Today in the economy

[VictorCharlie]

So like I said whats your solution?

[VictorCharlie]

On a different topic...Whats your opinion on a flat tax? Also use of income verus usage taxes (sales tax etc)?

[Kirkland Laing]

On a different topic...Whats your opinion on a flat tax? Also use of income verus usage taxes (sales tax etc)?

I'd be delighted to see everybody pay the same level of tax. I'd prefer a slightly progressive tax where high earners pay a little more but a flat rate would be an outstanding improvement on the current situation and I'd settle for that. I''d like to see, say, hedge fund manager John Paulson pay the same rate of tax as, say, the median US household*.

The median US household (Joe 150 million out of 300 million in earnings) made about $50 000 last year, and what with social security, medicare, income tax, State taxes, sales taxes and all the other taxes pays almost 50% of his fifty thousand in tax.

Paulson made $3.7 billion in 2007 and will end up paying about 5% of it in taxes. He'll also be able to defer payment for up to 30 years so that 5% will earn enough in interest to pay for itself. If Paulson's rate was the same as the average American there'd be a significant increase in tax revenue and he'd still make enough money to get his groceries in.

I'm not really bothered how taxes are raised but i'd like to see everybody pay at least a roughly similar rate.

[Kirkland Laing]

So like I said whats your solution?

Go back to the way we were before finance and banking were allowed to remerge early this century, something that hadn't been allowed since the Depression when FDR brought in rules and regulation. Keep banking and its deposits under a tight leash and don't let them bet their capital on risky investments. If people want to do that, let them do it but regulate financial firms like investment banks so that the failure of one or more firms can't blow up the system and cost taxpayers money. Put the trading of derivatives (securities based on things like mortgages, stock markets) under regulation too. They're the things that have bankrupted the banks and are cosing the taxpayer trillions. Put them under some form of regulation for the first time ever. Basically go back to roughly where we were before Reagan. It's not like the financial industry wasn't profitable then, it's that it was making actual profits then and not gaming the system. Regulate the system so that it can't be gamed.

Actually investigate bankers and politicians and prosecute them, give them actual prison terms in actual US prisons, not country clubs. That would end almost all criminality overnight, or at least wouldn't allow the entire system to edge into criminality. You'd still get the odd Madoff but with regulation these guys would be limited to tens of millions of fraud, not tens of billions.

In short make the US financial system and capital markets the most honest and transparent in the world, something that investors flock to and the reason they're so big, not let them edge the country towards becoming a banana republic as is happening now.


Increase taxes on the top 0.1% (people making tens of millions a year) to 65% for ten years to pay off the debt accumulated by the last eight years of diastrous/crooked governance. Then drop the rate to 50%. This would have zero effect on future economic growth. In the fifties the marginal rate for top earners was 90% and the US managed 9% yearly economic growth at the time. All this onsense about cutting taxes to increase growth is disproved by reality and has just ended up creating large capital bubbles in markets and consequent disasters. Plus earnings of the top 0.1% have gone up five or ten times since just 2000, so they're still earning far more at 65% tax than they were in 2000. Give a tax cut to 99% of Americans to redistribute income that's been redistributed upwards over the past 30 years. This is the only way to get things really going again.



Stop bombing other countries as a foreign policy tool. Cut military spending (two thirds of all US taxes) by about 80% and invest that money in alternative energies that don't involve hydrocarbons, creating untold millions of non-offshorable jobs that pay well. Basically pay US military wages and defence worker wages and end the hundreds of billions of welfare paid to the US war industry every year, in fact give the military a pay rise so they don't need food stamps to survive. Make sure there are no homeless veterans and they all get proper health care. Negotiate a treaty with other countries to limit weapons spending/work or abolish it. The US maintains its position and the world gets to spend military cash on useful things. Everybody would go for this for various reasons. The US empire is in the same situation the Brits were in 1918 where the war industry is now a huge cost to the country rather than a benefit, so America would benefit by far the most. Terrorism then takes carwe of itself. No interfering in other countries, no violent response, no large numbers of people willing to fund terrorists.

There you go, all problems solved. Nobody trying to bomb you, the economy fixed and the governemtn running the financial industry rather than vice versa.

[VictorCharlie]

I can get behind a lot of that. I am very concerned with the idea of cutting taxes with the national debt and a soon to be bankrupt social security and medicaire/medicaid. I don't pretend to be an economic expert but I don't understand how you lower taxes for anyone and dramatically increase spending to improve ones financial system. We obviously agree that our energy policy dictates a lot of our foreign policy. I just think you kind of get into a chicken before the egg scenario. I also see radical islam as something that is spreading out of the middle east. I am not so sure that simply removing ourselves from the region will totally alleviate the issue with islamic terrorists. I'm curious about your thoughts on health care?

[Kirkland Laing]

I can get behind a lot of that. I am very concerned with the idea of cutting taxes with the national debt and a soon to be bankrupt social security and medicaire/medicaid. I don't pretend to be an economic expert but I don't understand how you lower taxes for anyone and dramatically increase spending to improve ones financial system. We obviously agree that our energy policy dictates a lot of our foreign policy. I just think you kind of get into a chicken before the egg scenario. I also see radical islam as something that is spreading out of the middle east. I am not so sure that simply removing ourselves from the region will totally alleviate the issue with islamic terrorists. I'm curious about your thoughts on health care?

Social security is the only government programme in profit. It has two trillion in the bank. It won't need an extra dollar in taxes until 2041 at the earliest and even then will only need a $20 a month increase by everybody. But everybody will be earning hundreds of dollars extra then anyway and SS will have gone up much less than other expenses. SS is the best, most effective social insurance programme in the world. Britian privatised its pensions in the 1980s, something that ended in disaster for British pension plan holders as the newly-deregulated pensions industry robbed them blind. Pension companies were eventually charged with "mis-selling" pensions and fined a pittance for robbing Britain's state system and pension plan holders of billions. If I ever walk into a bank with a stocking mask on and a sawn off shotgun, rob the bank and am arrested on the way out I hope to be charged with "mis-selling" the bank and given the opportunity to avoid prison by paying a fine of 1.something % of the amount I robbed.

Unsurprisingly britian is now looking into a US-style SS system, along with all other major economies that haven;t already copied it.

Can you imagine if Bush had got his way and privatised SS in 2005? SS payments would now be slashed, millions would be destitiute, there's be huge pressure to bail out the system with more trillions of money etc. etc. Keep the bankers out of it. Things are already heading towards a banana republic as they are.


I'll do healthcare tomorrow as I've got to speak to some fucking American bankers now.

[killersheep]

Kirkland what do you think about China's call for an International Reserve Currency?

[VictorCharlie]

Thats pretty interesting about SS. I did some research and it seems your pretty much right on. Odd that politicians from both parties and the media give the idea that its failing.

[El Kabong]

http://www.youtube.com/watch?v=ZqzMziGop-w

The next PM right there...I wish we had someone like that in the GOP

[Kirkland Laing]

Thats pretty interesting about SS. I did some research and it seems your pretty much right on. Odd that politicians from both parties and the media give the idea that its failing.

I'm Kirkland Laing. I'm always right about everything.

Both parties have people who get paid big contributions by Wall Street who are desperate to get their hands on social security. Huge profits for everybody apart from the people the money belongs to.

After Jimmy Hoffa died the US government took the running of th Teamsters' pension fund away from the Teamsters' union and gave it to Wall Street to run. Over the years it's been run by seven different firms and none of them managed to make as much returns on it as Hoffa did when he was using it as a slush fund for the Mafia. Some even lost lots of money. Funny that.

In my last post, the median family income is $50 000, that's the 150 millionth household total income. The US median wage is $35 000. And flat taxes as espoused by Republicans like Steve Forbes are all bs, they're just yet another tactic of the Republican party to shift the burden of taxation from inherited income to earned income as they wouldn't tax investment income at all, the tax would all be on consumption. Since low/median/above median people consume as much (more the last few years) than they earn, they'd be paying taxes on 100% of their earnings. Guts like Forbes make almost all their income from investments and dividends which are never actually included in these bs flat tax schemes. A bunch of elites who want current earners to pay all the tax and leave people with billions in investments to pay nothing. America should be a country that does the opposite, when it has been it's grown much much faster economy-wise.

Healthcare to follow.

[Kirkland Laing]

Kirkland what do you think about China's call for an International Reserve Currency?

Economic sabre-rattling. They're terrified that the Fed is going to print their way out of this mess and leave the trillion plus they own in dollar securities worth less than half what they paid for it. But both sides need each other here. Expect them to spend future billions and trillions buying actual productive US assets over the next couple of years rather than treasuries.