Bill Whittle vs Michael Moore

You don't have to be a right-wing commentator like Bill Whittle to think Michael Moore is a crowd-manipulating phony. But I think Mr Whittle may have proved more - and less - than he intended.

It's clear from what he tells us that seizing the entire income and assets of "the rich" would cover the USA's expenses for only a year. Of itself, this does not exonerate those who benefitted hugely from skewing the economy. What he has shown is that the damage done to Humpty Dumpty is greater than all the king's horses and all the king's men can easily undo.

Eating the rich is revolutionary talk à la française and like Robespierre, Michael Moore might find he'd started a revolution that ate its own children. Reasserting the rule of law is another matter, and it would be part of the corrective process of justice to fine, jail or defenestrate from public office those who had the mens rea in this morass of criminal incompetence and wickedness. This is something for which Karl Denninger himself has often called. Right does not belong to the right, any more than to the left.

What a shame that Mr Whittle has forbidden all responses to his video. I suppose he would consider what I say to be merely part of his "predicted sewer backwash on the intertubes".

Behind the truth: Pastor Terry Jones and the Koran-burning

It could all be a terrible mistake. Pastor Jones may have thought he was burning his financial records:

"At first, Terry and Sylvia Jones split time between the Cologne and Gainesville churches. Then in 2008 they cut ties with the Cologne church after members accused the couple of financial improprieties connected with their side business, TS and Company, which is owned by Terry and Sylvia Jones. TS and Company sells vintage furniture on eBay and was supposed to help support the churches."

The secret target of tax / NI merger: the self-employed

The recently-announced plan to combine or harmonise levels of income tax and National Insurance Contributions could see the self-employed hit hard.

The government is moving the State pension system away from the layer cake of basic pension plus additional variable toppings of Graduated Pension, SERPS and S2P and towards a single income benefit for all set at a level that lifts pensioners out of the complicated and negatively-reinforcing savings trap.

But if all get the same benefit, it could be argued, all should pay the same, or at least the same rates. I think we may end with the self-employed paying the same proportion of their income in tax and NIC as employees - possibly also including what is currently the employer's contribution. This might vitally boost the government's flagging finances.

I commented on the stealth tax of NIC back in 2007, and showed how for an employee on basic rate tax the total government swipe was equivalent to a marginal rate of 40%. There is (or was, until the introduction of the 50% tax band) really not much difference between basic and higher rate tax-paying employees.

But there is a distinct advantage for certain categories of fairly highly-paid professionals to be self-employed or work as partners rather than directors. This could change - and what a juicy target those (e.g.) barristers might present!

Potentially, there's a plus for us ordinaries: if this tax-cum-NIC were all income tax, then it would be far more attractive for average earners to make personal pension contributions. Skandia thinks we could see the end of Higher Rate Tax relief on pensions; but I think it possible we could see, in effect, HRT relief for all. That would be radical, and ultimately beneficial. And it would reward the prudent ant above the live-for-today grasshopper.

Or maybe we'll just see an extension of the heavy tax burden to not only barristers, but jobbing plumbers, plasterers and the like, accompanied by more horrid, bullying tax investigations.

Trickle-up Economics

One standard conservative argument is that the wealthy are rich because they invest their money. The poor are that way because they spend their money.

The answer is thus to decrease taxes on the rich to stimulate the economy and increase employment.

Thirty years of trying have shown this not to work.

The problem is that the conclusion does not follow from the premise.

If we take the logical approach to this, we should increase taxes on the wealthy, and make sure that the lower-income folks get it. They will spend it, possibly in stupid ways, and thus stimulate local economies. Thus, more people get jobs, the government gets more tax revenue, and the corporations make even more money.

Too good not to pass on

http://abstrusegoose.com/339

Humility

Source: SMBC

The Most Evil Bank Scheme Ever

Conventional economics, so I understand, ignores the problem of debt and monetary inflation, because it's assumed that the money spreads quickly and evenly throughout the system. Wages up, prices up, nobody's hurt, right?

Wrong. Just like the Oklahoma Land Rush of 1893, who gets there first wins all. This is why those in the FIRE economy have taken over.

But you know, they are small thinkers, all of them, even the billionaires. What they've done so far is like building a faulty nuclear reactor; what they could do is like dropping the H-bomb.

Here's the scenario:

1. Two new banks are created - let's call them Orcbank and Trollbank. No branches - don't need them if you don't deal direct with the public. The problem with the housing bubble is the people. They have to be missold mortgages and then have to keep up the ridiculous payments while their equity tanks. Far too messy.

2. The Federal Government borrows a scad of money from the Federal Reserve - it doesn't matter how much, because the FR makes it up out of nothing anyway (watch Glenn Beck's recent crisp summation of the Fed's history).

3. This money is divided into two equal parts and deposited interest-free in Orcbank and Trollbank.

4. Orcbank lends whatever is the legal (who makes the laws?) maximum multiple of its deposit, to Trollbank; Trollbank does the same for Orcbank.

5. Then the banks go shopping. They go to all other banks, plus Fannie Mae and Freddie Mac, buying up any residential property that is now worth less than its mortgage. Not at phony book value valuations: the real, disaster-filled forced-sale valuations. Many billions, maybe trillions of dollars'-worth. And Orcbank and Trollbank buy the lot, for the full value of the debt, cash on the nail.

6. You now have two monster insolvent banks. Oh, dear.

7. No, you don't. You merge Trollbank with Orcbank, forming the new First Bank of Mordor. And poof! the debt disappears, every last cent of it. All the assets (mortgages) and liabilities (money loaned out) on one are exactly the same as, and counterbalanced by, the other. Matter meets antimatter; mutual annihilation of all assets and liabilities.

8. What's left? The deposits, which are returned to the Federal Reserve via the Government. The interest? We'll come to that shortly.

9. Oh, and there's the not-so-little matter of free-and-clear ownership of gigantic quantities of residential real estate. First Bank of Mordor, wishing to have nothing to do with such a tedious and messy business as moneylending, deregisters as a bank and becomes the Sauron Real Estate Trust. Sauron can rent out property at whatever rates it likes, whatever the market will bear - having no debts, everything after maintenance and repairs is profit.

10. Sorry, that should read "everything after maintenance, repairs and management costs" is profit. In fact, you don't want to make a profit: you just want to pay everyone who's in on the scam. No pesky shareholders, please, so no dividends. If the Fed can be a private company and own America's government, Sauron can be a private company and own America's real estate.

All it needs is the OK, and there's a small enough number of people to see right about their doubtless and naturally very large and absolutely confidential though never defined ongoing expenses, if they're willing to take the money. And the Fed will need some interest for the money it loaned for that short period of time; plus I guess a few billion in administrative fees. Who cares? It's only money.

Upside? Some very happy people in blue suits who just relocated to the Caribbean or that island Scaramanga fitted out so luxuriously. Insolvent banks bailed out - and you can always rinse 'n' repeat if you didn't do enough the first time round (by the way, there's always the commercial real estate bubble to rescue, too).

Downside? Joe Average pays rent forever. But there's not that many properties he can buy instead of renting. In fact, you may just have turned a bubble into an incredible shortage and so up go valuations again. After all, they're not making any more land. Who knows, when the price is right Sauron may start selling tranches of real estate, just to ease the market.

And if Joe Average doesn't like it? What do you think you've got police, Army and the National Guard for?

No, surely they wouldn't do it. Surely you'd never get this past enough legislators and regulators to make it stick. But I'm telling you this idea publicly, just in case it's already been germinating in someone else's twisted little head. That's what you pay quants, lawyers and accountants for - crooked schemes to steal from the people.

This is the potential of fractional reserve banking, governments that lend free money, crony capitalism and the secret magic of the Federal Reserve. They'd have to dress it up as rescuing the system and the people; you know, being responsible managers of the economy.

All they have to do is dare. And look what they dare to do already.