The Amity Shlaes Identity: 1937 Déjà vu All Over Again?

 

FDR and Obama share the unique distinction in American history of being re-elected in the midst of a disastrous US economy. Is this a spurious historical anomaly? Or should we look for other similarities between 1937 and 2013? 

In 1937, a year after Election Day, industrial production plummeted by 34.5 percent, unemployment rose to 15%, and the Dow dropped by half – it was the “depression within the Depression.” Is this what we are looking at for 2013? A “recession within the Great Recession”? 

Amity Shlaes, in her Bloomberg column, provides some pithy comparisons between then and now:
http://www.bloomberg.com/news/2012-11-18/2013-looks-a-lot-like-1937-in-four-fearsome-ways.html
 

Roosevelt said: “I should like to have it said of my first administration that in it the forces of selfishness and of lust for power met their match. I should like to have it said of my second administration that in it these forces met their master.” Can you say “Class warfare”? Does this sound at all like Obama 2012?

FDR then raised taxes in 1937, at the same time that individuals began contributing into Social Security, when labor (via the Wagner Act) was able to push for higher wages from a struggling economy, and the banks’ ability to lend was hobbled by the Banking Act of 1935, which allowed the Fed to boost reserve requirements for banks. Sound at all like Fiscal Cliff 2013? Onset of Obamacare in 2013?

Figure 1 plots the Dow index (as a percentage of the peak) for January 1937 - 1938, and for the period January 2008 – 2014, where the start time of two periods have been aligned. Uncannily similar?

-> There is the Dow crash in 1932-33, corresponding to the Dow crash of 2008-9.

-> There is the near doubling of the Dow from 1933 to 1937, corresponding to the near doubling in the Dow from 2009 to 2012.

-> There is the post-election droop and rebound, occurring both in November 1936 and November 2012.

->  Finally there is the capitulation in the fall of 1937, with the Dow dropping by 50%. Will we see this in fall of 2013?

All present indications are that history is about to repeat itself. Why should it not? Taxes are going up. Lending is going down. Unemployment is going up. Spending is going up.

Just like 1937.

Fiscal Cliff Reduces Annual Deficit by Half in 1 Year. Cost: 1/2% - 1% in GDP.

Fiscal Cliff Reduces Annual Deficit in Half in 1 Year, at cost of 1/2%  - 1% in GDP.

The Obamacare Penalty Tax

The Obamacare Penalty Tax

    The penalty/tax will be phased in from 2014 to 2016.

    The minimum penalty/tax in 2016 will be $695 per person and up to 3-times that per family. After 2016, these amounts will increase at the rate of inflation.

    The minimum penalty/tax per person will start at $95 in 2014 (and then increase through 2016)

    No family will ever pay more than 3X the per-person penalty, regardless of how many people are in the family.

    The $695 per-person penalty is only for those who make between $9,500 and ~$37,000 per year. If you make less than ~$9.500, you're exempt. If you make more than ~$37,000, your penalty is calculated by the following formula...

    The penalty is 2.5% of any household income above the level at which you are required to file a tax return. That level is currently $9,500 per person and $19,000 per couple. The penalty on any income above that is 2.5%. So the penalty can get expensive quickly if you make a lot of money.

    However, the penalty can never be more than the cost of a "Bronze" heath insurance plan purchased through one of the state "exchanges" that will be created as part of Obamacare. The CBO estimates that these policies will cost $4,500-$5,000 per person and $12,000-$12,500 per family in 2016, with the costs rising thereafter.

So, basically, you're looking at penalties of approximately the following at the following income levels:

    Less than $9,500 income = $0
    $9,500 - $37,000 income = $695
    $50,000 income = $1,000
    $75,000 income = $1,600
    $100,000 income = $2,250
    $125,000 income = $2,900
    $150,000 income = $3,500
    $175,000 income = $4,100
    $200,000 income = $4,700
    Over $200,000 = The cost of a "bronze" health-insurance plan

The IRS will collect the penalty-tax, a fact that will no doubt further enrage those who hate Obamacare.

But here's some more good news for those folks:

The IRS will not have the power to charge you criminally or seize your assets if you refuse to pay. The IRS will only have the ability to sue you. And the most the IRS can collect from you if it wins the suit is 2X the amount you owe. So if you want to thumb your nose at the penalty-tax, the IRS won't be able to do as much to you as they could if you refused to pay, say, income tax.

By the way, the following folks will be exempt from the penalty-tax:

    Those who make less than $9,500
    Employees whose employers only offer plans that cost more than 8% of the employee's income
    Those with "hardships"
    Members of Indian tribes
    Members of certain religions that don't pay Social Security tax, such as Amish, Hutterites, or Mennonites



Read more: http://www.businessinsider.com/how-much-is-the-obamacare-penalty-tax-2012-7#ixzz2CVMXBIqQ

The New Obamacare Taxes

Here are some of the new taxes you're going to have to pay to pay for Obamacare:

• A 3.8% surtax on "investment income" when your adjusted gross income is more than $200,000 ($250,000 for joint-filers). What is "investment income?" Dividends, interest, rent, capital gains, annuities, house sales, partnerships, etc. Taxes on dividends will rise from 15% to 18.8%--if Congress extends the Bush tax cuts. If Congress does not extend the Bush tax cuts, taxes on dividends will rise from 15% to a shocking 43.8%. (WSJ)
• A 0.9% surtax on Medicare taxes for those making $200,000 or more ($250,000 joint). You already pay Medicare tax of 1.45%, and your employer pays another 1.45% for you (unless you're self-employed, in which case you pay the whole 2.9% yourself). Next year, your Medicare bill will be 2.35%. (WSJ)
• Flexible Spending Account contributions will be capped at $2,500. Currently, there is no tax-related limit on how much you can set aside pre-tax to pay for medical expenses. Next year, there will be. If you have been socking away, say, $10,000 in your FSA to pay medical bills, you'll have to cut that to $2,500. (ATR.org)
• The itemized-deduction hurdle for medical expenses is going up to 10% of adjusted gross income. Right now, any medical expenses over 7.5% of AGI are deductible. Next year, that hurdle will be 10%. (ATR.org)
• The penalty on non-medical withdrawals from Healthcare Savings Accounts is now 20% instead of 10%.  That's twice the penalty that applies to annuities, IRAs, and other tax-free vehicles. (ATR.org)
• A tax of 10% on indoor tanning services. This has been in place for two years, since the summer of 2010. (ATR.org)
• A 40% tax on "Cadillac Health Care Plans" starting in 2018.Those whose employers pay for all or most of comprehensive healthcare plans (costing $10,200 for an individual or $27,500 for families) will have to pay a 40% tax on the amount their employer pays. The 2018 start date is said to have been a gift to unions, which often have comprehensive plans. (ATR.org)
• A"Medicine Cabinet Tax" that eliminates the ability to pay for over-the-counter medicines from a pre-tax Flexible Spending Account. This started in January 2011. (ATR.org)
• A "penalty" tax for those who don't buy health insurance. This will phase in from 2014-2016. It will range from $695 per person to about $4,700 per person, depending on your income. (More details here.)
• A tax on medical devices costing more than $100.  Starting in 2013, medical device manufacturers will have to pay a 2.3% excise tax on medical equipment. This is expected to raise the cost of medical procedures. (Breitbart.com)

Read more: http://www.businessinsider.com/here-are-the-new-obamacare-taxes-2012-7#ixzz2CVKbZfzj

Here are some of the new taxes you're going to have to pay to pay for Obamacare:

• A 3.8% surtax on "investment income" when your adjusted gross income is more than $200,000 ($250,000 for joint-filers). What is "investment income?" Dividends, interest, rent, capital gains, annuities, house sales, partnerships, etc. Taxes on dividends will rise from 15% to 18.8%--if Congress extends the Bush tax cuts. If Congress does not extend the Bush tax cuts, taxes on dividends will rise from 15% to a shocking 43.8%. (WSJ)
• A 0.9% surtax on Medicare taxes for those making $200,000 or more ($250,000 joint). You already pay Medicare tax of 1.45%, and your employer pays another 1.45% for you (unless you're self-employed, in which case you pay the whole 2.9% yourself). Next year, your Medicare bill will be 2.35%. (WSJ)
• Flexible Spending Account contributions will be capped at $2,500. Currently, there is no tax-related limit on how much you can set aside pre-tax to pay for medical expenses. Next year, there will be. If you have been socking away, say, $10,000 in your FSA to pay medical bills, you'll have to cut that to $2,500. (ATR.org)
• The itemized-deduction hurdle for medical expenses is going up to 10% of adjusted gross income. Right now, any medical expenses over 7.5% of AGI are deductible. Next year, that hurdle will be 10%. (ATR.org)
• The penalty on non-medical withdrawals from Healthcare Savings Accounts is now 20% instead of 10%.  That's twice the penalty that applies to annuities, IRAs, and other tax-free vehicles. (ATR.org)
• A tax of 10% on indoor tanning services. This has been in place for two years, since the summer of 2010. (ATR.org)
• A 40% tax on "Cadillac Health Care Plans" starting in 2018.Those whose employers pay for all or most of comprehensive healthcare plans (costing $10,200 for an individual or $27,500 for families) will have to pay a 40% tax on the amount their employer pays. The 2018 start date is said to have been a gift to unions, which often have comprehensive plans. (ATR.org)
• A"Medicine Cabinet Tax" that eliminates the ability to pay for over-the-counter medicines from a pre-tax Flexible Spending Account. This started in January 2011. (ATR.org)
• A "penalty" tax for those who don't buy health insurance. This will phase in from 2014-2016. It will range from $695 per person to about $4,700 per person, depending on your income. (More details here.)
• A tax on medical devices costing more than $100.  Starting in 2013, medical device manufacturers will have to pay a 2.3% excise tax on medical equipment. This is expected to raise the cost of medical procedures. (Breitbart.com)

Read more: http://www.businessinsider.com/here-are-the-new-obamacare-taxes-2012-7#ixzz2CVKbZfzj

Read more: http://www.businessinsider.com/here-are-the-new-obamacare-taxes-2012-7#ixzz2CVKbZfzj

Here are some of the new taxes for Obamacare:

    A 3.8% surtax on "investment income" when your adjusted gross income is more than $200,000 ($250,000 for joint-filers). What is "investment income?" Dividends, interest, rent, capital gains, annuities, house sales, partnerships, etc. Taxes on dividends will rise from 15% to 18.8%--if Congress extends the Bush tax cuts. If Congress does not extend the Bush tax cuts, taxes on dividends will rise from 15% to a shocking 43.8%. (WSJ)

    A 0.9% surtax on Medicare taxes for those making $200,000 or more ($250,000 joint). You already pay Medicare tax of 1.45%, and your employer pays another 1.45% for you (unless you're self-employed, in which case you pay the whole 2.9% yourself). Next year, your Medicare bill will be 2.35%. (WSJ)

    Flexible Spending Account contributions will be capped at $2,500. Currently, there is no tax-related limit on how much you can set aside pre-tax to pay for medical expenses. Next year, there will be. If you have been socking away, say, $10,000 in your FSA to pay medical bills, you'll have to cut that to $2,500. 

(ATR.org)

    The itemized-deduction hurdle for medical expenses is going up to 10% of adjusted gross income. Right now, any medical expenses over 7.5% of AGI are deductible. Next year, that hurdle will be 10%. (ATR.org)

    The penalty on non-medical withdrawals from Healthcare Savings Accounts is now 20% instead of 10%.  That's twice the penalty that applies to annuities, IRAs, and other tax-free vehicles. (ATR.org)

    A tax of 10% on indoor tanning services. This has been in place for two years, since the summer of 2010. (ATR.org)

    A 40% tax on "Cadillac Health Care Plans" starting in 2018.Those whose employers pay for all or most of comprehensive healthcare plans (costing $10,200 for an individual or $27,500 for families) will have to pay a 40% tax on the amount their employer pays. The 2018 start date is said to have been a gift to unions, which often have comprehensive plans. (ATR.org)

    A"Medicine Cabinet Tax" that eliminates the ability to pay for over-the-counter medicines from a pre-tax Flexible Spending Account. This started in January 2011. (ATR.org)

    A "penalty" tax for those who don't buy health insurance. This will phase in from 2014-2016. It will range from $695 per person to about $4,700 per person, depending on your income. (More details here.)

    A tax on medical devices costing more than $100.  Starting in 2013, medical device manufacturers will have to pay a 2.3% excise tax on medical equipment. This is expected to raise the cost of medical procedures. (Breitbart.com)

Read more: http://www.businessinsider.com/here-are-the-new-obamacare-taxes-2012-7#ixzz2CVKbZfzj

Read more: http://www.businessinsider.com/here-are-the-new-obamacare-taxes-2012-7#ixzz2CVKbZfzj

Read more: http://www.businessinsider.com/here-are-the-new-obamacare-taxes-2012-7#ixzz2CVKbZfzj

Here are some of the new taxes you're going to have to pay to pay for Obamacare:

• A 3.8% surtax on "investment income" when your adjusted gross income is more than $200,000 ($250,000 for joint-filers). What is "investment income?" Dividends, interest, rent, capital gains, annuities, house sales, partnerships, etc. Thanks to the expiration of the Bush tax cuts, taxes on dividends will rise rise from 15% to a shocking 43.8% on January 1st, unless Congress cuts a deal with respect to the fiscal cliff. (WSJ)
• A 0.9% surtax on Medicare taxes for those making $200,000 or more ($250,000 joint). You already pay Medicare tax of 1.45%, and your employer pays another 1.45% for you (unless you're self-employed, in which case you pay the whole 2.9% yourself). Next year, your Medicare bill will be 2.35%. (WSJ)
• Flexible Spending Account contributions will be capped at $2,500. Currently, there is no tax-related limit on how much you can set aside pre-tax to pay for medical expenses. Next year, there will be. If you have been socking away, say, $10,000 in your FSA to pay medical bills, you'll have to cut that to $2,500. (ATR.org)
• The itemized-deduction hurdle for medical expenses is going up to 10% of adjusted gross income. Right now, any medical expenses over 7.5% of AGI are deductible. Next year, that hurdle will be 10%. (ATR.org)
• The penalty on non-medical withdrawals from Healthcare Savings Accounts is now 20% instead of 10%.  That's twice the penalty that applies to annuities, IRAs, and other tax-free vehicles. (ATR.org)
• A tax of 10% on indoor tanning services. This has been in place for two years, since the summer of 2010. (ATR.org)
• A 40% tax on "Cadillac Health Care Plans" starting in 2018.Those whose employers pay for all or most of comprehensive healthcare plans (costing $10,200 for an individual or $27,500 for families) will have to pay a 40% tax on the amount their employer pays. The 2018 start date is said to have been a gift to unions, which often have comprehensive plans. (ATR.org)
• A"Medicine Cabinet Tax" that eliminates the ability to pay for over-the-counter medicines from a pre-tax Flexible Spending Account. This started in January 2011. (ATR.org)
• A "penalty" tax for those who don't buy health insurance. This will phase in from 2014-2016. It will range from $695 per person to about $4,700 per person, depending on your income. (More details here.)
• A tax on medical devices costing more than $100.  Starting in 2013, medical device manufacturers will have to pay a 2.3% excise tax on medical equipment. This is expected to raise the cost of medical procedures. (Breitbart.com)

Read more: http://www.businessinsider.com/here-are-the-new-obamacare-taxes-2012-7#ixzz2CVJ3XlzA

Circling the Economic Drain: Obama Selloff -> Eurozone Recession -> US Recession to follow

 Circling the Economic Drain: Obama Selloff -> Eurozone in Recession -> US Recession to follow

The downswing into the current economic slowdown has been faster than anyone has anticipated.

The GS indicator - GLI (Global Leading Indicator) shows that we are circling the drain, rotating from slowdown to contraction to recovery to expansion and now - in November - the indicators are pointing to a rapid shift into a slowdown phase. The GLI is losing momentum fast, has made lower cycle highs each time since the 2009 'recovery' began. We are headed for the lower left hand corner: GLI Deceleration and Contraction.

The Phoney Tax Fight: Where Obama and Rebulicans Agree & Disagree

It is a phoney war. They are fighting over whether to increase tax revenue by $99 Billion per year (where Obama and Republicans agree) or to increase tax revenue by $143 Billion per year (which Obama wants to do but at which Republicans are balking). The problem is that the federal deficit has been running at $1,200 Billion per year for the last four years.

 In other words, even with the largest tax increases anyone has proposed, the revenue raised will cover only about 15% of the federal deficit.

No one is addressing the other 85% of the deficit, or about $1,000 Billion, which can only be reduced by reducing spending.

Proof: Ohio's Unemployment Figures Doctored For Political Advantage by Obama

Proof: Ohio's Unemployment Figures Doctored For Political Advantage by Obama

The so called Ohio "unemployment rate miracle" touted by Obama in his many visits to the state turns out to be a doctored and manipulated fraud. For example, the September Ohio unemployment rate supposedly dipped to 7%, the lowest since September of 2008.  Examination of the underlying data shows that another important data set measurement, the LFP (Labor Force Participation), has been fudged and manipulation in order to falsely boost the unemployment figure.

The chart above illustrates how Obama operatives produced the fudged unemployment rate.

The black line in the figure (referencing the left hand scale) shows the LFP labor force participation rate plunging to 63.6% - the lowest since the "end of the recession", when the national LFP rate actually had an uptick in the past two months. This Ohio LFP artificially boosted the unemployment rate, by removing thousands of job seekers looking for work from being counted as unemployed.

Furthermore, the 63.6% LFP turns out to be the lowest for Ohio since 1984. So what can be inferred by looking at the convergence of the two data sets: LFP and Unemployemt?  (Note: the LFP in the figure references the left inverted axis, and the unemployment references the right hand axis).

What becomes clear form the figure is that once the pre-election "data nudging" ends, and the LFP is allowed to reflect reality,  the Ohio unemployment rate will explodes to over 10%, which is what its fair value is according to the participation rate. By then, of course, the game of pre-election optics will be over, and Ohioans will realize that promises, propaganda and reality never ever really existed, and that they were victimized, lied to, and played, by the Obama re-election campaign.

The truth is that Ohio, which was once home to a booming manufacturing industry, has declined by about 85,000 workers over the sad years of Obama's tenure. The unemployment rate of 7 percent is below the national rate of 7.9 percent onlye because people have stopping looking for work, and then are then not counted as unemployed. The labor force participation rate of 63.6 percent in both the U.S. and Ohio, indicates a “real unemployment rate”  closer to 10 percent.

The story gets even worse. Virtually all job gains at the national level since Obama came into office have occurred in the demographic age group 55-69 years old, which has risen by about 4 million workers. At the same time, younger people in the prime demographic of 25-54, have lost over 2 million jobs. Why? Because the elderly are forced to return to the labor force in large numbers because under ZIRP, their savings and retirement income have zero purchasing power. This skews the hirings toward those who have little wage negotiating leverage and substantially more job experience than their younger, inexperienced job hunting competition.

If Obama is re-elected, we have to look forward, depressingly, to 4 more years of this.

The Psychological Satisfaction of Twitter

The Psychological Satisfaction of Twitter

Nobody understands the brave new world of Twitter.

Most people are confounded and mystified by why it is that they love it so, and why they become so addicted. People are mystified by:
a) how to come to terms with Twitter,
b) how to understand it, and
c) what their deep underlying psychological needs are which Twitter seems to satisfy.

Addressing these questions has become a veritable cottage industry, spawning terabytes of nonsense and bloviating worldwide. But just how and why does Twitter really do what it does, namely fill a deep psychological need in our society, and in particular, how does Twitter address the following very pithy and fascinating questions:

• Why do I Twitter?
• Why is it so addictive & popular?
• Why is it rapidly becoming the dominant channel for all social media?

There’s been plenty of learned, pointy headed, adenoidal, scolding, agonized stuff about this, summarized below:

According to the “experts”, Twitter is:

• Narcissistic
• Done by people with low self-esteem
• The killer app for killing time & filling any moment with useless drivel
• Perfect for a culture starved for real community and tribal yearnings
• Perfect for brains wired to operate within the social context of community
• Needed to satisfy a deep evolutionary need for community, compelling people to tweet
• Needed to satisfy social needs, like those for belonging, love, affection, friendships, romantic attachments, companionship, relationship, and acceptance

None of the above is correct or true. It is really much much simpler.

We only need to go back to the 1943 paper "A Theory of Human Motivation" by the great psychologist Abraham Maslow, to get a handle on what it is that human beings need, and what motivates them, and to better understand why Twitter is an amazing phenomenon.

Figure 1 illustrates Prof. Maslow’s insights and the portion of his Triangle which Twitter addresses. But today’s misguided pundits are wrong, and even Prof. Maslow is a little bit wrong, in terms of emphasis, regarding what Twitter satisfies, and why it is like chocolate, like candy, like even sex, in its powers of attraction and addiction.

And the answer is:

Twitter Allows the Harmless Release/Expression of Pent-Up Anger and/or Love

Yes…

Twittering allows any person who is upset about anything at all, who is angry or frustrated about anything at all, or who feels strong attraction or love, to express him or herself in a totally harmless yet satisfying way. As a Twitterer, the person may directly address the object of his anger and/or love, and expend him or herself as energetically fully or little as they wish.

Moreover, the Twitterer may have a very reasonable realistic expectation that SOMEBODY will see what he has sent out, and that there may even be a response, meaning a bond of communication. Gratifying, if that happens. Not solipsistic. And best of all, it is completely harmless and safe, more or less.

Thus Twittering provides a unique form of self expression and communication which is beneficial to both the person who sends the Twitter, and the person who reads or receives the Twitter. And who may or may not choose to respond. Freedom. And anonymous, if the person is not a celebrity.

The result is a big “Aaahhhh…..”, such as the sound one makes after satisfying a hunger with particularly delicious foods: good soup, or fruits, or candy, or meat. Or after having a great conversation, or having meeting of the minds with someone. Or after good sex. Or not so good sex.

So Twitter gives the Twitterer a venue where he or she has virtual partner, ready made, with none of the mess or bother or disappointment or tragedy of a real live partner.

But is it like talking to a PSO? Possibly. If the PSO is a multi-faceted individual that can satisfy on many levels. But what’s ‘rong wit dat? As Joycelyn Elders, former Surgeon General of the United States, famously said: "I think that it is part of human sexuality, and perhaps it should be taught."

This all leaves open the question of why celebrities and beautiful people of all ilk indulge in Twitter. Wait, I'm thinking...