over whether the government should respond to it through higher taxes on the wealthy, the very richest Americans have financed a sophisticated and astonishingly effective apparatus for shielding their fortunes. Some call it the “income defense industry,” consisting of a high-priced phalanx of lawyers, estate planners, lobbyists and anti-tax activists who exploit and defend a dizzying array of tax maneuvers ... All are among a small group providing much of the early cash for the 2016 presidential campaign.

From the New York Review of Books: Parking the Big Money (by Cass R. Sunstein) on The Hidden Wealth of Nations: The Scourge of Tax Havens (by Gabriel Zucman, Foreword by Thomas Piketty -- 2015):

A lot of wealthy people in the United States, Europe, and elsewhere have been hiding money in foreign countries — above all, Switzerland, Luxembourg and the Virgin Islands. As a result, they have been able to avoid paying taxes in their home countries. Until recently, however, officials have not known the magnitude of that problem. About 8 percent of the world’s wealth, or $7.6 trillion, is held in tax havens. In 2015, Switzerland alone held $2.3 trillion in foreign wealth. As a result of fraud from unreported foreign accounts, governments around the world lose about $200 billion in tax revenue each year. Most of this amount comes from the evasion of taxes on investment income, but a significant chunk comes from fraud on inheritances. In the United States, the annual tax loss is $35 billion; in Europe, it is $78 billion. In African nations, it is $14 billion.

ZeroHedge: The Dark Side of a Record $5 Trillion in Mergers: Hundreds of Thousands of Imminent Layoffs (by Tyler Durden on 12/29/2015):

For the first time in history, global announced M&A [mergers and acquisitions] volume in 2015 would surpass $5 trillion. This record eclipses by 9% the previous all time high of $4.6 trillion set during the previous market bubble year of 2007 ... US targeted M&A ($2.5 trillion) accounts for half of 2015 volume and seven of the top 10 transactions.

An op-ed by Bernie Sanders at the New York Times (December 23, 2015) To Rein In Wall Street, Fix the Fed — and Larry Summers in response to Bernie Sanders' op-ed (December 29, 2015).

The Plutocrats Are Winning. Don’t Let Them! (Bill Moyers on December 22, 2015)

(Graph below) Via the St. Louis Federal Reserve, per data from the Bureau of Labor Statistics: Employed full time: Median usual weekly real earnings: Wage and salary workers: 16 years and over (1979 to the present) --- down $2 a week from 36 years ago. Trickle-down economics doesn't work. Most of the wealth went to the top (and much is hidden away in offshore tax havens).

Weekly median wage for full-time worker in U.S. - 1979 to the present.

Wage data shows 50% of all U.S. wage earners make $28,000 a year or less. After Bernie Sanders criticism of Donald Trump during last Sunday's interviews, Trump recently flip-flopped — and now says US wages are too low. Trump Tweeted:

“The middle-class has worked so hard, are not getting the kind of jobs that they have long dreamed of – and no effective raise in years. BAD. Many of the great jobs that the people of our country want are long gone, shipped to other countries. We now are part time, sad! I WILL FIX!”

Sentier Research: Household Income Trends (Released December 2015) — where "median" means half earn more and half earn less.

  • Over the past 8 years, the median annual household rose $32 a year (Don't forget, most households now have dual or multiple incomes.)
  • The median annual household income in November 2015 was $56,746 -- which is 1.1 percent lower than January 2000.
  • The median annual household income in December 2007 was $56,714 -- when the Great Recession began.

Washington Post (December 28, 2015) Jared Bernstein (former chief economist to Vice President Biden) says very low inflation (because of very cheap oil) meant that stagnant "nominal wage" growth (before inflation) translated into "real wage growth" (after inflation) — but barely. And what if oil had not fallen as much? As always, the cost of housing and food continues to go up. (As an aside: From Wall Street on Parade (December 28, 2015) What the Falling Price of Oil is Telling You)

Kevin Drum at Mother Jones: "[George W.] Bush inherited a mild recession and got a huge fiscal boost. Obama inherited a deep recession and got a huge fiscal headwind. Even so, Obama's employment performance has been far better than Bush's. As it happens, I don't think presidents have a dramatic effect on the economy." [My note: The Republican's argument has been that the economy only improved despite Obama's policies. But I agree with Keven Drum; I don't think presidents have a dramatic effect on the economy. And of course, there are always those "lagging indicators" as well.]

Where did all the good-paying union jobs go? Places like China. Per Assistant Vice President and Economist Yi Wen via the St. Louis Federal Reserve: "In the '70s China was essentially producing a very tiny amount of industrial manufacturing goods — and the U.S. was several hundredfold of China. But starting around 1980, China start to take off. And gradually accelerate and surpass all the industrial powers one by one — and ultimately overtook the U.S. around 2010. It didn't help that Bill Clinton gave PNTR to China in 2000, the very year that the labor force participation rate began to decline in the U.S.

The Rise of Manufacturing in China

Last year China overtook the U.S. as the world's largest economy. Look at the growth of Singapore just since 1987 — and read about China's infrastructure spending compared to the U.S. — showing how our leaders in Congress and our presidents have severely let down the average American worker for the past 40 years by allowing multi-national corporations to dominate and dictate our government spending, wages, regulations and tax laws.

Singaporse from 1987 to the present

Other Tid Bits

New York Times: Almost everyone has a family member who has worked at the century-old Heinz plant here. Residents feared the worst when a group of investors bought Heinz in 2013. The investors, 3G Capital and Berkshire Hathaway, Warren E. Buffett’s company, announced plans to close the plant and gave layoff notices to its 740 workers. But the plant got a reprieve because, in part, of a quirk of Canadian law. A 54-year-old regulation bans using tomato paste to make tomato juice. Tomato juice in the United States is often made from tomato paste, but Canadian regulations require fresh tomatoes. If the plant closed, Heinz would have to find another place to produce tomato juice for Canada, where it dominates the market for the beverage. (Related: Obama's Connection to Heinz Ketchup)

In an interview with CNN's Chris Cuomo, Bernie Sanders made some salient points with regard to the unprecedented amount of coverage that the media has given to Donald Trump since he announced his campaign for the GOP nomination for president. (The 5 minute interview is posted at YouTube) — and a related post at the Daily Kos (Sunday Dec 27, 2015 by News Corpse) Bernie Sanders Nails Clueless Media on their Donald Trump Obsession.

Did you know that Bernie Sanders always flies coach?

Slate: Part of Hillary Clinton's strategy for dealing with ISIS is a no-fly zone, which is in agreement with the GOP, but opposed by Obama and Bernie Sanders. So it’s worth remembering that a no-fly zone has little direct relevance to the fight against ISIS since it doesn’t have planes. The immediate goal of a no-fly zone would be to protect civilians from the bombing by the Assad regime and its allies — in theory, slowing the flood of refugees leaving Syria. Huffington Post: Bernie Sanders Opposes Perpetual War: Trump and Clinton Could Usher Another Military Draft. The Hill: Trump's and Clinton's policies would further burden an exhausted military.

Texas politicians hand out millions in bonuses to employees, who then leave soon after: Rick Perry doled out tens of thousands of dollars in bonuses for top aides in his last weeks in office, including $137,205 on a single day the month before leaving – more than he gave in the previous four years combined, and more than almost any other outgoing American governor gave in 2014. All of Perry's top aides left with Perry, and soon after, one joined a political group promoting his 2016 bid.

Google programs are used by more than 50 million students and teachers around the world — but Google is also tracking what those students are doing on its services and using some of that information to sell targeted ads.

Bernie Sanders and his wife Jane got married in 1988, squeezing their wedding in before a trip to Yaroslavl, in the Soviet Union, Burlington’s sister city. The trip — which the couple jokingly referred to as a honeymoon — has become something of a punch line for Republican candidates [and CNN moderators] who accuse Mr. Sanders of Bolshevism. Ms. Sanders has also seemed to have fun with the idea. In August 1988, she jokingly responded to an inquiry to her office about Russian-language courses, beginning “Dear Fellow Traveler.” The couple had a more traditional honeymoon a year later, in St. Lucia in the Caribbean. When they got back, Ms. Sanders helped her husband win his 1990 race for the House.

Bernie and Jane Sanders' wedding day.

Currently, the monthly payments on a median-priced home in Brooklyn eat up 98 percent of the borough's median income of $46,000. The median sales price in the nation's "most unaffordable city" just passed $600,000 for the first time. The 70 percent of Brooklyn residents who rent aren’t faring any better — average rent in the borough rose by 77 percent between 2000 and 2012. According to a March report by StreetEasy, "the typical new renter will spend 60 percent of their income on rent in 2015," the highest rent-to-income ratio in all of New York.

Bill Clinton's friend Bill Cosby was just officially charged with criminal sexual assault.

1 comment:

  1. UPDATE (related to the stories in my post today)

    Wall Street on Parade: "Yesterday Larry Summers penned an opinion piece for the Washington Post, lecturing Senator Bernie Sanders of Vermont, a Presidential candidate, on what Sanders should actually be saying in his own op-eds about reforming the Federal Reserve."

    Wall Street on Parade: "Thanks to Elizabeth Warren and Senator Bernie Sanders of Vermont, restoring the Glass-Steagall Act has become a hot button issue in the ongoing Presidential debates, helping American voters differentiate between the candidates. (For example, the sole Democratic Presidential candidate who is not in favor of restoring the Glass-Steagall Act is Hillary Clinton, who is heavily funded by executives of Wall Street firms and their legal powerhouses.)"

    Paul Krugman" "A number of people asked me whether I believe that presidents have a large effect on economic performance. My answer is no — but conservatives believe that they do ... The fact that the private sector has added more than twice as many jobs under that job-killing Obama as it did under pre-crisis Bush is important; not because Obama did it, but because it shows that there is no hint that the important things he did do had any negative effect at all, let alone the terrible effects right-wingers predicted ..."

    Zero Hedge: "As oil prices wallow near multi-year lows, it’s becoming increasingly clear that the new cartel controlling oil prices is not OPEC but world credit markets. From Saudi Arabia’s record $100 billion deficit to shale oil’s continuing reliance on cheap credit funding, it’s clear that no major oil producer or company in the world right now is economically self-sufficient based on oil revenues alone. This situation has left the flow of oil and the decision on when to stop pumping the increasingly tarnished black gold in the hands of banks rather than oil men."

    IMF: "As a result of the oil price plunge, the major oil-exporting countries are facing budget deficits for the first time in years. The growth in the assets of their sovereign wealth funds, which were rising at a rapid rate until recently, is now slowing; some have started drawing on their buffers. In the short run, this phenomenon is not cause for alarm. Most oil exporters have enough buffers to withstand a temporary drop in oil prices. But what will happen if low oil prices persist, and how will policymakers react?"